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EXHIBIT 1.1
8,600,000 Shares
INNKEEPERS USA TRUST
COMMON SHARES
UNDERWRITING AGREEMENT
______________, 1996
XXXXXXXXXX SECURITIES
BEAR, XXXXXXX & CO. INC.
ALEX. XXXXX & SONS INCORPORATED
EVEREN SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
c/x Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
As Representatives of the several Underwriters
Dear Sirs:
SECTION 1. Introductory. Innkeepers USA Trust, a Maryland
real estate investment trust (the "Company", which term shall also include,
where appropriate, each of the wholly owned subsidiaries of the Company listed
on Schedule 1 attached hereto (the "Company Subsidiaries"), as the context
requires), proposes to issue and sell 8,600,000 shares of its authorized but
unissued common shares of beneficial interest, $0.01 par value per share (the
"Shares of Beneficial Interest"), to the several underwriters named in Schedule
A annexed hereto (the "Underwriters"), for whom you are acting as
Representatives. Said aggregate of 8,600,000 Shares of Beneficial Interest are
herein called the "Firm Common Shares." In addition, the Company proposes to
grant to the Underwriters an option to purchase up to 1,290,000 additional
Shares of Beneficial Interest (the "Optional Common Shares") as provided in
Section 4 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
You have advised the Company that the Underwriters propose to
make a public offering of their respective portions of the Common Shares on the
effective date of the registration
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statement hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
On the First Closing Date (as hereinafter defined), or
immediately thereafter, the Company will complete a series of transactions
described in the Prospectus (as hereinafter defined). For the purposes hereof,
"Closing Transactions" include the transactions described below which are
designed to enable Innkeepers USA Limited Partnership, a Virginia limited
partnership (or any of the Subsidiary Partnerships listed on Schedule 2
attached hereto (each, a "Subsidiary Partnership"), and Innkeepers USA Limited
Partnership (the "Partnership") to acquire ten additional hotel properties
listed in the Prospectus as the "Acquisition Hotels", including all personal
property (other than inventory and supplies) related to such Hotels
(individually a "Hotel", and collectively the "Hotels" or the "Acquisition
Hotels").
(i) The Underwriters will purchase the Firm Common Shares
and, if applicable, the Optional Common Shares and offer them in a
public offering as contemplated hereby.
(ii) The Company, including through the Company Subsidiaries,
will contribute all of the net proceeds from the sale of the Common
Shares to the Partnership, whose sole general partner is Innkeepers
Financial Corporation (the "First General Partner") and the Subsidiary
Partnerships, whose sole general partners are the wholly owned Company
Subsidiaries listed on Schedule 3 attached hereto (collectively with
the First General Partner, the "General Partners"), in return for
partnership units in the Partnership (the "Units").
(iii) The Acquisition Hotels will be transferred to the
Partnership by the present owners of such properties pursuant to
agreements of purchase and sale (collectively, the "Agreements of
Purchase and Sale") entered into by the Company or the Partnership and
(a) partnerships affiliated with Xxxx X. XxXxxx (the "XxXxxx Group"),
with respect to seven of the Acquisition Hotels, (b) Marriott
International, Inc (together with its affiliates, "Marriott"), with
respect to one of the Acquisition Hotels, and (c) JF Atlanta, LLC ("JF
Atlanta") with respect to two of the Acquisition Hotels (collectively,
the "Present Owners").
(iv) In connection with the purchase and sale of seven of the
Acquisition Hotels (the "XxXxxx Hotels"), the Partnership will issue
to the XxXxxx Group, approximately 4,158,000 preferred units in the
Partnership (the "Preferred Units") and assume certain indebtedness
(the "Assumed Indebtedness") equal to approximately $24,000,000. The
Preferred Units shall have a liquidation preference of $11.00 per
Preferred Unit and are convertible into Units on
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a one-for-one basis. On or after the second anniversary of issuance,
the XxXxxx Group will have the right to redeem all outstanding
Preferred Units for cash or, at the option of the Company, Common
Shares on a one-for-one basis. In connection with the acquisition of
the XxXxxx Hotels, the Partnership shall issue to Marriott, as
consideration for Marriott's termination of the management agreements
relating to the XxXxxx Hotels, Units with a value of $500,000. On or
after the first anniversary of the issuance of such Units, Marriott
shall have the right to redeem all such Units for cash or, at the
option of the Company, Common Shares on a one-for-one basis.
(v) In connection with the purchase of one of the Acquisition
Hotels, the Partnership will pay approximately $5,100,000 to Marriott,
and issue Units to Marriott with a value of $859,000. On or after the
first anniversary of issuance, Marriott will have the right to redeem
all such outstanding Units for a per Unit price equal to the greater
of $_____________ per Unit or the market price of the Common Shares on
the date of redemption payable in cash or, at the option of the
Company, Common Shares with an equivalent value.
(vi) In connection with the purchase of two of the
Acquisition Hotels, the Partnership will pay approximately $27,800,000
(subject to increase for any additional financing costs and any
capital contributions incurred to finance operating losses from the
acquisition date to the date conveyed to the Partnership) to JF
Atlanta. Of such purchase price, $5,800,000 has previously been
deposited with JF Atlanta and will be applied against the purchase
price.
(vii) The Partnership will enter into percentage leases (the
"Percentage Leases") with JF Hotel, Inc., a Virginia corporation (the
"Lessee," which term shall include, as the context requires,
affiliates thereof) pursuant to which the Lessee will lease each
Acquisition Hotel in accordance with the provisions of the Percentage
Leases.
(viii) New management agreements (the "Management
Agreements") will be entered into between the Lessee and Marriott for
the operation of the Acquisition Hotels, other than the Hampton Inn
hotel in Norcross, Georgia for which a new franchise agreement with
Promus Hotels, Inc. will be entered into.
The Company and the Partnership hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
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SECTION 2. Representations and Warranties of the Company and
the Partnership. The Company and the Partnership hereby jointly and severally
represent and warrant to the several Underwriters that:
(a) A registration statement on Form S-3 (Registration No.
333-12809) with respect to the Common Shares has been prepared by the
Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, and has been filed with the Commission.
The Company has prepared and has filed an amendment or amendments to
such registration statement. There have been delivered to you two
signed copies of such registration statement and amendments, together
with two copies of each exhibit filed therewith. Conformed copies of
such registration statement and amendments (but without exhibits) and
of the related preliminary prospectus have been delivered to you in
such reasonable quantities as you have requested for each of the
Underwriters. The Company will next file with the Commission one of
the following: (i) prior to effectiveness of such registration
statement, a further amendment thereto, including the form of final
prospectus, or (ii) a final prospectus in accordance with Rules 430A
and 424(b) of the Rules and Regulations. As filed, such amendment and
form of final prospectus, or such final prospectus, shall include all
Rule 430A Information (as hereinafter defined) and, except to the
extent that you shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to you prior to the
date and time that this Agreement was executed and delivered by the
parties hereto, or, to the extent not completed at such date and time,
shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary Prospectus)
as the Company shall have previously advised you in writing would be
included or made therein.
The term "Registration Statement" as used in this Agreement
shall mean such registration statement at the time such registration
statement becomes effective and, in the event any post-effective
amendment thereto becomes effective prior to the First Closing Date,
shall also mean such registration statement as so amended; provided,
however, that such term shall also include all Rule 430A Information
deemed to be included in such registration statement at the time such
registration statement becomes effective as provided by Rule 430A of
the Rules and Regulations. The term "Preliminary Prospectus" shall
mean any preliminary prospectus referred to in the preceding paragraph
and any preliminary prospectus included in the Registration Statement
at the time it becomes effective that omits
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Rule 430A Information. The term "Prospectus" as used in this Agreement
shall mean the prospectus relating to the Common Shares in the form in
which it is first filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations or, if no filing pursuant to Rule 424(b) of
the Rules and Regulations is required, shall mean the form of final
prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A
Information" means information with respect to the Common Shares and
the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A of the Rules
and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements
of the Act and the Rules and Regulations and, as of its date, has not
included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and
at the time the Registration Statement becomes effective, and at all
times subsequent thereto up to and including each Closing Date (as
hereinafter defined), the Registration Statement and the Prospectus,
and any amendments or supplements thereto, will contain all material
statements and information required to be included therein by the Act
and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include 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;
provided, however, no representation or warranty contained in this
Section 2(b) shall be applicable to information contained in or
omitted from any Preliminary Prospectus, the Registration Statement,
the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by
or on behalf of any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof.
(c) The Company is a real estate investment trust with
transferable shares of beneficial interest (except as transferability
may be restricted in the Declaration of Trust of the Company), duly
formed and existing under and by virtue of the laws of the State of
Maryland and is in good standing with the State Department of
Assessments and Taxation of Maryland, with full power and authority
(trust and other) to own and lease its properties and conduct its
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businesses as currently conducted or as described in the Prospectus.
Except as disclosed in the Prospectus, neither the Company nor the
Partnership owns or controls, or after the Closing Transactions will
own or control, directly or indirectly, any corporation, partnership,
association or other entity.
(d) Each of the Lessee and the General Partners has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the Commonwealth of Virginia with full power and
authority (corporate and other) to own and lease its properties and
conduct its business as described in the Prospectus.
(e) The Partnership (including each Subsidiary Partnership)
has been duly formed and is validly existing as a limited partnership
under the laws of the Commonwealth of Virginia with full power and
authority (partnership and other) to own and lease its properties and
conduct its business as currently conducted or as described in the
Prospectus. The First General Partner is and will on each Closing Date
be the sole general partner of Innkeepers USA Limited Partnership, and
upon the consummation of the Offering and the application of the
proceeds therefrom as described in the Prospectus, will be the holder
of 19,428,998 Units (assuming no Optional Common Shares are sold), or
approximately 79.4% of the Units in the Partnership. Upon the
consummation of the Offering, the First General Partner will own the
Units it holds free and clear of all liens, encumbrances, equities,
claims, security interests, voting trusts or charges. Except as set
forth in the Prospectus, each of the Company, the Partnership, the
Lessee and each property to be owned by the Partnership as of the
First Closing Date, including the Acquisition Hotels, is, and after
the consummation of the Offering will be, in possession of and
operating in compliance with all authorizations, licenses, permits,
consents, certificates and orders material to the conduct of its
business, all of which are valid and in full force and effect. Each of
the Company, the Partnership and the Lessee is, and after the
consummation of the Offering will be, duly qualified to do business
and in good standing as a foreign corporation, real estate investment
trust or partnership, as applicable, in each jurisdiction in which the
ownership or leasing of properties or the conduct of its respective
business requires such qualification, except for jurisdictions in
which the failure to so qualify would not have a material adverse
effect upon the Company, the Partnership or the Lessee, as the case
may be, and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.
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(f) The Company has issued and outstanding 10,828,998 Shares
of Beneficial Interest, the issued and outstanding Shares of
Beneficial Interest have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities, and conform in all material respects to the
description thereof contained in the Prospectus. All issued and
outstanding Units of the Partnership have been validly issued and are
fully paid and nonassessable and have been issued in compliance with
all federal and state securities laws. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the
Company, and the related notes thereto, neither the Company nor the
Partnership has outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities
or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its beneficial interest or partnership
interests, as the case may be, or any such options, rights,
convertible securities or obligations.
(g) The Common Shares to be sold by the Company in the public
offering contemplated by this Agreement, when issued, delivered and
paid for in the manner set forth in this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, will be
registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), have been duly authorized for
listing on the New York Stock Exchange upon official notice of
issuance and will conform in all material respects to the description
thereof contained in the Prospectus. No shareholder of the Company has
any right which has not been waived to require the Company to register
the sale of any shares owned by such shareholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the shareholders or the Board of Trustees of the Company
will be required for the issuance and sale of the Common Shares to be
sold by the Company as contemplated herein. The description of the
Company's share option, share bonus and other share plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights. The Company
is, and following the issuance and sale of the Common Shares will be,
in compliance with all of the rules and regulations of the New York
Stock Exchange applicable to the Company.
(h) The Units (including the Preferred Units) to be issued to
the Company, to Marriott and to the XxXxxx Group
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in connection with the Closing Transactions have been duly authorized
and, when issued in the manner set forth in the Prospectus, will be
duly authorized, validly issued, fully paid and nonassessable. The
Units (including the Preferred Units) have been, or will be, issued in
compliance with all federal and state securities laws, are not, or
will not be, issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities and
conform in all material respects to the description thereof contained
in the Prospectus. The offer, issue, sale and delivery of the Units
(including the Preferred Units) in connection with the Closing
Transactions (i) constitute exempted transactions under the
registration provisions of the Act and (ii) will comply with all
federal securities, real estate syndication and Blue Sky laws. Neither
the acquisition of the Properties by the Partnership nor the issuance
of any Units (including the Preferred Units) to Marriott or to the
XxXxxx Group will violate any laws or regulations of any governmental
body with regard to roll-up transactions as such term is defined in
Item 901(c) of Regulation S-K of the Rules and Regulations.
(i) The Partnership has obtained the agreement of Marriott
(for a period of one year) and the XxXxxx Group (for a period of two
years from the date of issuance of Units to it) that for such period
such entities will not redeem Units, in the case of Marriott or
Preferred Units in the case of the XxXxxx Group, to be received by
them.
(j) Each of the Company and the Partnership has full legal
right, power and authority to enter into this Agreement and perform
the transactions contemplated hereby. This Agreement has been duly
authorized by the Company and the Partnership, has been duly executed
and delivered by the Company and the Partnership and constitutes a
valid and binding obligation of each of the Company and the
Partnership in accordance with its terms. The making and performance
of this Agreement by each of the Company and the Partnership and the
consummation of the transactions herein contemplated, including the
Closing Transactions, will not violate any provisions of the
declaration of trust, partnership agreement, certificate of
partnership, charter, by-laws or other organizational documents, as
applicable, of the Company, the Partnership or the Lessee and will not
conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a
default under (i) any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Company, the Partnership or the Lessee is a party or by which the
Company, the Partnership or the Lessee or any of their respective
properties may be bound or affected or (ii) any statute or any
authorization, judgment, decree, order, rule
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or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company, the
Partnership the Lessee or any of their respective properties. No
consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is
required, including the satisfaction of any requirements pursuant to
the Xxxx-Xxxxx- Xxxxxx Antitrust Improvements Act of 1976, as amended,
for the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement, except for
compliance with the Act, the Blue Sky and Canadian securities laws
applicable to the public offering of the Common Shares by the several
Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(k) Coopers & Xxxxxxx L.L.P. ("Coopers & Xxxxxxx") and KPMG
Peat Marwick ("KPMG"), who have expressed their opinion with respect
to the financial statements and schedules filed with the Commission or
incorporated by reference as a part of the Registration Statement and
included in the Prospectus and in the Registration Statement, are each
independent accountants as required by the Act and the Rules and
Regulations.
(l) The financial statements of the Company, the XxXxxx
Hotels (as defined in the Prospectus) and the Lessee set forth in the
Registration Statement and Prospectus fairly present the financial
condition of such entities as of the dates indicated and the results
of operations and changes in financial position for the periods
presented. The pro forma financial statements included in the
Registration Statement and the Prospectus comply in all material
respects with the applicable requirements of Rule 11-02 of Regulation
S-X of the Commission and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of such
statements. Such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis as certified by the independent
accountants named in Section 2(k). No other financial statements or
schedules are required to be included in the Registration Statement.
The selected financial data set forth in the Prospectus under the
captions "Capitalization" and "Selected Financial Information" fairly
present the information set forth therein on the basis stated in the
Registration Statement.
(m) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
which have not been described or filed as required. Each of the
agreements described in this
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Section, in the Prospectus or attached as exhibits to the Registration
Statement in connection with the Closing Transactions (the "Closing
Agreements"), including this Agreement, the Second Amended and
Restated Agreement of Limited Partnership for the Partnership, each of
the Agreements of Purchase and Sale for the Acquisition Hotels, each
of the Percentage Leases for the Acquisition Hotels, the Management
Agreements for the Acquisition Hotels to be operated as Residence Inns
and the Franchise Agreement for the Hampton Inn-Norcross, Georgia
hotel, has been, or prior to the consummation of the Closing
Transactions will be, duly authorized, executed and delivered by the
parties thereto and constitute valid and binding agreements; and none
of the Company, the Partnership nor the Lessee nor to the best of the
Company's knowledge, any other party is, or upon the consummation of
the Closing Transactions will be, in breach of or default under any
Closing Agreement. The Company, the Partnership and the Lessee, as
applicable, and to the knowledge of the Company, each other party to
the Closing Agreements has full legal right, power and authority to
enter into each such agreement and to consummate the transactions
contemplated therein.
(n) There are no legal or governmental actions, suits or
proceedings pending in which service of process has been received by
an employee of the Company or, to the best of the Company's knowledge,
threatened to which the Company, the Partnership, or the Lessee is or
may be, or upon the consummation of the Closing Transactions will be,
a party or of which property owned or leased by the Company, the
Partnership or the Lessee is or may be, or upon the consummation of
the Closing Transactions will be, the subject, or related to
environmental or discrimination matters, which actions, suits or
proceedings might, individually or in the aggregate, prevent or
adversely affect the transactions contemplated by this Agreement or
result in a material adverse change in the condition (financial or
otherwise), properties, business, results of operations or prospects
of the Company, the Partnership or the Lessee; and no labor
disturbance by the employees of the Company, the Partnership or the
Lessee exists or is imminent which might be expected to affect
adversely such condition (financial or otherwise), properties,
business, results of operations or prospects. None of the Company, the
Partnership nor the Lessee is a party or subject to the provisions of
any material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body.
(o) Upon the consummation of the Closing Transactions, the
Partnership will have good and marketable title to the Acquisition
Hotels, subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except (i) those reflected
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in the financial statements (or described elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property
by the Company and such partnership. The Partnership holds or will
hold upon consummation of the Closing Transactions, its leased
properties under valid and binding leases, with such exceptions as are
not or will not be materially significant in relation to the business
of any of the Partnership. The Company does not own or lease any real
property. The Partnership owns or leases and, upon the consummation of
the Closing Transactions, the Partnership will own or lease, all such
real and personal properties (except for items of inventory to be held
by the Lessee) as are necessary to operate the Properties as now
operated or as proposed to be operated.
(p) To the knowledge of the Company (i) no lessee, licensee,
concessionaire or vendor of any portion of any of the Hotels (as
defined in the Prospectus) is in default under any of the leases or
licenses governing such properties and there is no event which, but
for the passage of time or the giving of notice, or both, would
constitute a default under any of such leases or licenses, except such
defaults that would not, upon consummation of the Closing
Transactions, have a material adverse effect on the condition
(financial or otherwise) or on the earnings, business affairs or
business prospects of the Company, the Partnership or the Lessee; (ii)
all such leases or licenses are assignable without consent or approval
has been obtained to assign any such lease or license, to the
Partnership or the Lessee, as applicable, on the Closing Date; (iii)
the current and intended use and occupancy of each of the Hotels
complies with all applicable codes and zoning laws and regulations, if
any, except for such failures to comply which would not, upon
consummation of the Closing Transactions, individually or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise) or on the earnings, business affairs or business
prospects of the Company, the Partnership or the Lessee; and (iv)
there is no pending or threatened condemnation, zoning change,
environmental or other proceeding or action that will in any material
respect affect the size of, use of, improvements on, construction on,
or access to any of the Hotels except such proceedings or actions that
would not after consummation of the Closing Transactions have a
material adverse effect on the condition (financial or otherwise) or
on the earnings, business affairs or business prospects of the
Company, the Partnership or the Lessee.
(q) Since June 30, 1996, and except as described in or
specifically contemplated by the Prospectus: (i) none of
the Company, the Partnership nor the Lessee has incurred any
material liabilities or obligations, indirect, direct or
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contingent, or entered into any material verbal or written agreement
or other transaction which is not in the ordinary course of business
or which could result in a material reduction in the future earnings
of the Company, the Partnership or the Lessee; (ii) none of the
Company, the Partnership nor the Lessee has sustained any material
loss or interference with its respective businesses or properties from
fire, flood, windstorm, accident or other calamity, whether or not
covered by insurance; (iii) none of the Company, the Partnership nor
the Lessee has paid or declared any dividends or other distributions
with respect to its capital stock, other than (A) the $0.225 per share
distribution declared by the Company payable on October 15, 1996 to
shareholders of record on September 27, 1996, (B) the distribution to
Xx. Xxxxxx and Xx. Xxxx in the aggregate amount of $___________,
shares of beneficial interest or interests, as applicable, and none of
the Company, the Partnership nor the Lessee is in default in the
payment of principal or interest on any outstanding material debt
obligations; (iv) there has not been any change in the number of
outstanding Shares of Beneficial Interest (other than upon the sale of
the Common Shares or purchase of shares pursuant to the Company's
dividend reinvestment program) of the Company, the ownership interests
in any of the Partnership or the common stock of the Lessee or
indebtedness material to the Company, the Partnership or the Lessee
(other than in the ordinary course of business); and (v) there has not
been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects
of the Company, the Partnership or the Lessee.
(r) Except as disclosed in or specifically contemplated by
the Prospectus, the Company, the Partnership and the Lessee have and
will have, upon the consummation of the Closing Transactions,
sufficient trademarks, trade names, patent rights, copyrights,
licenses or other similar rights and proprietary knowledge
(collectively, "Intangibles"), approvals and governmental
authorizations to conduct their businesses as now conducted; the
expiration of any Intangibles, approvals or governmental
authorizations would not have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Partnership or, upon the consummation of the Closing
Transactions, the Company, the Partnership or the Lessee; and the
Company has no knowledge of any material infringement by the
Partnership of any Intangibles, and there is no claim being made
against the Company, the Partnership or the Lessee regarding any
Intangible or other infringement which could have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company, the Partnership or the Lessee.
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(s) Neither the Company nor the Partnership has been advised,
or has reason to believe, that the Company, the Partnership and the
Lessee are not conducting, and after the consummation of the Closing
Transactions will not be conducting, business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which
any of them is, or upon the consummation of the Closing Transactions
will be, conducting business, including, without limitation, all
applicable local, state and federal environmental laws and
regulations; except where failure to be in compliance would not
materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of any such entity.
(t) The Company, the Partnership and the Lessee each has
filed all necessary federal, state and foreign income and franchise
tax returns and has paid all taxes shown as due thereon; and to the
Company's knowledge, there is no tax deficiency which has been or
might be, whether in connection with the consummation of the Closing
Transactions or otherwise, asserted or threatened against which could
materially and adversely affect the business, operations or properties
of, the Company, the Partnership or the Lessee, as the case may be.
(u) Neither of the Company nor the Partnership has
distributed or will distribute prior to the First Closing Date any
offering material in connection with the offering and sale of the
Common Shares other than the Prospectus, the Registration Statement
and the other materials permitted by the Act.
(v) None of the Company, the Partnership nor the Lessee has
at any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office or failed to disclose
fully any contribution in violation of law or (ii) made any payment to
any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(w) Neither the Company nor any of its affiliates has taken
or will take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Shares to facilitate the sale
or resale of the Common Shares.
(x) Upon consummation of the Closing Transactions, the
Company, the Partnership or the Lessee, as applicable, will have and
will maintain liability, property and casualty insurance (insured by
insurers of recognized financial
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responsibility) in favor of the Partnership, and in the case of
liability insurance, the Lessee and the Partnership, with respect to
each of the Hotels, in an amount and on such terms as is reasonable
and customary for businesses of the type proposed to be conducted by
the Partnership and the Lessee, including, among other things,
insurance against theft, damage, destruction and acts of vandalism.
Neither the Company nor the Partnership has received from any
insurance company notice of any material defects or deficiencies
affecting the insurability of any such Hotels.
(y) Upon consummation of the Closing Transactions, title
insurance in favor of the Partnership will be in force with respect to
each of the Hotels in an amount at least equal to the purchase price
of such Hotel set forth in the applicable Agreements of Purchase and
Sale.
(z) The mortgages and deeds of trust encumbering the Hotels
are not convertible nor, upon the consummation of the Closing
Transactions, will the Company or the Partnership hold a participating
interest therein and such mortgages and deeds of trust are not
cross-defaulted or cross-collateralized to any property not to be
owned directly or indirectly by the Company or the Partnership.
(aa) The Agreements of Purchase and Sale have been duly
authorized, executed and delivered by the parties thereto and give the
Partnership the right upon the terms set forth therein and upon
payment of the consideration specified therein, to acquire the Hotels
and all other assets specified therein. Other than payments set forth
in the Agreements of Purchase and Sale or in connection with the
termination of the management agreements with respect to the XxXxxx
Hotels to be operated as Residence Inns, none of the Company, the
Partnership nor the Lessee will be required to make any payments to,
or on behalf of, the Partnership in connection with the acquisition of
the Hotels.
(bb) Each of the Company, the Partnership and the Lessee (i)
is or will be, as of the Closing Date after giving effect to the
Closing Transactions, in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or any
Hazardous Material (as hereinafter defined) ("Environmental Laws"),
(ii) has received, or will have received, as of the Closing Date after
giving effect to the Closing Transactions, as the case may be, all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii)
is, or will be, as of the Closing Date after giving effect to the
Closing Transactions, as the case may be, in compliance with all terms
and conditions of any such permit, license or
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approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals are otherwise disclosed in the Prospectus or
would not, singly or in the aggregate, after consummation of the
Closing Transactions, have a material adverse effect on the Company,
the Partnership or the Lessee. As used herein, "Hazardous Material"
shall mean (a) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA"), (b) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act, as amended, (c) any
petroleum or petroleum product, (d) any polychlorinated biphenyl and
(e) any pollutant or contaminant or hazardous, dangerous, or toxic
chemical, material, waste or substance regulated under or within the
meaning of any other Environmental Law.
(cc) To the knowledge of the Company, there is no liability,
alleged liability or potential liability (including, without
limitation, liability, alleged liability or potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or
penalties), of any of the Present Owners, the Company, the Partnership
or the Lessee arising out of, based on or resulting from (a) the
presence or release into the environment of any Hazardous Material at
any location, whether or not owned by any of the Present Owners, the
Company or the Lessee or (b) any violation or alleged violation of any
Environmental Law, which liability, alleged liability or potential
liability is required to be disclosed in the Registration Statement,
other than as disclosed therein, or which liability, alleged liability
or potential liability, singly or in the aggregate, would have a
material and adverse effect on the respective business, prospects,
properties, condition (financial or otherwise) or results of
operations of any of the Hotels or the Company, the Partnership or the
Lessee.
(dd) None of the Company, the Partnership nor the Lessee is
or will become as a result of the Closing Transactions, or will
conduct their respective businesses in a manner in which any such
entity would become an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(ee) Neither the assets of the Company nor the Partnership
constitutes, nor will such assets, as of the Closing Date, constitute
"plan assets" under the Employee
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Retirement Income Security Act of 1974, as amended ("ERISA").
(ff) As of the Closing Date, the Company will be organized
and will operate in a manner so as to qualify as a "real estate
investment trust" ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), and has
elected to, is qualified to and intends to remain qualified to, be
taxed as a REIT under the Code and pursuant to any applicable state
tax laws. As of the Closing Date, less than 15 percent of the
aggregate adjusted tax bases of both the personal property and the
real property (the "Total Bases") to be leased pursuant to any
Percentage Lease shall consist of the adjusted tax bases of the
personal property (the "Personal Property Bases"), except in each
instance where the failure to maintain such ratios will not disqualify
the Company's election as a REIT or otherwise have a material adverse
effect on the business and operations of the Company; in each
succeeding year the Personal Property Bases in connection with each
Percentage Lease will not exceed 15 percent of the Total Bases for
such lease, except in each instance where the failure to maintain such
ratios will not cause the Company to fail to qualify as a REIT or
otherwise have a material adverse effect on the business and
operations of the Company; and the Company has received a segmentation
study from Coopers & Xxxxxxx L.L.P. stating that based on its
projections, during the first five years of the term of each
Percentage Lease less than 15 percent of the Total Bases of each such
Percentage Lease is expected to consist of Personal Property Bases,
except in each instance where the failure to maintain such ratios will
not cause the Company to fail to qualify as a REIT or otherwise have a
material adverse effect on the business and operations of the Company.
The Company does not know of any event which would cause or is likely
to cause the Company to fail to qualify as a REIT at any time. All of
the assets, liabilities and items of income, deduction and credit of
the Partnership are, and following the consummation of the Closing
Transactions will be, treated as assets, liabilities and items of
income, deduction and credit of the Company under the provisions of
the Code and the Partnership is not, nor will it be, treated as a
separate corporation under the provisions of the Code. The Partnership
is, and upon the consummation of the Closing Transactions will be,
treated for federal income tax purposes as a partnership and not as an
association taxable as a corporation.
(gg) The Partnership has maintained and currently maintains,
and upon consummation of the Closing Transactions, the Company, the
Partnership and the Lessee will each maintain, a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
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management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to financial and
corporate books and records is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(hh) Neither the Company, the Partnership nor any other
affiliate of the Company has incurred any liability for a fee,
commission or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement other than as disclosed in the Registration Statement.
(ii) No environmental engineering firm which prepared Phase I
environmental assessment reports of the Properties with respect to the
Hotels as set forth in the Registration Statement was employed for
such purpose on a contingent basis or has any substantial interest in
the Company, the Partnership or the Lessee.
(jj) To the best knowledge of the Company, no general labor
problem exists or is imminent with the employees of any of the Hotels,
the Company, the Partnership or the Lessee. All applicable
notification requirements in connection with the Worker Adjustment and
Retraining Notification Act ("WARN") have been fulfilled in connection
with the transfer of the Hotels to the Partnership.
(kk) The Closing Transactions, including the leasing and
operation of the Properties by the Lessee, have been consented to by
each of the Franchisors, to the extent applicable, and the
consummation of the Closing Transactions will not result in a breach
of any Franchise Agreement. There are no franchise agreements and/or
licenses in connection with the Hotels except for the franchise
agreements and/or licenses with the Franchisors. On the Closing Date,
the Company will deliver a certificate (from the applicable Franchisor
or from the Company as to those Hotels for which no certificate is
provided by the Franchisor) for each of the Hotels to the effect that
the assignment of the Franchise Agreement or the entering into of new
Franchise Agreement in connection with the Closing Transactions has
been approved by the Franchisor, such Hotel is in compliance with all
of the terms of the Franchise Agreement (except where such
non-compliance will not have a material adverse effect on the
operations of the Company or the Hotels) and there are no requirements
or duties on the part of any party and no understandings as to any
required
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improvements or other expenditures for such Hotel in connection with
such consents or the entering into of a new Franchise Agreement except
as set forth in the Prospectus.
(ll) Each certificate signed by any officer of the Company,
the Partnership or the Lessee or any of their affiliates and delivered
to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company, the Partnership or
the Lessee, as the case may be, as to the matters covered thereby.
(mm) The personal property (including, but not limited to,
furniture, equipment, bedding and towels) to be acquired from the
Present Owners or held by the Partnership immediately prior to the
Closing Date as part of the Hotels is adequate to enable the
Partnership and the Lessee to continue to conduct the operations of
the Hotels in the manner in which such operations have normally been
conducted by the Present Owners and the Partnership. The Company has
provided the Representatives with a replacement schedule for such
personal property which the Company reasonably believes is sufficient
to permit the Hotels to continue to be operated in the manner in which
such operations have been conducted by the Present Owners and the
Partnership and which will comply with the requirements of the
Franchise and Management Agreements.
(nn) The Closing Agreements and all deeds, assignments of
leases and other documents delivered in connection therewith are
sufficient to effect the transfer to the Partnership or the Lessee, as
applicable, of all right, title and interest in and to the Hotels and
other assets specified therein upon payment of the consideration
therefor.
(oo) None of the Company, the Partnership, the Lessee nor any
of their affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba in violation of Section
517.075 of the Florida Statutes.
(pp) The Closing Transactions, have been consented to by
Nomura Asset Capital Corporation, as lender under the Term Loan and Line of
Credit (each as described in the Prospectus), to the extent required under the
applicable loan documents. The Company is not and will not upon consummation of
the Closing Transactions be in default of its obligations, covenants and
agreements contained in the Term Loan and/or the Line of Credit.
SECTION 3. Representations and Warranties of the
Underwriters. The Representatives, on behalf of the several Underwriters,
represent and warrant to the Company and the Partnership that the information
set forth (i) on the cover page
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of the Prospectus with respect to price, underwriting discounts and commissions
and terms of offering and (ii) under "Underwriting" in the Prospectus was
furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and the
Prospectus and is correct in all material respects. The Representatives
represent and warrant that they have been authorized by each of the other
Underwriters as the Representatives to enter into this Agreement on its behalf
and to act for it in the manner herein provided.
SECTION 4. Purchase, Sale and Delivery of Common Shares. On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriters the Firm Common Shares. The Underwriters
agree, severally and not jointly, to purchase from the Company the number of
Firm Common Shares described below. The purchase price per share to be paid by
the several Underwriters to the Company shall be $_______ per share.
Delivery of certificates for the Firm Common Shares to be
purchased by the Underwriters and payment therefor shall be made at such place
as set forth below at such time and date, not later than the third (or, if the
Firm Common Shares are priced, as contemplated by Rule 15c6-1(c) of the
Securities Exchange Act of 1934, after 4:30 P.M. Washington, D.C. Time, the
fourth) full business day following the first date that any of the Common
Shares are released by you for sale to the public, as you shall designate by at
least 48 hours' prior notice to the Company (or at such other time and date,
not later than one week after such third full business day as may be agreed
upon by the Company and the Representatives) (the "First Closing Date");
provided, however, that if the Prospectus is at any time prior to the First
Closing Date recirculated to the public, the First Closing Date shall occur
upon the later of the third or fourth, as the case may be, full business day
following the first date that any of the Common Shares are released by you for
sale to the public or the date that is 48 hours after the date that the
Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be
made by or on behalf of the Company to you, for the respective accounts of the
Underwriters against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer or certified or
official bank checks payable in same day funds to the order of a title company
designated by the Company to facilitate payment by the Company for the
acquisition of the Acquisition Hotels. The certificates for the Firm Common
Shares shall be registered in such names and denominations as you shall have
requested in writing to the Company or the Company's transfer agent at least
two full business days prior to the First Closing Date, and shall be made
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available for checking and packaging on the business day preceding the First
Closing Date at a location in New York, New York or such other location, as may
be designated by you. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters.
In addition, on the basis of the representations, warranties
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, the Optional Common Shares at the purchase
price per share to be paid for the Firm Common Shares, for use solely in
covering any over-allotments made by you for the account of the Underwriters in
the sale and distribution of the Firm Common Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the first date that any of the Common Shares are released by you for sale
to the public, upon notice by you to the Company setting forth the aggregate
number of Optional Common Shares as to which the Underwriters are exercising
the option, the names and denominations in which the certificates for such
shares are to be registered and the time and place at which such certificates
will be delivered. Such time of delivery (which may not be earlier than the
First Closing Date), being herein referred to as the "Second Closing Date,"
shall be determined by you, but if at any time other than the First Closing
Date shall not be earlier than three nor later than five full business days
after delivery of such notice of exercise. The number of Optional Common Shares
to be purchased by each Underwriter shall be determined by multiplying the
number of Optional Common Shares to be sold by the Company pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Common Shares to be purchased by such Underwriter as set forth opposite its
name in Schedule A and the denominator of which is 8,600,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New York, New York or such other location, as may
be designated by you. Payment for the Optional Common Shares shall be made
directly to the Company, or such other party as designated by the Company, by
wire transfer of same-day funds and delivery of the Optional Common Shares
shall be the same as for the Firm Common Shares purchased from the Company as
specified in the two preceding paragraphs. At any time before lapse of the
option, you may cancel such option by giving written notice of such
cancellation to the Company. If the option is cancelled or expires unexercised
in whole or in part, the Company will deregister under the Act the number of
Common Shares as to which the option has not been exercised.
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You have advised the Company that each Underwriter has
authorized you to accept delivery of its Common Shares, to make payment and to
issue a receipt therefor. You, individually and not as the Representatives of
the Underwriters, may (but shall not be obligated to) make payment for any
Common Shares to be purchased by any Underwriter whose funds shall not have
been received by you by the First Closing Date or the Second Closing Date, as
the case may be, for the account of such Underwriter, but any such payment
shall not relieve such Underwriter from any of its obligations under this
Agreement.
Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the Common
Shares as soon after the effective date of the Registration Statement as in the
judgment of the Representatives is advisable and at the public offering price
set forth on the cover page of and on the terms set forth in the Prospectus.
SECTION 5. Covenants of the Company and the
Partnership. The Company and the Partnership covenant and agree
that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective. If the Registration Statement has
become or becomes effective pursuant to Rule 430A of the Rules and
Regulations, or the filing of the Prospectus is otherwise required
under Rule 424(b) of the Rules and Regulations, the Company will file
the Prospectus, properly completed, pursuant to the applicable
paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of
such timely filing. The Company will promptly advise you in writing
(i) of the receipt of any comments of the Commission, (ii) of any
request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective),
any Preliminary Prospectus or the Prospectus or for additional
information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the Commission
shall enter any such stop order at any time, the Company will use its
best efforts to obtain the lifting of such order at the earliest
possible moment. The Company will not file any amendment or supplement
to the Registration Statement (either before or after it becomes
effective), any Preliminary Prospectus or the Prospectus of which you
have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object
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or which is not in compliance with the Act and the Rules and
Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue
the distribution of the Common Shares and will use its best efforts to
cause the same to become effective as promptly as possible. The
Company will fully and completely comply with the provisions of Rule
430A of the Rules and Regulations with respect to information omitted
from the Registration Statement in reliance upon such Rule.
(c) If at any time within the applicable period referred to
in Section 10(a)(3) of the Act or Rule 174 of the Rules and
Regulations during which a prospectus relating to the Common Shares is
required to be delivered any event occurs, as a result of which the
Prospectus, including any amendments or supplements, would include an
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 not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements, to comply with
the Act or the Rules and Regulations, the Company will promptly advise
you thereof and will promptly prepare and file with the Commission, at
its own expense, an amendment or supplement which will correct such
statement or omission or an amendment or supplement which will effect
such compliance and will use its best efforts to cause the same to
become effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after the applicable time period, the
Company upon request, but at the expense of such Underwriter, will
promptly prepare such amendment or amendments to the Registration
Statement and such Prospectus or Prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the Act
and Rule 174 of the Rules and Regulations, as applicable.
(d) As soon as practicable, but not later than 45 days (or 90
days if such quarter is the fiscal year end) after the end of the
first quarter ending after one year following the effective date of
the Registration Statement (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its
security holders an earnings statement (which need not be audited)
covering a period of 12 consecutive months beginning after the
effective date of the Registration Statement which will satisfy the
provisions of the last paragraph of Section 11(a) of the Act.
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(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the applicable period referred
to in Section 10(a)(3) of the Act or Rule 174 of the Rules and
Regulations, will furnish to you or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and
all amendments and supplements to any such documents in each case as
soon as available and in such quantities as you may reasonably
request, for the purposes contemplated by the Act and the Rules and
Regulations.
(f) The Company shall cooperate with you and your counsel in
order to qualify or register the Common Shares for sale under (or
obtain exemptions from the application of) the Blue Sky and Canadian
securities laws of such jurisdictions as you designate, will comply
with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the
distribution of the Common Shares; provided, however, that neither the
Company nor the Partnership shall be required to qualify as a foreign
real estate investment trust, corporation or partnership, as
applicable, or to file a general consent to service of process in any
such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign real estate investment
trust, corporation or partnership. The Company will advise you
promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Common Shares for offering; sale
or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of
any order suspending such qualification, registration or exemption,
the Company, with your cooperation, will use its best efforts to
obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request of the
Representatives, to each of the other Underwriters: (i) as soon as
available after the end of each fiscal year and mailing to the
shareholders, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year
and statements of income, shareholders' equity and cash flows for the
year then ended and the opinion thereon of the Company's independent
public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any
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report or communication of the Company mailed generally to holders of
its Common Shares.
(h) During the period of 90 days after the first date that
any of the Common Shares are released by you for sale to the public,
without the prior written consent of Xxxxxxxxxx Securities (which
consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities), the Company and Messrs. Xxxxxx and Xxxx will not, other
than pursuant to the Company's share incentive plans, dividend
reinvestment plan, pursuant to redemptions in accordance with the
Partnership Agreement or in connection with the acquisition of real
estate or hotel properties or in connection with a merger,
consolidation or similar transaction issue, offer, sell, grant options
to purchase or otherwise dispose of any of the Company's equity
securities or any other securities convertible into or exchangeable
with its Shares of Beneficial Interest or other equity security.
(i) The Company and the Partnership will apply the net
proceeds of the sale of the Common Shares sold by the Company
substantially in accordance with the statements under the caption "Use
of Proceeds" in the Prospectus.
(j) As necessary, the Company will use its reasonable best
efforts to qualify or register its Common Shares for sale in
non-issuer transactions under (or obtain exemptions from the
application of) the Blue Sky laws of the State of California and the
provincial laws of Canada as specified by the Representatives (and
thereby permit market making transactions and secondary trading in the
Company's Common Shares in California and such Canadian provinces as
specified by the Representatives), will comply with such Blue Sky or
Canadian provincial laws and will use its reasonable best efforts to
continue such qualifications, registrations and exemptions in effect
for a period of five years after the date hereof; provided, however,
that neither the Company nor the Partnership shall be required to
qualify as a foreign real estate investment trust, corporation or
partnership, as applicable, or to file a general consent to service of
process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign real estate
investment trust, corporation or partnership.
(k) The Company will use its reasonable best efforts to
continue the listing of the Common Shares on the New York Stock
Exchange and will continue to comply with all of the rules and
regulations of the New York Stock Exchange applicable to the Company
and the trading of the Common Shares.
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(l) The Company will continue to meet the requirements to
qualify as a REIT, effective for the year ending December 31, 1994 and
thereafter.
(m) The Company will maintain a transfer agent for the Common
Shares and, if necessary under the jurisdiction of formation of the
Company, a registrar (which may be the same entity as the transfer
agent).
(n) The Company and the Partnership will not permit the
redemption of any of the (i) Units issued to Marriott, or (ii)
Preferred Units issued to the XxXxxx Group, into Shares of Beneficial
Interest prior to one year and two years, respectively, after the
issuance of such Units.
(o) The Company and the Partnership in good faith will
enforce the terms of any agreements with the Lessee, the Present
Owners or any parties affiliated with the Lessee, including, without
limitation, the Share Purchase Agreement dated as of the First Closing
Date by and among Xxxxxxx X.
Xxxxxx, Xxxxxxxx X. Xxxx and the Company.
(p) The Partnership will, per quarter on a cumulative basis,
make available for periodic replacement and refurbishment of
furniture, fixtures and equipment at each of the Hotels an amount
equal to 4% of room revenues (as defined in the Percentage Leases).
You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company or the Partnership, as applicable, of
any one or more of the foregoing covenants or extend the time for their
performance.
SECTION 6. Payment of Expenses. Whether or not the
transactions contemplated hereunder are consummated or this Agreement becomes
effective or is terminated, the Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby,
including without limiting the generality of the foregoing, (i) all expenses
incident to the issuance and delivery of the Common Shares (including all
printing and engraving costs), (ii) all fees and expenses of the registrar and
transfer agent of the Common Shares, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to the Underwriters, (iv) all fees and expenses of the Company's counsel and
the Company's independent accountants, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein and the Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with
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qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the Blue Sky laws or the provincial securities laws of Canada, (vii) the filing
fee of the NASD and the related legal fees in connection with such filing and
(viii) all other fees, costs and expenses referred to in Item 30 of the
Registration Statement. Except as provided in this Section 6, Section 8 and
Section 10 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification, registration or exemption under the Blue Sky and Canadian
provincial securities laws and the Blue Sky memorandum and the legal fees in
connection with clearance of the offering with the NASD referred to above which
fees shall be paid on the First Closing Date or the Second Closing Date, as
applicable).
SECTION 7. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Partnership herein set forth as
of the date hereof and as of the First Closing Date or the Second Closing Date,
as the case may be, to the accuracy of the statements of the Company's officers
and the Partnership's officers made pursuant to the provisions hereof, to the
performance by each of the Company and the Partnership of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 5:00 P.M. (or, in the case of a registration statement
filed pursuant to Rule 462(b) of the Rules and Regulations relating to
the Common Shares, not later than 10:00 P.M.) Miami, Florida time, on
the date of this Agreement, or at such later time as shall have been
consented to by you; if the filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b) of the Rules
and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to such Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have been instituted or
shall be pending or, to the knowledge of the Company or you, shall be
contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
(b) There shall have been furnished to you, as
Representatives of the Underwriters, on each Closing Date,
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in form and substance satisfactory to you, except as
otherwise expressly provided below:
(i) An opinion of Hunton & Xxxxxxxx, counsel for the
Company, the Partnership and the Lessee, or Xxxxxxx Xxxxx
Xxxxxxx & Ingersoll, special Maryland counsel to the Company,
addressed to the Underwriters and dated the First Closing
Date, or the Second Closing Date, as the case may be, to the
effect that:
(1) The Company is a real estate investment
trust with transferable shares of beneficial
interest (except as transferability may be
restricted in the Declaration of Trust of the
Company), duly formed and existing under and by
virtue of the laws of the State of Maryland, is in
good standing with the State Department of
Assessments and Taxation of Maryland, and has the
requisite trust power to own its properties and
conduct its business substantially as described in
the Registration Statement; and, to such counsel's
knowledge, other than the entities listed on
Schedules 1 and 2 attached hereto, the Company does
not own or control, directly or indirectly, any
corporation, association, partnership or other
entity;
(2) Each of the General Partners has been
duly incorporated and is validly existing as a
corporation in good standing under the laws of the
Commonwealth of Virginia and has the requisite
corporate power and authority to own its properties
and conduct its business as described in the
Registration Statement;
(3) Each Lessee has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the Commonwealth of
Virginia, and is duly qualified to do business as a
foreign corporation and is in good standing in the
each of the states in which it leases real property
from the Partnership and has the requisite corporate
power and authority to own its properties and
conduct its business as described in the
Registration Statement;
(4) The Partnership has been duly formed
and is validly existing as a limited partnership
under the laws of the Commonwealth of Virginia, is
duly qualified to do business as a foreign limited
partnership and is in good standing in each of the
states in which it owns real property, has the
requisite partnership power and authority to own
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and lease its properties and conduct its business as
currently conducted as described in the Prospectus.
The General Partners are the sole general partners
of the Partnership and the Subsidiary Partnerships
and, upon the consummation of the Closing
Transactions, the First General Partner will be the
holder of 19,428,998 Units (assuming no Optional
Common Shares are sold), or approximately 79.4% of
the Units in the Partnership which Units, to such
counsel's knowledge (and except for the pledge of
Units in connection with the Line of Credit and the
Term Loan) shall be held free and clear of all
liens, encumbrances, equities, claims, security
interests, voting trusts or charges;
(5) All of the issued and outstanding
Shares of Beneficial Interest have been duly
authorized and validly issued; all outstanding
Shares of Beneficial Interest were duly registered
under the Act or were issued in transactions exempt
from the registration requirements of the Act and
were duly registered or subject to an available
exemption from the registration requirements of the
applicable state securities or blue sky laws, are
fully paid and nonassessable, were not issued in
violation of or subject to any statutory, or to such
counsel's knowledge, other preemptive rights or
other rights to subscribe for or purchase any
securities and conformed in all material respects to
the description thereof incorporated by reference in
the Registration Statement; provided however that
such counsel need not express any opinion with
respect to the registration or availability of an
exemption under applicable state securities or blue
sky laws for Common Shares issued pursuant to an
underwritten public offering;
(6) The certificates representing the
Common Shares to be delivered hereunder are in due
and proper form under Maryland law, and when duly
countersigned by the Company's transfer agent and
registrar, and delivered to you or upon your order
against payment of the agreed consideration therefor
in accordance with the provisions of this Agreement,
the Common Shares represented thereby will be duly
authorized and validly issued, fully paid and
nonassessable, will not have been issued in
violation of or subject to any statutory, or to such
counsel's knowledge, other preemptive rights or
other rights to subscribe for or purchase
securities;
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(7) Except as disclosed in or specifically
contemplated by the Prospectus, to such counsel's
knowledge, there are no outstanding options,
warrants or other rights calling for the issuance
of, and no commitments, plans or arrangements to
issue, any Shares of Beneficial Interest of the
Company or any security convertible into or
exchangeable for shares of beneficial interest of
the Company;
(8) The issued and outstanding Units are as
set forth in the Prospectus; all necessary
partnership proceedings have been taken in order to
validly authorize the Units which will be issued in
connection with the Closing Transactions; when
issued and delivered against payment therefor as
provided in the Partnership Agreement, the Purchase
and Sale Agreement with Marriott and the Purchase
and Sale Agreements with the XxXxxx Group, all
outstanding Units (including those issued in
connection with the Closing Transactions) will be
duly and validly issued, will be fully paid and
nonassessable and the issuance of such Units will be
exempt from the registration requirements of the Act
and applicable state securities laws; and, to such
counsel's knowledge other than as described in the
Prospectus such Units will not be issued in
violation of or subject to any statutory, or to such
counsel's knowledge, other preemptive rights or
other rights to subscribe for or purchase any
securities; and conform in all material respects to
the description thereof contained in the
Registration Statement;
(9) The issued and outstanding Preferred
Units are as set forth in the Prospectus; all
necessary partnership proceedings have been taken in
order to validly authorize the Preferred Units which
will be issued in connection with the Closing
Transactions; when issued and delivered against
payment therefor as provided in the Partnership
Agreement and the Purchase and Sale Agreements with
the XxXxxx Group, all outstanding Preferred Units
(including those issued in connection with the
Closing Transactions) will be duly and validly
issued, will be fully paid and nonassessable and the
issuance of such Preferred Units will be exempt from
the registration requirements of the Act and
applicable state securities laws; and, to such
counsel's knowledge other than as described in the
Prospectus such Preferred Units will not be issued
in violation of
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or subject to any statutory, or to such counsel's
knowledge, other preemptive rights or other rights
to subscribe for or purchase any securities; and
conform in all material respects to the description
thereof contained in the Registration Statement;
(10)(a) Counsel to the Company has been
verbally advised by the Commission staff that the
Registration Statement has become effective under
the Act, and, to such counsel's knowledge, no stop
order suspending the effectiveness of the
Registration Statement or preventing the use of the
Prospectus has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated by the Commission and any required
filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules and Regulations
has been made in the manner and within the time
period required by such Rule 424(b);
(b) The Registration Statement, the
Prospectus and any amendment or supplement thereto
(except for the financial statements and schedules
and other financial and statistical information
included therein as to which such counsel need
express no opinion) comply as to form in all
material respects with the requirements of the Act
and the Rules and Regulations;
(c) To such counsel's knowledge, there are
no franchise agreements, leases, contracts,
agreements or documents of a character required to
be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the
Registration Statement which are not disclosed or
filed, as required; and
(d) To such counsel's knowledge, there are
no legal or governmental actions, suits or
proceedings pending (in which service or notice of
process has been received by the Company) or
threatened against the Company which are required to
be described in the Prospectus which are not
described as required;
(11) The Company has the trust power and
authority to enter into this Agreement, to sell and
deliver the Common Shares to be sold by it to the
several Underwriters and to consummate the other
transactions contemplated herein; the Partnership
has the partnership power and
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authority to enter into this Agreement and to
consummate the transactions contemplated herein;
this Agreement has been duly and validly authorized
by all necessary trust and partnership action by
each of the Company and the Partnership,
respectively, has been duly and validly executed and
delivered by and on behalf of each of the Company
and the Partnership, and, assuming due
authorization, execution and delivery by the
Underwriters, constitutes a valid and binding
agreement of each of the Company and the Partnership
enforceable against the Company and the Partnership
in accordance with its terms, except as may be
limited or otherwise affected by general equitable
principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of
creditors generally and by principles of equity,
whether considered at law or in equity, and except
as to those provisions relating to indemnity or
contribution for liabilities arising under the Act
as to which no opinion need be expressed; and no
approval, authorization, order, consent,
registration, filing, qualification, license or
permit of or with any court, regulatory,
administrative or other governmental body is
required for the execution and delivery of this
Agreement by each of the Company and the Partnership
or the consummation of the transactions contemplated
by this Agreement, except such as have been obtained
and are in full force and effect under the Act and
such as may be required under applicable Blue Sky or
Canadian securities laws in connection with the
purchase and distribution of the Common Shares by
the Underwriters and the clearance of such offering
with the NASD;
(12) The execution and performance of this
Agreement and the consummation of the transactions
herein contemplated by the Company and the
Partnership will not conflict with, result in the
material breach of, or constitute, either by itself
or upon notice or the passage of time or both, a
material default under, any material agreement,
mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument known to such
counsel to which any of the Company, the Partnership
or the Lessee is a party or by which the Company,
the Partnership or the Lessee or any of their
property may be bound or affected which is material
to the Company, the Partnership or any Hotel;
violate any of the provisions of the declaration of
trust,
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partnership certificate, partnership agreement,
certificate of incorporation or bylaws, or other
organizational documents, as applicable, of the
Company, the Partnership or the Lessee; or, to such
counsel's knowledge, violate any statute, judgment,
decree, order, rule or regulation of any court or
governmental body having jurisdiction over the
Company, the Partnership or the Lessee or any of
their property known to such counsel, except such as
will not materially adversely affect the Company or
the Partnership;
(13) To such counsel's knowledge, none of
the Company, the Partnership nor the Lessee is in
violation of its respective declaration of trust,
partnership certificate, partnership agreement,
certificate of incorporation or bylaws, or other
organizational documents, as applicable, or is in
breach of or default with respect to any provision
of any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other
instrument known to such counsel to which the
Company, the Partnership or the Lessee is a party or
by which they or any of their properties may be
bound or affected, except where such default would
not materially adversely affect the Company, the
Partnership or the Lessee, as the case may be; to
such counsel's knowledge, all applicable WARN
notification requirements have been fulfilled in
connection with the acquisition of any of the Hotels
by the Partnership;
(14) To such counsel's knowledge, no
holders of securities of the Company or the
Partnership have rights to register Shares of
Beneficial Interest, Units, Preferred Units or other
securities because of the filing of the Registration
Statement by the Company or the offering;
(15) No transfer taxes are required to be
paid to the states of Maryland and New York in
connection with the sale and delivery of the Common
Shares to the Underwriters hereunder;
(16) Commencing with the Company's short
taxable year ending December 31, 1994, the Company
will be organized in conformity with the
requirements for qualification as a REIT pursuant to
Sections 856 through 860 of the Code and the
Company's proposed method of operation as described
in the "Federal Income Tax Considerations" of the
Company's Prospectus will
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enable it to meet the requirements for
qualification and taxation as a REIT under the
Code. The Partnership will be treated for federal
income tax purposes as a partnership and not as an
association taxable as a corporation;
(17) Neither the Company nor the
Partnership (after giving effect solely to the
Closing Transactions and the sale of the Common
Shares and conveyance of the Units) will be an
"investment company" within the meaning of the 1940
Act;
(18) Each of the Closing Agreements has
been duly authorized, executed and delivered by the
Company, the Partnership or the Lessee, as
applicable, and constitutes a valid and binding
agreement on such parties, enforceable in accordance
with its terms, except as may be limited or
otherwise affected by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium
or other laws affecting the rights of creditors
generally and by principles of equity, whether
considered at law or in equity, and except with
respect to those provisions relating to indemnities
or contributions for liabilities under the Act, as
to which no opinion need be expressed; and to such
counsel's knowledge none of the Company, the
Partnership nor the Lessee is, or upon the
consummation of the Closing Transactions will be, in
breach of or default under any of such agreements;
(19) The Common Shares have been duly
authorized for listing by the New York Stock
Exchange upon official notice of issuance and to
such counsel's knowledge the Company is not in
breach of any of the rules and regulations of the
New York Stock Exchange applicable to the Company;
and
(20) The information in the Prospectus set
forth under the captions "Risk Factors -- Tax
Risks," "-- Limitation on Acquisition and Change in
Control, " -- Ownership Limitation," "Price Range of
Common Shares and Distributions" (as it relates to
distributions only), "Management -- 1994 Share
Incentive Plan, "Shares Available for Future Sale"
and "Federal Income Tax Considerations" to the
extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and
is correct in all material respects.
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In rendering such opinion, such counsel may rely as
to matters of local law, on opinions of local counsel, and as
to matters of fact, on certificates of officers of the
Company, the Partnership or the Lessee, as applicable, and
certificates and verbal advice of governmental officials, in
which case their opinion is to state that they are so doing
and that the Underwriters are justified in relying on such
opinions or certificates and copies of said opinions or
certificates are to be attached to the opinion. Such counsel
shall also include a statement to the effect that nothing has
come to such counsel's attention that would lead such counsel
to believe that either at the effective date of the
Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains any untrue statement of a
material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading (other than with respect to the financial
statements, the notes thereto and the related financial
schedules and other financial or statistical data as to which
such counsel need express no opinion).
(ii) Such opinion or opinions of O'Melveny & Xxxxx
LLP, counsel for the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, with
respect to the formation of the Company, the execution and
delivery of the Agreement, the validity of the Common Shares,
certain legal matters related to the Registration Statement
and the Prospectus and other related matters as you may
reasonably require, and the Company shall have furnished to
such counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request for
the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company
and governmental officials.
(iii) A certificate of each of the Company, executed by
the Chairman of the Board and President of the Company, and
the Partnership executed by an authorized officer of its
general partner, dated the First Closing Date or the Second
Closing Date, as the case may be, to the effect that:
(1) The representations and warranties of
the Company and the Partnership set forth in Section
2 of this Agreement are true and correct as of the
date of this Agreement and as of the
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First Closing Date or the Second Closing Date, as
the case may be, and the Company and the Partnership
each has complied with all the agreements and
satisfied all of the conditions on its part to be
performed or satisfied on or prior to such Closing
Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus
or any Preliminary Prospectus filed as a part of the
Registration Statement or any amendment thereto; no
stop order suspending the effectiveness of the
Registration Statement has been issued; and to the
best of the knowledge of the respective signers, no
proceedings for that purpose have been instituted or
are pending or contemplated under the Act;
(3) Each of the respective signers of each
certificate has carefully examined the Registration
Statement and the Prospectus; in his opinion and to
the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or
supplements thereto contain all statements required
to be stated therein; and neither the Registration
Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of
a material fact or omits to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading;
(4) Since the initial date on which the
Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment to
the Registration Statement or in a supplement to or
amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(5) As to the Company's certificate only,
since the respective dates as of which information
is given in the Registration Statement and the
Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been
any material adverse change or a development
involving a material adverse change in the condition
(financial or otherwise), business, properties,
results of operations, management or prospects of
the Company or, to the best of such officer's
knowledge, any of the Hotels; and no legal or
governmental action, suit or proceeding is pending
or threatened against the Company, or,
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to the best of such officer's knowledge, any of the
Hotels which is material to the Company or any of
the Hotels, as applicable, whether or not arising
from transactions in the ordinary course of
business, or which may adversely affect the
transactions contemplated by this Agreement; since
such dates and except as so disclosed, the Company
has not entered into any verbal or written agreement
or other transaction which is not in the ordinary
course of business or which could result in a
material reduction in the future earnings of the
Company or the Partnership or incurred any material
liability or obligation, direct, contingent or
indirect, made any change in its beneficial
interests, made any material adverse change in its
short-term debt or funded debt or repurchased or
otherwise acquired any of the Company's Shares of
Beneficial Interest or the Partnership's interests;
and the Company, has not declared or paid any
dividend, or made any other distribution, upon its
outstanding shares of beneficial interests payable
to shareholders of record on a date prior to the
First Closing Date or Second Closing Date except as
set forth in the Prospectus;
(6) As to the Partnership's certificate
only, since the respective dates as of which
information is given in the Registration Statement
and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been
any material adverse change or a development
involving a material adverse change in the condition
(financial or otherwise), business, properties,
results of operations, management or prospects of
the Partnership, or to the best of such officer's
knowledge, any of the Hotels; and no legal or
governmental action, suit or proceeding is pending
or threatened against the Partnership or, to the
best of such officer's knowledge, any of the Hotels,
which is material to the Partnership or any of the
Hotels, as applicable, whether or not arising from
transactions in the ordinary course of business, or
which may adversely affect the transactions
contemplated by this Agreement; since such dates and
except as so disclosed, the Partnership has not
entered into any verbal or written agreement or
other transaction which is not in the ordinary
course of business or which could result in a
material reduction in the future earnings of the
Company or the Partnership or incurred any material
liability or obligation, direct,
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contingent or indirect, made any change in its
partnership interests, made any material adverse
change in its short-term debt or funded debt or
repurchased or otherwise acquired any of the
Partnership's interests; and the Partnership has not
declared or paid any dividend, or made any other
distribution, upon its outstanding partnership
interests payable to partners of record on a date
prior to the First Closing Date or Second Closing
Date, except as set forth in the Prospectus;
(7) Since the respective dates as of which
information is given in the Registration Statement
and the Prospectus and except as disclosed in or
contemplated by the Prospectus, none of the Hotels
(or any other hotel property owned by the
Partnership) has sustained a material loss or damage
by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured); and
(8) Each of the Company, the Partnership
and each of the Hotels owned by the Partnership upon
consummation of the Closing Transactions (i) will be
in compliance with any and all applicable
Environmental Laws, (ii) will have received all
permits, licenses or other approvals required under
applicable Environmental Laws to conduct its
operations and (iii) will be in compliance with all
terms and conditions of any such permit, license or
approval except where such noncompliance with
Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to
comply with the terms and conditions of such
permits, licenses or approvals are otherwise
disclosed in the Prospectus or would not, singly or
in the aggregate, have a material adverse effect on
the Company, the Partnership or any Hotel.
(iv) On the date that this Agreement is executed and also
on the First Closing Date and the Second Closing Date a
letter addressed to you, as Representatives of the
Underwriters, from Coopers & Xxxxxxx or KPMG, as appropriate,
each independent accountants, the first one to be dated the
date of the Preliminary Prospectus, the second one to be
dated the First Closing Date and the third one (in the event
of a Second Closing) to be dated the Second Closing Date, in
form and substance satisfactory to the Representatives, to
the effect that:
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(1) Coopers & Xxxxxxx or KPMG, as
appropriate, are independent certified public
accountants with respect to the Company and the
Partnership within the meaning of the Act and the
Rules and Regulations;
(2) It is their opinion that the financial
statements, historical summaries and any
supplementary financial information and supporting
schedule included or incorporated by reference in
the Registration Statement and the Prospectus
examined by them comply as to form in all material
respects with the applicable accounting requirements
of the Act and the Rules and Regulations;
(3) The financial statements of each of the
entities and properties included in the Prospectus
for the periods referenced therein to the extent
applicable, were reviewed by them in accordance with
the standards established by the American Institute
of Certified Public Accountants and based upon their
review they are not aware of any material
modifications that should be made to such financial
statements or historical summaries for them to be in
conformity with generally accepted accounting
principles and such financial statements comply as
to form in all material respects with the applicable
requirements of the Act and the Rules and
Regulations;
(4) Based upon procedures set forth in
detail in such letter, including a reading of the
latest available interim financial statements of the
Company and inquiries of officials of the Company
responsible for financial and accounting matters,
nothing has come to their attention which causes
them to believe that:
(A) the unaudited financial information
with respect to the results of operations for and at
the end of each of the five years (or such lesser
period, if applicable) in the period ended December
31, 1995 and any subsequent quarters included in the
Registration Statement under the captions
"Prospectus Summary" and "Selected Financial
Information" do not comply as to form in all
material respects with the applicable accounting
requirements of the Act and the Rules and
Regulations or are not presented in conformity with
generally accepted accounting principles applied on
a basis substantially consistent with that of the
audited financial statements included
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in the Registration Statement, or do not agree with
the corresponding amounts in the audited financial
statements for each of the years then ended, or that
with respect to the unaudited pro forma financial
statements, such financial statements do not comply
as to form in all material respects with the
applicable accounting requirements of the Act and
the Rules and Regulations and the pro forma
adjustments have not been properly applied to the
historical amounts in the compilation of such
statements, or
(B) at a specified date not more than five
days prior to the date of this Agreement, (i) there
has been any change in the assets or shareholders'
equity, as compared with the amounts shown in the
June 30, 1996 balance sheet of the Company included
in the Registration Statement, (ii) there has been
any increase in indebtedness or other liabilities as
compared with the amounts shown in the June 30, 1996
historical or pro forma balance sheets related to
the Hotels (other than accrued interest) or during
the period June 30, 1996 to a specified date not
more than five days prior to the date of this
Agreement, there were any decreases, as compared
with the corresponding period in the preceding year,
in combined revenues or net income of the Hotels,
except in all instances for changes, increases or
decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur or
(iii) there has been any decrease since June 30,
1996 in room revenues or total revenues from the
Hotels which would adversely affect the Percentage
Lease revenue of the Company or the Partnership, in
each case as compared with the corresponding period
of the preceding year, except in each case for
decreases which the Prospectus discloses have
occurred or may occur or which are described in such
letter; and
(5) In addition to the examination referred
to in their opinions and the procedures referred to
above, they have carried out certain specified
procedures, not constituting an audit, in accordance
with generally accepted auditing standards, with
respect to certain amounts, percentages and
financial information which are included in the
Registration Statement and Prospectus and which were
specified by you, and have found such amounts,
percentages and financial information to be in
agreement with, or derived from, the relevant
accounting, financial and other
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records of the Company, the Partnership and the
Present Owners.
(v) On or before the First Closing Date, a copy of
the segmentation study of Coopers & Xxxxxxx referred to in
Section 2(ff).
(vi) On or before the First Closing Date, lock-up
agreements from Messrs. Xxxxxx and Shaw and the Company to
the effect that such officers and the Company, subject to
limited exceptions, will not sell any of the Shares held by
them for a period of 90 days following the First Closing
Date. In addition, such agreements shall also provide that
Messrs. Xxxxxx and Shaw will not sell any shares purchased by
them from the net income of the Lessee in excess of $500,000
per year (subject to certain distributions) for a period of
one year from the date of purchase.
(c) The Closing Transactions shall have been consummated or
shall occur simultaneously with the closing of the purchase and sale
of the Firm Common Shares or within five business days thereafter.
(d) The Firm Common Shares and the Optional Common Shares
shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance and the Company shall not be in
default of any of the rules and regulations of the New York Stock
Exchange, and the NASD, upon review of the terms of the public
offering, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(e) The Company shall have furnished to you such further
certificates and documents as you shall have reasonably requested.
(f) On or before the First Closing Date, the Company or the
Partnership, as applicable, shall have made available to you or your
counsel with respect to each Hotel:
(i) A copy of the deed therefor, naming the
Partnership as the grantee thereunder;
(ii) A standard ALTA Owner's Title Insurance Policy
(or a commitment to issue such a policy) naming the
Partnership as named insured and insuring (or committing to
insure) that the Partnership thereof owns fee title to the
real property and fixtures comprising such Hotel in an amount
not less than the amount specified in Section 2(y), which
policy (or commitment) shall be issued by a title company or
companies (the "Title Company") reasonably acceptable to the
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Underwriters, and contain as exceptions to title only the
exceptions described in the Prospectus, the Assumed
Indebtedness and such exceptions which do not materially
adversely affect the current or potential use to be made of
the Hotel by the Partnership or the Lessee or the market
value of the Property to the Partnership (the "Permitted
Exceptions");
(iii) An ALTA survey of each Hotel in form
reasonably satisfactory to you;
(iv) Policies or certificates of insurance relating
to such Hotel evidencing coverages and in amounts customarily
obtained by owners of similar properties;
(v) UCC, judgment and tax lien searches confirming
that the personal property comprising a part of the Hotel is
subject to no Liens other than Permitted Exceptions;
(vi) Such affidavits, certificates and instruments
of indemnification as shall reasonably be required to induce
the Title Company to issue the policy (or commitment)
contemplated in item (ii) above;
(vii) Checks payable to the appropriate public
officials in payment of all recording costs and transfer
taxes (or checks or wire transfers to the Title Company in
respect of such amounts) due in respect of the recording of
any instruments to be recorded in connection with the Closing
Transactions, together with a check or wire transfer for the
Title Company in payment of the Title Company's premium,
search and examination charges, survey costs and any other
amounts due in connection with the issuance of its policy (or
commitment); provided that such payment may be made out of
the proceeds of the offering of the Firm Common Shares;
(viii) An engineering (structural) report from an
engineer or engineers and in a form reasonably
satisfactory to you;
(ix) All documentation necessary to effect the
transfer of all personal property in connection with such
Property to the Partnership, together with checks payable to
the appropriate public officials in payment of all recording
costs and transfer taxes (including sales taxes) due in
respect of the transfer of such personal property; provided
that, such payment may be made out of the proceeds of the
offering of the Firm Common Shares; and
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(x) A letter dated not earlier than 10 days prior to
the First Closing Date from the holder of the Assumed
Indebtedness indicating that the mortgagor or grantor under
such Assumed Indebtedness is not then in default and
indicating the principal amount required to satisfy all
amounts then owing under the Assumed Indebtedness, together
with all documentation and consents necessary to permit the
assumption of the Assumed Indebtedness by the Partnership.
Any documents or other matters set forth in this Section
7(f) which are approved by you prior to the First Closing Date shall
be acceptable to you subject to any changes which you may reasonably
require based on factual information of which you become aware after
your approval of any such documents or matters.
(g) There shall have been delivered to you the Firm Common
Shares and, if any Optional Common Shares are purchased, the Optional
Common Shares in the manner required pursuant to Section 4 hereof.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory to you and to O'Melveny & Xxxxx LLP, counsel for the Underwriters.
The Company shall furnish you with such manually signed or conformed copies of
such opinions, certificates, letters and documents as you request. Any
certificate signed by any officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder
to be satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon written notification by you as
Representatives to the Company without liability on the part of any Underwriter
or the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in
Section 10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to the last paragraph of Section 7, or if the sale
to the Underwriters of the Common Shares at the First Closing is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses that shall have been reasonably incurred by you and
them in connection with the proposed purchase and the sale of the Common
Shares,
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including but not limited to fees and disbursements of counsel relating
directly to the offering contemplated by the Prospectus. Any such termination
shall be without liability of any party to any other party except that the
provisions of this Section 8, Section 6 and Section 10 shall at all times be
effective and shall apply.
SECTION 9. Effectiveness of Registration Statement. You and
the Company will use your and its best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.
SECTION 10. Indemnification. (a) The Company and the
Partnership, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act, the Exchange Act, or other federal,
state or Canadian statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company or the Partnership, as applicable), insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, or arise out of or are based in whole or in part on any inaccuracy
in the representations and warranties of the Company or the Partnership
contained herein or any failure of the Company or the Partnership to perform
its obligations hereunder or under law; and will reimburse each Underwriter and
each such controlling person for any legal and other expenses as such expenses
are reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
neither the Company nor the Partnership will be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with the information furnished to the Company and the
Partnership pursuant to Section 3 hereof. In addition to its other obligations
under this Section 10(a), the Company and the Partnership agree that, as an
interim measure
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during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, or any inaccuracy in the representations and
warranties of the Company or the Partnership herein or failure to perform its
obligations hereunder, all as described in this Section 10(a), they will
reimburse each Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Company's or the Partnership's obligation to reimburse each Underwriter for
such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company or the Partnership, as
applicable, together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to time by Bank of America NT&SA,
San Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
the Company or the Partnership may otherwise have.
(b) Each Underwriter will severally indemnify and hold
harmless the Company, each of its trustees, each of its officers who signed the
Registration Statement, the Partnership and each person, if any, who controls
the Company or the Partnership within the meaning of the Act, against any
losses, claims, damages, liabilities or expenses to which the Company, or any
such trustee, officer, the Partnership, or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with the
information
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furnished to the Company and the Partnership pursuant to Section 3 hereof; and
will reimburse the Company, or any such trustee, officer, the Partnership or
any controlling person of the Company or the Partnership for any legal and
other expense reasonably incurred by the Company, or any such trustee, officer,
the Partnership, any controlling person of the Company or the Partnership in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. In addition to its
other obligations under this Section 10(b), each Underwriter severally agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 10(b) which relates to information furnished to the Company and the
Partnership pursuant to Section 3 hereof, it will reimburse the Company, the
Partnership (and, to the extent applicable, each officer, trustee or
controlling person of the Company or the Partnership) on a quarterly basis for
all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters, obligation to reimburse
the Company or the Partnership (and, to the extent applicable, each officer,
trustee or controlling person of the Company or the Partnership) for such
expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Company or
the Partnership (and, to the extent applicable, each officer, trustee or
controlling person of the Company or the Partnership) shall promptly return it
to the Underwriters together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are not
made within 30 days of a request for reimbursement, shall bear interest at the
Prime Rate from the date of such request. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained in
this Section or to the extent it is not prejudiced as a proximate result of
such failure. In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
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participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available
to the indemnifying party, the indemnified party or parties shall have the
right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties; provided, however, that the indemnifying party shall only be
obligated to pay the reasonable fees and expenses of a single law firm employed
by all of the indemnified parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 10 is
required by its terms, but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under Sections
(a), (b) or (c) of this Section 10 in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Partnership and the Underwriters from
the offering of the Common Shares or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, the Partnership and the
Underwriters in connection with the statements or omissions or inaccuracies in
the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any
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other relevant equitable considerations. The respective relative benefits
received by the Company, the Partnership and the Underwriters shall be deemed
to be in the same proportion, in the case of the Company and the Partnership as
the total price paid to the Company, for the Common Shares sold by the Company
to the Underwriters (net of underwriting commissions, but before deducting
expenses), and in the case of the Underwriters as the underwriting commissions
received by them bears to the total of such amounts paid to the Company and
received by the Underwriters as underwriting commissions. The relative fault of
the Company, the Partnership and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact or the inaccurate or the alleged inaccurate representation and/or
warranty relates to information supplied by the Company, the Partnership or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section (c) of this Section 10, any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section (c) of this Section 10 with respect to notice of commencement of any
action shall apply if a claim for contribution is to be made under this Section
(d); provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section (c) of this
Section 10 for purposes of indemnification. The Company, the Partnership and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 10 were determined solely by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 10 are several in proportion to their
respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 10(a)
or 10(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining
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such amounts, shall be settled by arbitration conducted pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Section 10(a) hereof and
would not resolve the ultimate propriety or enforceability of the obligation to
reimburse expenses which is created by the provisions of such Sections 10(a)
and 10(b) hereof.
SECTION 11. Default of Underwriters. It shall be a condition
to this Agreement and the obligation of the Company to sell and deliver the
Common Shares hereunder, and of each Underwriter to purchase the Common Shares
in the manner as described herein, that, except as hereinafter in this Section
provided, each of the Underwriters shall purchase and pay for all the Common
Shares agreed to be purchased by such Underwriter hereunder upon tender to the
Representatives of all such shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in its or their obligations to purchase
Common Shares hereunder on either the First or Second Closing Date and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase on such Closing Date does not exceed
10% of the total number of Common Shares which the Underwriters are obligated
to purchase on such Closing Date, the non-defaulting Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder,
to purchase the Common Shares which such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Common Shares with respect to which such
default occurs is more than 10% of the total number of Shares of Beneficial
Interest which the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Common Shares by other persons are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company or the Partnership except for
the expenses to be paid by the Company pursuant to Section 6 hereof and except
to the extent provided in Section 10 hereof.
In the event that Common Shares to which a default relates
are to be purchased by the non-defaulting Underwriters or by another party or
parties, the Representatives or the Company shall have the right to postpone
the First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
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49
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 12. Effective Date. This Agreement shall become
effective immediately as to Sections 6, 8, 10, 13 and 14 and, as to all other
provisions, (i) if at the time of execution of this Agreement the Registration
Statement has not become effective, at 8:00 A.M., California time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii) if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 2:00 P.M., California time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by notice
to the Company or by release of any of the Common Shares for sale to the
public. For the purposes of this Section 12, the Common Shares shall be deemed
to have been so released upon the release for publication of any newspaper
advertisement relating to the Common Shares or upon the release by you of
telegrams (i) advising Underwriters that the Common Shares are released for
public offering or (ii) offering the Common Shares for sale to securities
dealers, whichever may occur first.
SECTION 13. Termination. Without limiting the right
to terminate this Agreement pursuant to any other provision
hereof:
(a) This Agreement may be terminated by the Company by notice
to you or by you by notice to the Company at any time prior to the
time this Agreement shall become effective as to all its provisions,
and any such termination shall be without liability on the part of the
Company to any Underwriter (except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and
except to the extent provided in Section 10 hereof) or of any
Underwriter to the Company (except to the extent provided in Section
10 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or
minimum or maximum prices shall have been generally established on the
New York Stock Exchange or on the American Stock Exchange or in the
over the counter market by the NASD, or trading in securities
generally shall have been suspended on either such Exchange or in the
over the counter market by the NASD, or a general banking moratorium
shall have been established by federal,
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50
New York or California authorities; (ii) if an outbreak of major
hostilities or other national or international calamity or any
substantial change in political, financial or economic conditions
shall have occurred or shall have accelerated or escalated to such an
extent, as, in the judgment of the Representatives, to affect
adversely the marketability of the Common Shares; (iii) if any adverse
event shall have occurred or shall exist which makes untrue or
incorrect in any material respect any statement or information
contained in the Registration Statement or Prospectus or which is not
reflected in the Registration Statement or Prospectus but should be
reflected therein in order to make the statements or information
contained therein not misleading in any material respect; or (iv) if
there shall be any action, suit or proceeding pending or threatened,
or there shall have been any development involving particularly the
business or properties or securities of the Company, the Partnership
or the transactions contemplated by this Agreement, which, in the
reasonable judgment of the Representatives, may materially and
adversely affect the Company's or the Partnership's business or
earnings and makes it impracticable or inadvisable to offer or sell
the Common Shares. Any termination pursuant to this Section (b) shall
be without liability on the part of any Underwriter to the Company or
on the part of the Company to any Underwriter (except for expenses to
be paid or reimbursed by the Company pursuant to Sections 6 and 8
hereof and except to the extent provided in Section 10 hereof).
SECTION 14. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Partnership, the Company's and the
Partnership's officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or the
Partnership or any of its or their partners, officers or trustees or any
controlling person, as the case may be, and will survive delivery of and
payment for the Common Shares sold hereunder and any termination of this
Agreement.
SECTION 15. Notices. All communications hereunder shall be in
writing and, if sent to the Representatives shall be mailed, delivered,
telecopied or telegraphed and confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Telecopier: (000) 000-0000, Attention: Xxx Xxxxxxx
III with a copy to O'Melveny & Xxxxx LLP, Embarcadero Center West 000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Telecopier: (000) 000-0000, Attention:
Xxxxx X. Xxxxx; and if sent to the Company or the Partnership shall be mailed,
delivered or telegraphed and confirmed to the Company at 000 Xxxxx Xxxxxxxxx
Xxx, Xxxx Xxxxx, Xxxxxxx 00000, Telecopier: (000) 000-0000
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Attention: Xxxxxxx X. Xxxxxx with a copy to Hunton & Xxxxxxxx, Riverfront
Plaza-East Tower, 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Telecopier: (804)
788-8218, Attention: Xxxx X. Xxxxxx. The Company, the Partnership or you may
change the address for receipt of communications hereunder by giving notice to
the others.
SECTION 16. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 11 hereof, and to the benefit of the officers
and trustees and controlling persons referred to in Section 10, and in each
case their respective successors, personal representatives and assigns, and no
other person will have any right or obligation hereunder. No such assignment
shall relieve any party of its obligations hereunder. The term "successors"
shall not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 17. Underwriters' Representatives. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you,
as Representatives, will be binding upon all of the Underwriters.
SECTION 18. Partial Unenforceability. The invalidity or
unenforceability of any section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph or
provision hereof. If any section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 19. Applicable Law. This Agreement shall be
governed by and construed in accordance with the internal laws (and not the
laws pertaining to conflicts of laws) of the State of California.
SECTION 20. Knowledge. As used in this Agreement (other than
with respect to opinions of counsel), the term knowledge or best knowledge on
the part of an entity shall include the knowledge of such entity's officers and
any other employees with managerial responsibilities and such entity shall only
make such statement after conducting a diligent investigation on the subject
matter thereof.
SECTION 21. General. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in several
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counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Partnership and you.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement among the Company, the Partnership
and the several Underwriters, including you, all in accordance with its terms.
Very truly yours,
INNKEEPERS USA TRUST
By:
-----------------------------
Xxxxxxx X. Xxxxxx, President
INNKEEPERS USA LIMITED PARTNERSHIP
By: INNKEEPERS FINANCIAL
CORPORATION
Its: General Partner
By:
-----------------------------
Xxxxxxx X. Xxxxxx,
President
The foregoing Underwriting Agreement is
hereby confirmed and accepted by us in San
Francisco, California as of the date first
above written.
XXXXXXXXXX SECURITIES BEAR, XXXXXXX & CO.
INC. ALEX. XXXXX & SONS INCORPORATED EVEREN
SECURITIES, INC. XXXXXX XXXXXX & COMPANY,
INC.
Acting as Representatives of the several
Underwriters named in the attached Schedule
A.
By: XXXXXXXXXX SECURITIES
-----------------------------
Managing Director
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SCHEDULE A
Amount of
Securities
to be
Underwriter Purchased
----------- ----------
Xxxxxxxxxx Securities
Bear, Xxxxxxx & Co. Inc.
Alex. Xxxxx & Sons Incorporated
EVEREN Securities, Inc.
Xxxxxx Xxxxxx & Company, Inc.
Total
55
SCHEDULE 1
COMPANY SUBSIDIARIES
56
SCHEDULE 2
SUBSIDIARY PARTNERSHIPS
57
SCHEDULE 3
WHOLLY OWNED SUBSIDIARY GENERAL PARTNERS
