Exhibit 1.1
XXXXXXXX HOSPITALITY TRUST, INC.
(a Virginia corporation)
1,000,000 Shares of Common Stock
($_____ per share)
UNDERWRITING AGREEMENT
March ___, 1998
Xxxxxxxx & Xxxxxxxxx, Incorporated
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned, Xxxxxxxx Hospitality Trust, Inc., a Virginia
corporation (the "Company"), Xxxxxxxx Hospitality REIT Trust, a Maryland real
estate investment trust (the "General Partner"), and Xxxxxxxx Hospitality
Limited Partnership, a Virginia limited partnership (the "Partnership"), hereby
confirm their agreement with you as follows:
1. Introduction. This Agreement sets forth the understandings and
agreements among the Company and you whereby, subject to the terms and
conditions herein contained, the Company will sell to you, as provided in
Section , at a price of $__________ per share, 1,000,000 shares (the "Initial
Shares") of common stock, par value $0.01 (the "Common Stock"), to be issued by
the Company. In addition, as provided in Section , the Company will give you the
option to purchase up to an additional 150,000 shares of Common Stock (the
"Option Shares", and together with the Initial Shares, the "Shares") at the
price of $________ per share. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Prospectus
prepared by the Company and dated March ___, 1998 (the "Prospectus"). It is our
understanding that you intend to make a public offering of the Shares (the
"Offering") as soon as you deem it advisable to do so after the Registration
Statement has become effective. The Shares are to be initially offered to the
public at the initial public offering price set forth in the Prospectus. You may
from time to time thereafter change the public offering price and other selling
terms.
The Company is a real estate investment trust under the
Internal Revenue Code of 1986, as amended. Through its wholly-owned subsidiary,
the General Partner, the Company currently holds a ______% partnership interest
in the Partnership. The remaining
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______% partnership interest is owned by Xxxxx X. Xxxxxxxx ("Xx. Xxxxxxxx"),
Xxxxxxxx Associates, Inc. ("Xxxxxxxx Associates"), Farmville Lodging Associates,
L.L.C. (the "LLC") and Xxxxxxxx-Key Largo Associates, L.P. ("Xxxxxxxx-Key
Largo") (Xx. Xxxxxxxx, Xxxxxxxx Associates, the LLC and Xxxxxxxx-Key Largo
together, "Xxxxxxxx"). The Partnership owns nineteen hotels (the "Partnership
Hotels") and a 99% interest in Solomons Beacon Inn Limited Partnership (the
"Subsidiary Partnership"), which owns a twentieth hotel (the "Solomons Hotel"
and collectively with the nineteen Partnership Hotels, the "Hotels"). The other
1% interest in the Subsidiary Partnership is owned by the Company. The
Partnership and the Subsidiary Partnership lease the Hotels to Xxxxxxxx
Hospitality Management, Inc. (the "Lessee") pursuant to leases (the "Leases").
On the Initial Closing Date (as hereinafter defined), the
Company will contribute all of the net proceeds from the Offering to the
Partnership in exchange for 1,000,000 units (the "Units") (assuming no exercise
of the Option Shares) of limited partnership in the Partnership. The Partnership
will use the net proceeds to repay approximately $_________ of outstanding
indebtedness secured by the Hotels. As used herein, the term "Transactions"
shall mean the occurrence of all events described in this paragraph and the
other transactions described in the section of the Prospectus captioned "USE OF
PROCEEDS."
2. Representations and Warranties of the Company, the General Partner and
the Partnership.
The Company, the General Partner and the Partnership jointly and
severally represent and warrant to and agree with you that:
(a) Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (File No. 333-15897) (as
defined below, the "Registration Statement") conforming to the requirements of
the Securities Act of 1933, as amended (the "1933 Act"), and the applicable
rules and regulations (the "Rules and Regulations") of the Commission. Such
amendments to such Registration Statement as may have been required prior to the
date hereof have been filed with the Commission, and such amendments have been
similarly prepared. Copies of the Registration Statement, any and all amendments
thereto prepared and filed with the Commission, and each related Preliminary
Prospectus, and the exhibits, financial statements and schedules, as finally
amended and revised, have been delivered to you for review.
The term "Registration Statement" as used in this Agreement shall mean
the Company's Registration Statement on Form S-11, including the Prospectus, any
documents incorporated by reference therein, and all financial schedules and
exhibits thereto, as amended on the date that the Registration Statement becomes
effective. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Shares in
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the form in which it was filed with the Commission pursuant to Rule 424(b) of
the 1933 Act or, if no filing pursuant to Rule 424(b) of the 1993 Act is
required, shall mean the form of the final prospectus included in the
Registration Statement when the Registration Statement becomes effective. The
term "Preliminary Prospectus" shall mean any prospectus included in the
Registration Statement before it becomes effective. The terms "effective date"
and "effective" refer to the date the Commission declares the Registration
Statement effective pursuant to Section 8 of the 1933 Act.
(b) Adequacy of Disclosure. Each Preliminary Prospectus, at
the time of filing thereof, conformed in all material respects to the
requirements of the 1933 Act and the Rules and Regulations, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by you expressly for use in the Registration
Statement. When the Registration Statement shall become effective, when the
Prospectus is first filed pursuant to Rule 424(b) of the Rules and Regulations,
when any amendment to the Registration Statement becomes effective, and when any
supplement to the Prospectus is filed with the Commission and on each Closing
Date (as hereinafter defined), (i) the Registration Statement, the Prospectus
and any amendments thereof and supplements thereto will conform in all material
respects with the applicable requirements of the 1933 Act and the Rules and
Regulations, and (ii) neither the Registration Statement, the Prospectus nor any
amendment or supplement thereto will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by you expressly for use in the Registration Statement.
(c) No Stop Order. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus with respect to
the Shares, and no proceedings for that purpose have been instituted or
threatened by the Commission or the state securities or blue sky authority of
any jurisdiction.
(d) Company: Organization and Qualification. The Company has
been duly incorporated and is validly existing in good standing as a corporation
under the laws of the Commonwealth of Virginia with all requisite corporate
power and authority to enter into this Agreement, to conduct its business as now
conducted and as proposed to be conducted, and to own, lease and operate its
properties, and the properties it proposes to own, lease and operate, as
described in the Registration Statement and Prospectus, and is qualified to do
business and in good standing as a foreign corporation in each other
jurisdiction in which the failure so to qualify could have a material adverse
effect on the Company, the General Partner, the Partnership, the Subsidiary
Partnership or any Hotel. The Company is not in
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violation of any provision of its articles of incorporation, bylaws or other
governing documents and is not in default under or in breach of, and does not
know of the occurrence of any event that with the giving of notice or the lapse
of time or both would constitute a default under or breach of, any term or
condition of any material agreement or instrument to which it is a party or by
which any of its properties is bound, except as disclosed in the Registration
Statement and Prospectus. No consent, approval, authorization, or order from any
court, governmental agency or body is required in connection with the execution
and delivery of this Agreement by the Company, the consummation by the Company
of the transactions contemplated herein and in the Registration Statement and
Prospectus or the issuance and sale of the Shares, except such as may be
required by the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or applicable state securities or blue sky laws. Except for the
General Partner, the Partnership and the Subsidiary Partnership, the Company
does not own or control, directly or indirectly, any corporation, association,
or other entity.
(e) General Partner: Organization and Qualification. The
General Partner has been duly formed and is validly existing as a real estate
investment trust under the laws of the State of Maryland with all requisite
power to conduct its business as now conducted and as proposed to be conducted,
and to own, lease and operate its properties and the properties it proposes to
own, lease and operate, as described in the Registration Statement and
Prospectus, and is qualified to do business and in good standing in each other
jurisdiction in which the failure so to qualify could have a material adverse
effect on the Company, the General Partner, the Partnership, the Subsidiary
Partnership or any Hotel. The General Partner is not in violation of any
provision of its declaration of trust or other governing documents and is not in
default under or in breach of, and does not know of the occurrence of any event
that with the giving of notice or the lapse of time or both would constitute a
default under or breach of, any term or condition of any material agreement or
instrument to which it is a party or by which any of its properties is bound,
except as disclosed in the Registration Statement and Prospectus. No consent,
approval, authorization or order from any court, governmental agency or body is
required in connection with the execution and delivery of this Agreement by the
General Partner, or the consummation by the General Partner of the transactions
contemplated herein and in the Registration Statement and Prospectus, except
such as may be required by the 1933 Act, the 1934 Act, or applicable state
securities or blue sky laws. The Company is and at each Closing Date will be the
sole holder of the shares of beneficial interest of the General Partner.
(f) Partnership: Organization and Qualification. The
Partnership has been duly formed and is validly existing as a limited
partnership under the laws of the Commonwealth of Virginia with all requisite
partnership power to conduct its business as now conducted and as proposed to be
conducted, and to own, lease and operate its properties and the properties it
proposes to own, lease and operate, as described in the Registration Statement
and Prospectus, and is qualified to do business and in good standing as a
foreign limited partnership in each other jurisdiction in which the failure so
to qualify
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could have a material adverse effect on the Company, the General Partner, the
Partnership, the Subsidiary Partnership or any Hotel. The Partnership is not in
violation of any provision of its partnership agreement or other governing
documents and is not in default under or in breach of, and does not know of the
occurrence of any event that with the giving of notice or the lapse of time or
both would constitute a default under or breach of, any term or condition of any
material agreement or instrument to which it is a party or by which any of its
properties is bound, except as disclosed in the Registration Statement and
Prospectus. No consent, approval, authorization or order from any court,
governmental agency or body is required in connection with the execution and
delivery of this Agreement by the Partnership, or the consummation by the
Partnership of the transactions contemplated herein and in the Registration
Statement and Prospectus, except such as may be required by the 1933 Act, the
1934 Act, or applicable state securities or blue sky laws. The General Partner
is and at each Closing Date will be the sole general partner of the Partnership.
Immediately subsequent to the Initial Closing Date, the General Partner will be
the holder of __________ Units, or approximately _______% of the Units in the
Partnership, and the limited partners of the Partnership will be the holders, in
the aggregate, of __________ Units, or approximately ______% of the Units in the
Partnership.
(g) Subsidiary Partnership: Organization and Qualification.
The Subsidiary Partnership has been duly formed and is validly existing as a
limited partnership under the laws of the State of Maryland with all requisite
partnership power to conduct its business as now conducted and as proposed to be
conducted, and to own, lease and operate its properties, as described in the
Registration Statement and Prospectus. The Subsidiary Partnership is not in
violation of any provision of its partnership agreement or other governing
documents and is not in default under or in breach of, and does not know of the
occurrence of any event that with the giving of notice or the lapse of time or
both would constitute a default under or breach of, any term or condition of any
material agreement or instrument to which it is a party or by which any of its
properties is bound, except as disclosed in the Registration Statement and
Prospectus. The Company is the sole limited partner of the Subsidiary
Partnership and the Partnership is the sole general partner of the Subsidiary
Partnership.
(h) Lessee: Organization and Qualification. The Lessee has
been duly incorporated and is validly existing in good standing as a corporation
under the laws of its state of incorporation with all requisite corporate power
and authority to enter into the Leases, and to conduct its business as now
conducted and as proposed to be conducted, and to own, lease and operate its
properties, as described in the Registration Statement and Prospectus, and is
qualified to do business and in good standing as a foreign corporation in each
other jurisdiction in which the failure so to qualify could have a material
adverse effect on the Lessee. The Lessee is not in violation of any provision of
its articles of incorporation, bylaws, or other governing documents, is not in
default or in breach of, or does not know of the occurrence of any event that
with the giving of notice or the lapse of time or both would constitute a
default under or breach of, any term or condition of any material agreement or
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instrument to which it is a party or by which any of its properties is bound,
except as disclosed in the Registration Statement and Prospectus. No consent,
approval, authorization or order from any court, governmental agency or body is
required in connection with the consummation by the Lessee of the transactions
contemplated herein and in the Registration Statement and Prospectus, except
such as may be required by the 1933 Act, the 1934 Act, and applicable state
securities or blue sky laws.
(i) Validity of Shares. The Shares have been duly and validly
authorized by the Company, and upon issuance, will be validly issued, fully paid
and nonassessable, with no personal liability attaching to the ownership
thereof, and will conform to the description thereof contained in the
Prospectus. The preferences, rights and limitations of the Shares are set forth
in the Prospectus under the caption "Description of Capital Stock". There are no
preemptive rights with respect to any of the Shares. No person or entity holds a
right to require or participate in the registration under the 1933 Act of the
Shares pursuant to the Registration Statement; and, except as set forth in the
Prospectus, no person holds a right to require registration under the 1933 Act
of any Common Stock of the Company at any other time. No person or entity has a
right of participation or first refusal with respect to the sale of the Shares
by the Company. The form of certificates evidencing the Shares complies with all
applicable requirements of Virginia law.
(j) Company Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Prospectus under
the caption "Description of Capital Stock". All of the issued and outstanding
shares of Common Stock of the Company have been duly authorized, validly issued,
fully paid and are non-assessable, and the holders of such shares have no
preemptive rights. Except as disclosed in the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for capital stock of
the Company.
(k) Validity of Units. The Units to be issued to the General
Partner in connection with the Transactions (i) have been duly and validly
authorized by the Partnership, and upon issuance, will be validly issued, and
(ii) have been and will be issued, offered and sold at or prior to each Closing
Date in compliance with all applicable laws (including, without limitation,
federal and state securities laws).
(l) Full Power: Company. The Company has full legal right,
power, and authority to enter into this Agreement to issue and deliver the
Shares as provided herein and to consummate the transactions contemplated
herein.
(m) Disclosed Agreements. All agreements between or among the
Company, the General Partner, the Partnership, the Subsidiary Partnership and
the Lessee, respectively, and third parties expressly referenced in the
Prospectus, are legal, valid, and binding obligations of the Company, the
General Partner, the Partnership, the Subsidiary
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Partnership and the Lessee, respectively, enforceable in accordance with their
respective terms, except to the extent enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, liquidation, reorganization, or similar laws
affecting creditors' rights generally, regardless of whether such enforceability
is considered in equity or at law, (ii) general equity principles and (iii)
limitations imposed by federal or state securities laws or the public policy
underlying such laws regarding the enforceability of indemnification or
contribution provisions.
(n) Consents. Each consent, approval, authorization, order,
license, certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization, issuance,
sale and delivery of the Shares, the execution, delivery and performance of this
Agreement and the consummation by the Company, the General Partner and the
Partnership of the transactions contemplated hereby has been made or obtained
and is in full force and effect.
(o) Litigation. There is not pending or, to the knowledge of
the Company, the General Partner or the Partnership, threatened or contemplated,
any action, suit, proceeding, inquiry, or investigation before or by any court
or any federal, state, or local governmental authority or agency to which the
Company, the General Partner, the Partnership, the Subsidiary Partnership or the
Lessee or any of their respective officers or directors are or may be a party,
or to which any of the properties or rights of any such entity or person may be
subject, that is not described in the Registration Statement and Prospectus and
(i) that might result in any material adverse change in the condition (financial
or otherwise) or business of the Company, the General Partner, the Partnership
or the Lessee; or (ii) that might materially adversely affect any of the
material properties of any such entity; or (iii) that might adversely affect the
consummation of the transactions contemplated by this Agreement, or any of the
Transactions, nor, to the knowledge of the Company, the General Partner or the
Partnership, is there any meritorious basis therefor.
(p) Financial Statements. The financial statements of the
Company and the [Combined Acquired Hotels] together with related schedules and
notes included in the Registration Statement and the Prospectus present fairly
the financial position of the Company and the [Combined Acquired Hotels],
respectively, as of the dates indicated and the results of operations and cash
flows for the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis during the periods involved. The financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under the captions
"Prospectus Summary-Summary Financial Data" and "Selected Financial Information"
fairly present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration Statement
and the Prospectus. No other financial statements or schedules are required by
Form S-11 or otherwise to be included in the Registration Statement, the
Prospectus or any Preliminary Prospectus. The unaudited pro forma combined
financial information (including the related notes) included
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in the Prospectus or any Preliminary Prospectus complies as to form in all
material respects to the applicable accounting requirements of the 1933 Act and
the Rules and Regulations, and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable. Such pro forma
adjustments have been properly applied to the historical amounts in the
compilation of the information and such information fairly presents with respect
to the Company and the [Combined Acquired Hotels] the financial position,
results of operations and other information purported to be shown therein at the
respective dates and for the respective periods specified.
(q) Independent Accountants. Xxxxxxx Xxxxxx & Xxxxxxxxx, the
accountants that have expressed an opinion on the financial statements that are
included in the Registration Statement and Prospectus are, and were during the
period covered by their Reports included in the Registration Statements and
Prospectus, with respect to the Company, independent public accountants as
required by the 1933 Act and the Rules and Regulations.
(r) Disclosed Liabilities. None of the Company, the General
Partner, the Partnership, the Subsidiary Partnership or the Lessee has
sustained, since December 31, 1997 any material loss or interference with its
business from fire, explosion, flood, hurricane, accident, or other calamity,
whether or not covered by insurance, or from any labor dispute or arbitrators'
or court or governmental action, order, or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as otherwise stated in the Registration Statement and Prospectus, there
has not been (i) any material change in the capital stock or partnership
interests or membership interests, as applicable, long-term debt, obligations
under capital leases, or short-term borrowings of the Company, the General
Partner, the Partnership, the Subsidiary Partnership or the Lessee, (ii) any
material adverse change, or any development that could reasonably be seen as
involving a prospective material adverse change in or affecting the business,
prospects, properties, assets, results of operations or condition (financial or
other) of the Company, the General Partner, the Partnership, the Subsidiary
Partnership or the Lessee, (iii) any liability or obligation, direct or
contingent, incurred or undertaken by the Company, the General Partner, the
Partnership, the Subsidiary Partnership or the Lessee that is material to the
business or condition (financial or other) of such entity, except for
liabilities or obligations incurred in the ordinary course of business, (iv) any
declaration or payment of any dividend or distribution of any kind on or with
respect to the capital stock of the Company or the Lessee, the shares of
beneficial interest of the General Partner or the partnership interests of the
Partnership or the Subsidiary Partnership, respectively or (v) any transaction
that is material to the Company, the General Partner, the Partnership, the
Subsidiary Partnership or the Lessee, except transactions in the ordinary course
of business or as otherwise disclosed in the Registration Statement and the
Prospectus.
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(s) Hotels. The Partnership and the Subsidiary Partnership
have good and marketable title in fee simple to all real property owned by them,
including the Hotels, free and clear of all liens, encumbrances, claims,
security interests, restrictions, and defects except such as are described in
the Prospectus and the policies of title insurance previously provided to you.
Neither the Company nor the General Partner owns or leases any real property.
Except as disclosed in the Prospectus, no person other than the Company has an
option or right of first refusal to purchase all or part of any Hotel or any
interest therein. Each of the Hotels complies with all applicable codes, laws,
and regulations (including, without limitation, building and zoning codes, laws
and regulations, and laws relating to access to Hotels), except if and to the
extent disclosed in the Prospectus and except for such failures to comply that
would not individually or in the aggregate have a material adverse impact on the
condition (financial or otherwise) or on the earnings, assets, business affairs,
or business prospects of such Hotel, the General Partner, the Partnership, the
Subsidiary Partnership or the Company. None of the Company, the General Partner,
the Partnership or the Subsidiary Partnership has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding or
action that will in any manner effect the size of, use of, improvements on,
construction on, or access to the Hotels, except such proceedings or actions
that would not have a material adverse effect on the condition (financial or
otherwise) or on the earnings, assets, business affairs, or business prospects
of or with respect to such Hotel, the General Partner, the Partnership, the
Subsidiary Partnership or the Company.
(t) Required Licenses and Permits. Except as disclosed in the
Prospectus, the Company, the General Partner, the Partnership, the Subsidiary
Partnership or the Lessee owns, possesses, has obtained or has commitments to
obtain, and has made available for your review, all material permits, licenses,
franchises (including, with respect to the Lessee, the franchises relating to
the Hotels), certificates, consents, orders, approvals, and other authorizations
of governmental or regulatory authorities as are necessary to own or lease, as
the case may be, and to operate their respective properties and to carry on
their respective businesses as presently conducted, or as contemplated in the
Prospectus to be conducted (the "Permits"), and none of the Company, the General
Partner, the Partnership, the Subsidiary Partnership or the Lessee has received
any notice of proceedings relating to revocation or modification of any such
Permits.
(u) Trademarks, etc. Each of the Company, the General Partner,
the Partnership, the Subsidiary Partnership and the Lessee owns or possesses
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle each of the Company, the
General Partner, the Partnership, the Subsidiary Partnership and the Lessee to
conduct their respective businesses now, and as proposed to be, conducted or
operated as described in the Prospectus, and none of the Company, the General
Partner, the Partnership, the Subsidiary Partnership and the Lessee has received
notice of infringement or of conflict with (or knows
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of such infringement of or conflict with) asserted rights of others with respect
to any intangible that could materially and adversely affect the business,
prospects, properties, assets, results of operation, or condition (financial or
otherwise) of the Company, the General Partner, the Partnership, the Subsidiary
Partnership or the Lessee.
(v) Internal Accounting Measures. To the knowledge of the
Company, the General Partner and the Partnership, the Company's, the General
Partner's, the Partnership's, the Subsidiary Partnership's and the Lessee's
system of internal accounting controls taken as a whole is sufficient to meet
the broad objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in amounts
that would be material in relation to the Company's, the General Partner's, the
Partnership's, the Subsidiary Partnership's or the Lessee's financial
statements; and, to the knowledge of the Company, the General Partner and the
Partnership, none of the Company, the General Partner, the Partnership, the
Subsidiary Partnership or the Lessee, or any employee or agent thereof, has made
any payment of funds of the Company, the General Partner, the Partnership, the
Subsidiary Partnership or the Lessee, as the case may be, or received or
retained any funds and no funds of the Company, the General Partner, the
Partnership, the Subsidiary Partnership or the Lessee, as the case may be, have
been set aside to be used for any payment, in each case in violation of any law,
rule, or regulation.
(w) Taxes. Each of the Company, the General Partner, the
Partnership (to the extent not consolidated with the Company), the Subsidiary
Partnership and the Lessee has timely filed all required federal and state tax
returns, has paid all taxes that have become due and have no tax deficiency
asserted against any such entity, nor does any such entity know of any tax
deficiency that is likely to be asserted against any such entity that if
determined adversely to any such entity, would, either individually or in the
aggregate, have a material adverse effect on the business, prospects,
properties, assets, results of operations, or condition (financial or otherwise)
of any such entity, respectively. All tax liabilities are adequately provided
for on the respective books of such entities.
(x) Compliance with Instruments. The execution, delivery and
performance of this Agreement, the compliance with the terms and provisions
hereof and the consummation of the transactions contemplated herein and in the
Registration Statement and Prospectus by the Company, the General Partner, the
Partnership, the Subsidiary Partnership or the Lessee do not and will not
violate or constitute a breach of, or default under (i) the articles of
incorporation, charter, bylaws, declaration of trust, certificate of limited
partnership, partnership agreement, articles of organization or operating
agreement, as the case may be, of the Company, the General Partner, the
Partnership, the Subsidiary Partnership or the Lessee; (ii) any of the terms,
provisions, or conditions of any material instrument, agreement, or indenture to
which the Company, the General Partner, the Partnership, the Subsidiary
Partnership or the Lessee is a party or by which they are bound or by which
their respective businesses, assets, investments, properties, or any Hotel may
be
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affected; or (iii) any order, statute, rule, or regulation applicable to the
Company, the General Partner, the Partnership, the Subsidiary Partnership or the
Lessee, or any of their respective businesses, investments, assets, properties,
or Hotel, of any court or any federal, state or local governmental authority or
agency having jurisdiction over the Company, the General Partner, the
Partnership, the Subsidiary Partnership or the Lessee or any of their respective
businesses, investments, properties, assets, or Hotels; and do not and will not
result in the creation or imposition of any lien, charge, claim, or encumbrance
upon any property or asset of any of the foregoing.
(y) Insurance. The Company, the General Partner, the
Partnership, the Subsidiary Partnership and the Lessee maintain insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and, to
the knowledge of the Company, the General Partner and the Partnership,
consistent with insurance coverage maintained by similar companies and similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company, the General Partner, the Partnership,
the Subsidiary Partnership and the Lessee against theft, damage, destruction,
acts of vandalism, and all other risks customarily insured against, all of which
insurance is in full force and effect.
(z) Work Force. To the knowledge of the Company, the General
Partner and the Partnership, no general labor problem exist or is imminent with
the employees of the Lessee.
(aa) Stock Restriction. The Company has obtained the agreement
of the members of the Board of Directors of the Company that, for a period of
ninety (90) days from the date hereof, they will not, without your prior written
consent, directly or indirectly, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of any shares of Common Stock or securities
convertible into Common Stock held by such persons (including, without
limitation, shares of Common Stock deemed to be beneficially owned by such
person in accordance with the Rules and Regulations promulgated under the 1934
Act).
(ab) Securities Matters. Each of the Company, the General
Partner, the Partnership and their officers, directors, or affiliates have not
taken and will not take, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in or constitute the
stabilization or manipulation of any security of the Company or to facilitate
the sale or resale of the Shares.
(ac) Stock Registration. The Common Stock is registered
pursuant to Section 12(g) of the 1934 Act and is quoted on the National Market
of the National Association of Securities Dealers Automated Quotation System
(the "Nasdaq National Market").
11
(ad) Environmental Status. Except as otherwise disclosed in
the Prospectus, none of the Company, the General Partner, the Partnership, the
Subsidiary Partnership or the Lessee has authorized or conducted or has
knowledge of the generation, transportation, storage, presence, use, treatment,
disposal, release, or other handling of any hazardous substance, hazardous
waste, hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquified gas, synthetic gas, or other material defined, regulated, controlled,
or potentially subject to any remediation requirement under any environmental
law (collectively, "Hazardous Materials"), on, in, under, or affecting any real
property currently leased or owned by any means controlled by the Company, the
General Partner, the Partnership or the Subsidiary Partnership, including the
Hotels (the "Real Property") except as in material compliance with applicable
laws; to the knowledge of the Company, the General Partner, the Partnership or
the Subsidiary Partnership, the Real Property and the Company's, the General
Partner's, the Partnership's, the Subsidiary Partnership's and the Lessee's
operations with respect to the Real Property are in compliance with all federal,
state, and local laws, ordinances, rules, regulations, and other governmental
requirements relating to pollution, control of chemicals, management of waste,
discharges of materials into the environment, health, safety, natural resources,
and the environment (collectively, "Environmental Laws"), and the Company, the
General Partner, the Partnership, the Subsidiary Partnership and the Lessee
have, and are in compliance with, all licenses, permits, registrations, and
government authorizations necessary to operate under all applicable
Environmental Laws. Except as otherwise disclosed in the Prospectus, none of the
Company, the General Partner, the Partnership, the Subsidiary Partnership and
the Lessee has received any written or oral notice from any governmental entity
or any other person and there is no pending or threatened claim, litigation, or
any administrative agency proceeding that: alleges a violation of any
Environmental Laws by the Company, the General Partner, the Partnership, the
Subsidiary Partnership or the Lessee; alleges that the Company, the General
Partner, the Partnership, the Subsidiary Partnership or the Lessee is a liable
party or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss.9601, et seq., or any
state superfund law; has resulted in or could result in the attachment of an
environmental lien on any of the Real Property; or alleges that the Company, the
General Partner, the Partnership, the Subsidiary Partnership or the Lessee is
liable for any contamination of the environment, contamination of the Real
Property, damage to natural resources, property damage, or personal injury based
on their activities or the activities of their predecessors or third parties
(whether at the Real Property or elsewhere) involving Hazardous Materials,
whether arising under the Environmental Laws, common law principles, or other
legal standards.
(ae) Real Estate Investment Trust. Each of the Company and the
General Partner have been organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's and the General Partner's
method of operation (as presently conducted
12
and proposed to be conducted immediately after Closing) enables each of them to
meet the requirements for qualification and taxation as a real estate investment
trust under the Code. Each of the Partnership and the Subsidiary Partnership is
and immediately after Closing will be, treated as a partnership for federal
income tax purposes and not as a corporation or an association taxable as a
corporation.
(af) Investment Company Act. None of the Company, the General
Partner, the Partnership, the Subsidiary Partnership or the Lessee will become
as a result of the consummation of the Transactions, or will conduct their
respective businesses in a manner in which any such entity would become, an
"investment company" or an entity that "controls" or is "controlled by" an
"investment company," as such terms are defined under the Investment Company Act
of 1940, as amended (the "1940 Act").
(ag) Receipt of Commissions and Fees. Except as stated in or
contemplated by the Prospectus, neither the Company nor any affiliate of the
Company has received or is entitled to receive, directly or indirectly, any
compensation or other benefit, including, but not limited to, any finder's fee,
acquisition fee, selection fee, nonrecurring management fee or other fee or
commission, relating to the investments of the Company.
(ah) Payment of Commissions and Fees. Except as stated in or
contemplated by the Prospectus, neither the Company nor any affiliate of the
Company has paid or awarded, nor will any such person pay or award, directly or
indirectly, any commission or other compensation to any person engaged to render
investment advice to a potential purchaser of Shares as an inducement to advise
the purchase of Shares.
Any certificates of any officer of the Company on behalf of the Company, the
General Partner and/or the Partnership and delivered to you or your counsel,
shall be deemed a representation and warranty by such entity to you as to the
matters covered thereby.
3. Sales of Shares.
(a) Initial Shares. The Company hereby agrees to sell to you,
and on the basis of the representations and warranties herein contained but
subject to the terms and conditions herein set forth, you agree to purchase from
the Company, at a price per share of $__________, the Initial Shares. Subject to
your commitment to purchase the Shares, nothing in this Agreement shall prevent
you from entering into an agency agreement, underwriting agreement, or other
similar agreement governing the offer and sale of securities with any other
issuer of securities, and nothing contained herein shall be construed in any way
as precluding or restricting your right to sell or offer for sale securities
issued by any other person, including securities similar to, or competing with,
the Shares.
(b) Option Shares. The Company hereby grants an option to you
to purchase the Option Shares at the price of $________ per share. The option
granted hereby
13
may be exercised in whole or in part at any time upon written notice from you to
the Company, given within thirty (30) days after the effective date of the
Registration Statement. Such notice will set forth the number of Option Shares
as to which you are exercising the option, the names and denominations in which
the Option Shares are to be registered and the time and date at which such
Option Shares are to be delivered. The time and date at which certificates for
Option Shares are to be delivered shall be determined by you but shall not be
earlier than two nor later than ten full business days after the exercise of the
option, nor in any event prior to the Initial Closing Date (as defined in
Section below) (the "Option Closing Date). The option with respect to the Option
Shares granted hereunder may be exercised only to cover over-allotments in the
sale of the Shares by you. You may cancel such option at any time prior to its
expiration by giving written notices of such cancellation to the Company. If the
option is exercised as to all or any portion of the Option Shares, the Option
Shares as to which the option is exercised shall be purchased by you.
(c) Obligation to Purchase Shares. Your obligation to purchase
any of the Shares is subject to receipt by you of satisfactory evidence that the
Registration Statement is effective, is subject to the Shares being qualified
for offering under applicable laws in the states as may be reasonably designated
by you, is subject to the absence of any prohibitory action by any governmental
body, agency, or official, and is subject to the terms and conditions contained
in this Agreement and in the Registration Statement.
(d) Closing Date. As and when the closing of the purchase of
the Initial Shares is effected, on such date (the "Initial Closing Date" and
together with the Option Closing Date, each a "Closing Date") and at such time
and place as determined by you (which determination shall be subject to the
satisfaction on such date of the conditions contained herein), you shall pay to
the Company, by wire transfer of immediately available funds on the Initial
Closing Date, the purchase price for the Initial Shares. To the extent your
option to purchase the Option Shares is exercised as provided in Section , you
shall pay to the Company on the Option Closing Date, by wire transfer of
immediately available funds, the purchase price for the Option Shares.
(e) Finder's Fees. Except as set forth in the Registration
Statement or Prospectus, neither you nor the Company, directly or indirectly,
shall pay or award any finder's fee, commission, or other compensation to any
person engaged by a potential purchaser for investment advice as an inducement
to such advisor to advise the purchase of Shares or for any other purpose.
(f) Delivery of Share Certificates. Delivery of certificates
in definitive form representing the Initial Shares shall be made at the offices
of Newbridge Securities, Inc. or at such other place as shall be agreed upon by
the Company and you, on March ____, 1998 (the "Initial Date of Delivery"). The
certificates representing the Initial Shares shall be in such denominations and
registered in such names as you may request in writing at least three
14
full business days before the Initial Date of Delivery. The certificates
representing the Initial Shares will be made available for examination and
packaging at the offices of Newbridge Securities, Inc. or at such other place as
shall be agreed upon by the Company and you, not later than at least two (2)
full business days prior to the Initial Date of Delivery. The certificates
representing the Option Shares shall be delivered in the same manner as with
respect to the Initial Shares, and the date of delivery for the certificates
shall be two (2) full business days prior to the Option Closing Date.
4. Covenants.
(a) Covenants of the Company, the General Partner and the
Partnership. The Company, the General Partner and the Partnership covenant with
you as follows:
(i) Notices. The Company, the General Partner and the Partnership
immediately will notify you, and confirm such notice in writing, (A) of any fact
that would make inaccurate any representation or warranty by the Company, the
General Partner and the Partnership, and (B) of any change in facts on which
your obligation to perform under this Agreement is dependent.
(ii) Effectiveness of Registration Statement. The Company will use its
best efforts to cause the Registration Statement to become effective (if not yet
effective at the date and time this Agreement is executed and delivered by the
parties hereto). If the Company elects to rely upon Rule 430A of the Rules and
Regulations or the filing of the Prospectus is otherwise required under Rule
424(b) of the Rules and Regulations, and subject to the provisions of Section of
this Agreement, the Company will comply with the requirements of Rule 430A and
will file the Prospectus, properly completed, pursuant to the applicable
provisions of Rule 424(b) within the time prescribed. The Company will notify
you immediately, and confirm the notice in writing, (i) when the Registration
Statement, or any post-effective amendment to the Registration Statement, shall
have become effective, or any supplement to the Prospectus, or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission to amend the Registration
Statement or amend or supplement the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceeding for any such purposes. The Company
will use all reasonable efforts to prevent the issuance of any such stop order
or of any order preventing or suspending such use and, if any such order is
issued, to obtain the withdrawal thereof at the earliest possible moment.
(iii) Amendments to Registration Statement and Prospectus. The Company
will not at any time file or make any amendment to the Registration Statement,
or
15
any amendment or supplement (i) to the Prospectus, if the Company has not
elected to rely upon Rule 430A, or (ii) if the Company has elected to rely upon
Rule 430A, to either the Prospectus included in the Registration Statement at
the time it becomes effective or to the Prospectus filed in accordance with Rule
424(b), in either case if you shall not have previously been advised and
furnished a copy thereof a reasonable time prior to the proposed filing, or if
you or your counsel shall object to such amendment or supplement.
(iv) Delivery of Registration Statement. The Company has delivered to you
or will deliver to you, without expense to you, at such locations as you shall
request, as soon as the Registration Statement or any amended Registration
Statement is available, such number of signed copies of the Registration
Statement as originally filed and of amended Registration Statements, if any,
copies of all exhibits and documents filed therewith, and signed copies of all
consents and certificates of experts, as you may reasonably request.
(v) Delivery of Prospectus. The Company will deliver to you at its
expense, from time to time, as many copies of each Preliminary Prospectus as you
may reasonably request, and the Company hereby consents to the use of such
copies for purposes permitted by the 1933 Act. The Company will deliver to you
at its expense, as soon as the Registration Statement shall have become
effective and thereafter from time to time as requested during the period when
the Prospectus is required to be delivered under the 1933 Act, such number of
copies of the Prospectus (as supplemented or amended) as you may reasonably
request. The Company will comply to the best of its ability with the 1933 Act
and the Rules and Regulations so as to permit the completion of the distribution
of the Shares as contemplated in this Agreement and in the prospectus. If the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any events shall have occurred as
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made when such Prospectus is delivered not misleading or, if for
any reason it shall be necessary during the same period to amend or supplement
the Prospectus in order to comply with the 1933 Act, the Company will notify you
and upon your request prepare and furnish without charge to you and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus that will
correct such statement or omission or effect such compliance, and in case you
are required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at your expense, the Company will prepare and
deliver to you as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the 1933 Act.
(vi) Blue Sky Qualification. The Company, in good faith and in
cooperation with you, will use its best efforts to qualify the Shares for
offering and sale under
16
the applicable "blue sky" or securities laws and real estate syndication laws of
such jurisdictions as you from time to time may reasonably designate and to
maintain such qualifications in effect for as long as may be necessary to
complete the sale and distribution of the Shares; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to make any undertakings in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Shares have been qualified as above
provided.
(vii) Financial and Other Information.
A. Earnings Statement. The Company will make generally available to its
security holders, in the manner specified in Rule 158(b) under the 1933 Act and
deliver to you as soon as practicable and in any event not later than 45 days
after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings statement
meeting the requirements of Rule 158(a) under the 1933 Act covering a period of
at least twelve consecutive months beginning after the effective date of the
Registration Statement.
B. Annual and Quarterly Reports. The Company will furnish to its
securityholders, as soon as practicable after the end of each respective period,
annual reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of operations for each of the first
three quarters of the fiscal year. For a period through and including November
29, 1999, the Company will furnish to you: (i) concurrently with the date on
which the same shall be sent to the securityholders of the Company, if
applicable, and in any event not later than sixty (60) days after the end of
each fiscal quarter of the Company, statements of operations of the Company for
each of the first three quarters in the form furnished to the Company's
securityholders; (ii) concurrently with the date on which the same shall be sent
to the securityholders of the Company, if applicable, and in any event not later
than one hundred twenty (120) days after the end of each fiscal year of the
Company, a balance sheet of the Company as of the end of such fiscal year,
together with statements of operations, of cash flows, and of securityholders'
equity of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent public accountants; (iii) as soon
as they are available, copies of all reports (financial or otherwise) mailed to
securityholders; and (iv) as soon as they are available, copies of all reports
and financial statements furnished to or filed with the Commission, any
securities exchange, or the National Association of Securities Dealers, Inc.
("NASD"). During the period through and including November 29, 1999, the
foregoing financial statements shall be made on a consolidated basis to the
extent that the accounts of the Company are consolidated with any subsidiaries,
and shall be accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
17
C. Press Releases. For a period through and including November 29, 1999,
the Company will furnish to you, concurrently with the release thereof, two
copies of every press release to be issued and every material news item and
article in respect of the Company or its affairs to be released by the Company;
and promptly, such additional documents and information with respect to the
Company and its affairs as you from time to time may reasonably request.
D. Other Information. For a period through and including November 29,
1999, the Company will furnish to you any additional information of a public
nature concerning the Company or its business that you may reasonably request in
writing.
(viii) Application of Net Proceeds. The Company and the Partnership will
apply the net proceeds received from the sale of the Shares in all material
respects as set forth in the Prospectus under the caption "Use of Proceeds."
(ix) Solicitation of Purchasers.
A. Except as hereinafter specified, the Company will not, and will not
permit the General Partner, the Partnership or any of its other affiliates or
agents to, furnish the names of such purchasers or of other potential investors
obtained through you to any person other than as may be required in connection
with the normal and usual conduct by the Company of its business or required by
court order or law.
B. The Company agrees and understands that a violation of the provisions
of Section 4(a)(ix)(A) of this Agreement will cause you irreparable harm and
injury and that any money damages you receive will not compensate you for any
breach thereof. Accordingly, the Company agrees that, in addition to monetary
damages, you will be entitled to all such equitable relief including, without
limitation, injunctive relief, as a court of equity or proper jurisdiction shall
deem appropriate in the circumstances. Such relief shall not be exclusive of any
rights you may have at law or in equity. All of the rights and remedies you have
hereunder shall be cumulative and not alternative. The provisions of this
Section shall not limit your remedies upon the breach by the Company of any
other Section of this Agreement.
(x) Cooperation with Your Due Diligence. At all times prior to each
Closing Date, the Company will cooperate with you in such investigation as you
may make or cause to be made of all the business and operations (including all
Hotels) of the Company, the General Partner, the Partnership, the Subsidiary
Partnership and the Lessee in connection with the sale of the Shares, and will
make available to you in connection therewith such information in its possession
as you may reasonably request.
18
(xi) Transfer Agent. The Company will maintain a transfer agent and, if
necessary under applicable jurisdictions, a registrar (which may be the same
entity as the transfer agent) for its Common Stock.
(xii) Nasdaq. The Company will use its best efforts to maintain the
quotation of its shares of Common Stock on the Nasdaq National Market.
(xiii) Compliance with Investment Company Act. The Company, the General
Partner and the Partnership are familiar with the Investment Company Act of
1940, as amended, as the rules and regulations thereunder, and have in the past
conducted their affairs, and will in the future conduct their affairs, in such a
manner so as to ensure that the Company, the General Partner and the Partnership
were not and will not be an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(xiv) Actions of Company, Officers, Directors, and Affiliates. The
Company will not and will use its best efforts to cause its officers, directors,
and affiliates not to (i) take, directly or indirectly, prior to termination of
the offering contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or that may cause or result
in, or that might in the future reasonably be expected to cause or result in,
the stabilization or manipulation of the price of any security of the Company,
to facilitate the sale or resale of any of the Shares, (ii) other than under
this Agreement, sell, bid for, purchase, or pay anyone any compensation for
soliciting purchases of the Shares or (iii) pay or agree to pay to any person
any compensation for soliciting any order to purchase any other securities of
the Company.
(xv) Obligations Under this Agreement. Subject to the terms hereof, the
Company, the General Partner and the Partnership will do and perform their
respective obligations under this Agreement to the extent required to consummate
the transactions contemplated hereby.
(xvi) Additional Issuances. For a period of ninety (90) days from the
Initial Closing Date, the Company will not, without your prior written consent,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any shares of Common Stock or securities convertible
into Common Stock, other than pursuant to this agreement and other than
partnership interests or other securities convertible into Common Stock issued
in connection with the acquisition of a hotel property.
(xvii) Additional Hotels. The Company will use the net proceeds of the
Offering to acquire or develop hotels only to the extent that the Company would
expect to receive rental income with respect to each such hotel, net of
insurance paid by the Company, reserves for furniture, fixtures and capital
expenditures and real estate taxes, in an
19
amount greater than or equal to twelve percent (12%) of the purchase price or
development costs paid by the Company for such hotel.
(b) Your Covenants. You covenant with the Company that you have not
provided and will not provide to the purchasers of Shares any written or oral
information regarding the business of the Company, including any representations
regarding the Company's financial condition or financial prospects, other than
such information as is contained in the Prospectus.
5. Payment of Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, and subject to
the provisions of Section of this Agreement, the Company hereby agrees that it
will pay all fees and expenses incident to the performance of its obligations
under this Agreement (excluding fees and expenses of counsel for you, except as
specifically set forth below), including (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, the Preliminary Prospectuses and
the Prospectus and any amendments or supplements thereto, and the cost of
furnishing copies thereof to you, (b) the preparation, printing, and
distribution of this Agreement, any Selected Dealer Agreement, the certificates
representing the Shares, the Blue Sky Memoranda, and any instruments relating to
any of the foregoing, (c) the issuance and delivery of the Shares, including any
transfer taxes payable thereon, (d) the fees and disbursements of the Company's
counsel and accountants, (e) the qualification of the Shares under applicable
securities and real estate syndication laws in accordance with Section of this
Agreement and any filing fee paid in connection with the review of the offering
by the NASD, including filing fees and fees and disbursements made in connection
therewith and in connection with the Blue Sky Memoranda supplied to you by
counsel for the Company, (f) all costs, fees, and expenses in connection with
the application for qualifying the Shares for quotation on the Nasdaq National
Market, (g) the transfer agent's and registrar's fees and all miscellaneous
expenses referred to in Item 30 of the Registration Statement, (h) costs related
to travel and lodging incurred by the Company and its representatives relating
to meetings with and presentations to prospective purchasers of the Shares
reasonably determined by you to be necessary or desirable to effect the sale of
the Shares to the public, (i) all other costs and expenses incident to the
performance of the Company's obligations hereunder that are not otherwise
specifically provided for in this Section.
6. Conditions of Your Obligations. Your obligations hereunder shall be
subject to, in your discretion, the following terms and conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement shall have become effective not later than 5:30 p.m. on the date of
this Agreement or, at such later time or on such later date as you may agree to
in writing; and as of each Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or
20
shall be pending or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the satisfaction of
your counsel.
(b) Closing Date Matters. On each Closing Date, (i) the
Registration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the Rules and Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the Rules and
Regulations; the Company shall have complied in all material respects with Rule
430A (if it shall have elected to rely thereon) and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company, the General Partner, the
Partnership, the Subsidiary Partnership or the Lessee, whether or not arising in
the ordinary course of business, (iii) no action, suit or proceeding at law or
in equity shall be pending or, to the Company's knowledge, threatened against
the Company, the General Partner, the Partnership or the Subsidiary Partnership
that would be required to be set forth in the Prospectus other than as set forth
therein and no proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company, the General Partner, the Partnership or the
Subsidiary Partnership before or by any federal, state or other commission,
board or administrative agency wherein an unfavorable decision, ruling or
finding could materially adversely affect the business, prospects, assets,
results of operations or condition (financial or otherwise) of the Company, the
General Partner, the Partnership or the Subsidiary Partnership other than as set
forth in the Prospectus, (iv) the Company, the General Partner and the
Partnership shall have complied with all agreements and satisfied all conditions
on their part to be performed or satisfied on or prior to each Closing Date, and
(v) the representations and warranties of the Company, the General Partner and
the Partnership set forth in Section of this Agreement shall be accurate as
though expressly made at and as of each Closing Date. On each Closing Date, you
shall have received a certificate executed by the President of the Company, the
trustee of the General Partner and the general partner of the Partnership, dated
as of each Closing Date, to such effect and with respect to the following
additional matters: (A) the Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus has been issued,
and no proceedings for that purpose have been instituted or are pending or, to
their knowledge, threatened under the 1933 Act; and (B) they have reviewed the
Registration Statement and the Prospectus and, when the Registration Statement
became effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required to be
included therein or necessary to make the statements therein
21
not misleading and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus that has not
been so set forth.
(c) Opinions of Hunton & Xxxxxxxx. At each Closing Date, you
shall receive the opinions of Hunton & Xxxxxxxx, counsel for the Company, the
General Partner and the Partnership, in form and substance satisfactory to you
and your counsel, to the effect
that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Virginia,
with the corporate power and authority to execute, deliver and perform this
Agreement and to conduct its business as described in the Prospectus, and is
qualified to do business or registered to transact business as a foreign
corporation and is in good standing as a foreign corporation in
____________________________. No consent, approval, authorization or order from
any court, governmental agency or body is required in connection with the
execution and delivery by the Company of this Agreement, or the consummation by
the Company of the transactions contemplated hereby, except such as has been
obtained or as may be required by applicable state securities, blue sky or real
estate syndication laws or required by the NASD, as to which such counsel need
express no opinion. Such counsel also need not express an opinion on local laws
relating to the leasing or operation of real estate.
(ii) The General Partner has been duly formed and is validly existing as
a real estate investment trust in good standing under the laws of the State of
Maryland, with the power and authority to execute, deliver and perform this
Agreement and to conduct its business as described in the Prospectus, and is
qualified to do business or registered to transact business and is in good
standing in ____________________________________________. No consent, approval,
authorization or order from any court, or governmental agency or body is
required in connection with the execution and delivery by the General Partner of
this Agreement, or the consummation by the General Partner of the transactions
contemplated hereby, except such as has been obtained or as may be required by
applicable state securities, blue sky or real estate syndication laws or
required by the NASD, as to which such counsel need express no opinion. Such
counsel also need not express an opinion on local laws related to the leasing or
operation of real estate. The Company is the sole beneficial owner of the shares
of beneficial interest of the General Partner.
(iii) The Partnership was duly formed and is validly existing as a
limited partnership under the Virginia Revised Uniform Limited Partnership Act
with the partnership power and authority to execute, deliver and perform this
Agreement and to
22
conduct its business as described in the Prospectus, and is qualified to do
business or is registered to transact business as a foreign limited partnership
and is in good standing as a foreign limited partnership in
_______________________________________. No consent, approval, authorization or
order from any court, governmental agency or body is required in connection with
the execution and delivery by the Partnership of this Agreement, or the
consummation by the Partnership of the transactions contemplated hereby, except
such as has been obtained or as may be required by applicable state securities,
blue sky or real estate syndication laws or required by the NASD, as to which
such counsel need express no opinion. Such counsel also need not express an
opinion on local laws relating to the leasing or operation of real estate. The
General Partner is the sole general partner of the Partnership.
(iv) The Company has the corporate power and authority to execute,
deliver and perform this Agreement, to issue, sell and deliver the Shares as
provided herein and to consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed, and delivered by the Company and
the Agreement constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, moratorium, liquidation,
reorganization, or similar laws affecting creditors' rights generally, (b)
general equity principles, regardless of whether such enforceability is
considered in equity or at law, and (c) limitations imposed by federal or state
securities laws or the public policy underlying such laws regarding the
enforceability of indemnification provisions.
(v) The General Partner has the power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
herein. This Agreement has been duly authorized, executed and delivered by the
General Partner and the Agreement constitutes a valid and binding agreement of
the General Partner, enforceable in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, moratorium,
liquidation, reorganization, or similar laws affecting creditors' rights
generally, (b) general equity principles, regardless of whether such
enforceability is considered in equity or at law, and (c) limitations imposed by
federal or state securities laws or the public policy underlying such laws
regarding the enforceability of indemnification provisions.
(vi) The Partnership has the partnership power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly authorized, executed, and
delivered by the Partnership and the Agreement constitutes a valid and binding
agreement of the Partnership, enforceable in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
moratorium, liquidation, reorganization, or similar laws affecting creditors'
rights generally, (b) general equity principles, regardless of whether such
enforceability is considered in equity or at law, and (c) limitations imposed by
federal or
23
state securities laws or the public policy underlying such laws regarding
the enforceability of indemnification provisions.
(vii) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a summary
of the terms of the Common Stock and laws related thereto, fairly summarize such
terms and applicable law, and present the information called for by the 1933 Act
and the Rules and Regulations. The Common Stock conforms in all material
respects as to legal matters to the description thereof contained in the
Registration Statement and the Prospectus.
(viii) The Shares have been duly and validly authorized by the General
Partner, and, when issued and delivered against payment as provided in this
Agreement, will be validly issued, fully paid, and nonassessable. No person or
entity holds preemptive rights with respect to any of the Shares. The form of
the certificates evidencing the Shares comply with all applicable requirements
of Virginia law.
(ix) The Units to be issued to the General Partner in connection with the
Transactions have been duly and validly authorized by the Partnership. The offer
and sale of the Units by the Partnership will constitute an exempted transaction
pursuant to Section 4(2) of the 1933 Act and will not require registration of
the Units under Section 5 of the 0000 Xxx.
(x) The execution, delivery, and performance of this Agreement, the
compliance with the terms and provisions hereof and the consummation of the
transactions contemplated herein and in the Registration Statement and
Prospectus, by the Company, the General Partner and/or the Partnership do not
and will not:
A. violate the articles of incorporation, bylaws, declaration of trust,
certificate of limited partnership or partnership agreement, as the case may be,
of the Company or the Partnership;
B. result in a breach of, or constitute a default under, any contract
that was filed, or the form of which was filed, as an exhibit to the
Registration Statement;
C. to such counsel's knowledge, violate any applicable statute, rule or
regulation, order of any court or any federal, state, or local governmental
authority or agency binding on the Company or the Partnership, or any of their
respective businesses, investments, properties, assets or Hotels;
D. to such counsel's knowledge, result in the creation or imposition of
any lien, charge, claim, or encumbrance upon any property or asset of any of the
foregoing.
24
(xi) The Common Stock, including the Shares, has been approved for
quotation on the Nasdaq National Market.
(xii) The Company and the General Partner are organized in conformity
with the requirements for qualification as real estate investment trusts under
the Code, and the Company's and the General Partner's respective methods of
operation (as presently conducted and proposed to be conducted immediately after
Closing) enable them to meet the requirements for qualification and taxation as
real estate investment trusts under the Code. The descriptions of the law and
the legal conclusions contained in the Prospectus under the caption "Federal
Income Tax Consequences" are correct in all material respects, and the
discussion thereunder fairly summarizes the federal tax considerations that are
material to a holder of the Common Stock.
(xiii) The Registration Statement has become effective under the 1933 Act
and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or is pending or contemplated under the
1933 Act. Other than financial statements and other financial and operating data
and schedules contained therein, as to which counsel need express no opinion,
the Registration Statement, when it became effective, the Prospectus, as of its
date and as of the date hereof, comply as to form in all material respects with
the requirements of the 1933 Act and the Rules and Regulations.
(xiv) Nothing has come to such counsel's attention that leads it to
believe that the Registration Statement, or any further amendment thereto made
prior to the Closing Date, on its effective date, contained or contains any
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus or any amendment or supplement thereto
made prior to the Closing Date, as of its date and as of the Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that such counsel need express no belief regarding the
financial statements and related schedules and other financial data contained in
the Registration Statement, any amendment thereto, or the Prospectus, or any
amendment or supplement thereto).
(xv) None of the Company, the General Partner, or the Partnership is, or
solely as a result of the consummation of the Transactions will become, an
"investment company," or an entity that controls or is "controlled by" an
"investment company," as such terms are defined under the 0000 Xxx.
(xvi) The information in the Prospectus under the captions "Certain
Provisions of Virginia Law and of the Company's Articles of Incorporation and
Bylaws," "Shares Available for Future Sale," and "Federal Income Tax
Considerations," to the extent
25
that it constitutes matters of law or legal conclusions, has been reviewed by
such counsel, is correct, and presents fairly the information required to be
disclosed therein under the 1933 Act and the Rules and Regulations.
(xvii) To such counsel's knowledge, except as described in the
Prospectus, there is not pending or threatened, any action, suit, proceeding,
inquiry or investigation before or by any court or any federal, state or local
governmental authority or agency to which the Company, the General Partner, the
Partnership or any of their respective officers or directors are or may be a
party, or to which any of the properties, assets or rights of any such entity or
person may be subject, which, if determined adversely to any of the Company, the
General Partner or the Partnership would individually or in the aggregate (A)
have a material adverse effect on the financial position, results of operations,
business or material assets of any of the Company, the General Partner or the
Partnership, or (B) that might adversely affect the consummation of the
transactions contemplated by this Agreement.
In rendering the opinions set forth above, Hunton & Xxxxxxxx, with your
consent as to matters of form and substance, may adopt forms of opinion that are
consistent with the Legal Opinion Accord of the ABA Section of Business Law
(1991) (the "Accord").
(d) Other Legal Opinion. At each Closing Date, you shall have
received a favorable opinion of Xxxxxxxxx, Xxxxxxx & Xxxxx, counsel for the
Lessee and the Subsidiary Partnership, dated as of that Closing Date, in form
and substance satisfactory to your
counsel to the effect that:
(i) The Lessee has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland with all
requisite corporate power and authority to conduct its business as described in
the Prospectus, and is qualified to do business and in good standing as a
foreign corporation in _________________________________. The Lessee is not in
violation of any provision of its articles of incorporation, bylaws or other
governing documents. To the knowledge of such counsel, the Lessee is not in
default under or in breach of, or subject to any event that with the giving of
notice or the lapse of time or both would constitute a default under or breach
of, any term or condition of any material agreement or instrument of which such
counsel has knowledge to which the Lessee is a party or by which any of its
properties is bound, except as disclosed in the Prospectus. No consent,
approval, authorization or order from any court, governmental agency or body is
required in connection with the consummation by the Lessee of the transactions
contemplated in this Agreement and in the Prospectus, except such as may be
required by applicable state securities, blue sky or real estate syndication
laws or required by the NASD, as to which such counsel need express no opinion.
(ii) The Subsidiary Partnership has been duly formed and is validly
existing as a limited partnership under the laws of the State of Maryland, with
all requisite
26
partnership power and authority to conduct its business and to own its
properties, as described in the Prospectus.
(iii) The Subsidiary Partnership is not in violation of any provisions of
its partnership agreement or other governing documents. To the knowledge of such
counsel, the Subsidiary Partnership is not in default under or in breach of, or
subject to any event that with the giving of notice or the lapse of time or both
would constitute a default under or breach of, any term or condition of any
material agreement or instrument to which it is a party or by which any of its
properties is bound, except as disclosed in the Prospectus. The Company is the
sole limited partner of the Subsidiary Partnership and the Partnership is the
sole general partner of the Subsidiary Partnership.
(iv) The Lessee owns, possesses or has obtained such Permits as are
necessary to own or lease its properties and to carry on its businesses in the
manner described in the Prospectus; to such counsel's knowledge, the Lessee has
fulfilled and performed all of its obligations with respect to all such Permits,
and no event has occurred that allows, or after notice or lapse of time or both
would allow, revocation or modification thereof or would result in any other
impairment of the rights of the holder of any such Permit.
(v) To the knowledge of such counsel, neither the Lessee nor the
Subsidiary Partnership is in violation of, or in default with respect to, any
statute, rule, regulations, order, judgment, or decree, except as may be
properly described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a materially adverse effect on the financial
position, results of operations, or business or each of such entity,
respectively.
(vi) To such counsel's knowledge, except as described in the Prospectus,
there is not pending, threatened or contemplated, any action, suit, proceeding,
inquiry or investigation before or by any court or any federal, state or local
governmental authority or agency to which the Lessee or the Subsidiary
Partnership or any of their respective officers or directors are or may be a
party, or to which any of the properties, investments, assets or rights of any
such entity or person may be subject, (A) that might result in any material
adverse change in the condition (financial or otherwise) or business of the
Lessee or the Subsidiary Partnership or (B) that might materially adversely
affect any of the material properties, investments or assets of any such entity,
or (C) that might adversely affect the consummation of the transactions
contemplated by this Agreement or any of the other Transactions.
In rendering the opinion set forth above, Xxxxxxxxx, Xxxxxxx & Xxxxx
may, with your consent as to matters of form and substance, adopt a form of
opinion that is consistent with the Legal Opinion Accord of the ABA Section of
Business Law (1991) (the "Accord").
27
(e) Opinion of Your Counsel. At each Closing Date, you shall
receive the favorable opinion of Xxxxxxx & Savage, P.C., your counsel, with
respect to such matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass on such matters.
(f) Independent Public Accountants. At the time that this
Agreement is executed by the Company, you shall have received from Xxxxxxx
Xxxxxx & Xxxxxxxxx a letter, dated the date hereof, in form and substance
satisfactory to you, confirming that they are independent public accountants
with respect to the Company within the meanings of the 1933 Act and the Rules
and Regulations, and stating in effect that:
(i) in their opinion, the financial statements
and any supplementary financial information and schedule included in the
Registration Statement and covered by their opinion therein comply as to form
and in all material respects with the applicable accounting requirements of the
1933 Act and the Rules and Regulations;
(ii) on the basis of limited procedures (set
forth in detail in such letter and made in accordance with such procedures as
may be specified by you) not constituting an audit in accordance with generally
accepted auditing standards, consisting of (but not limited to) a reading of the
latest available internal unaudited financial statements of the Company, a
reading of the minute books of the Company, inquiries of officials of the
Company responsible for financial and accounting matters, and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention to cause them to believe that:
A. the unaudited financial statements
and supporting schedule and other unaudited financial data of the Company
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
Rules and Regulations or are not presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration Statement;
B. any other unaudited income statement
data and balance sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited financial statements from which such data
and items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements included in the
Prospectus;
C. any unaudited pro forma financial
information included in the Prospectus does not comply as to form in all
material respects with the applicable
28
accounting requirements of the 1933 Act and the Rules and Regulations or the pro
forma adjustments have not been properly applied to historical amounts in the
compilation of that information;
D. at a specified date not more than
five (5) days prior to the date of such letter, there was any change in the
capital stock or long-term debt or obligations of the Company or there were any
decreases in net current assets or net assets, shareholders' equity, or other
items specified by you from that set forth in the Company's balance sheet at
December 31, 1997, except as described in such letter; and
E. for the period from December 31,
1997 to a specified date not more than five (5) days prior to the date of
delivery of such letter, there were any decreases in room revenues, food
revenues, beverage revenues, or operating income before interest, depreciation
and amortization for the Company, in each case as compared with the
corresponding period of the preceding year, except in each case for decreases
that the Prospectus discloses have occurred or may occur or that are described
in such letter; and
(iii) in addition to the procedures referred to in
clause (ii) above and the examination referred to in their Reports including in
the Registration Statement, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages, and financial
information specified by you that are derived from the general accounting
records of the Company, that appear in the Registration Statement or the
exhibits or schedules thereto and are specified by you, and have compared such
amounts, percentages, and financial information with the accounting records of
the Company and with material derived from such records and have found them to
be in agreement.
(g) Updated Comfort Letter. At each Closing Date, you shall
have received from Xxxxxxx Xxxxxx & Xxxxxxxxx a letter, in form and substance
satisfactory to you and dated as of that Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to Section above,
except that the specified date referred to shall be a date not more than five
(5) days prior to that Closing Date.
(h) Post-Financial Developments. In the event that either of
the letters to be delivered pursuant to Sections and above sets forth any
changes, decreases or increases, it shall be a further condition to your
obligations that you shall have reasonably determined, after discussions with
officers of the Company responsible for financial and accounting matters and
with Xxxxxxx Xxxxxx & Xxxxxxxxx, that such changes, decreases or increases as
are set forth in such letter do not reflect a material adverse change in the
capital stock, long-term debt, obligations under capital leases, total assets,
net current assets, or shareholders' equity of the Company as compared with the
amounts shown in the latest consolidated pro forma balance sheet of the Company,
or a material adverse change in the room revenues, food revenues, beverage
revenues, or operating income before interest,
29
depreciation and amortization for the Hotels in each case as compared with the
corresponding period of the prior year.
(i) Additional Information. On each Closing Date, your counsel
shall have been furnished with all such documents, certificates and opinions as
they may request for the purpose of enabling them to pass upon the issuance and
sale of the Shares as contemplated in this Agreement and the matters referred to
in Section and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or the Partnership, the
performance of any of the covenants of the Company or the Partnership, or the
fulfillment of any of the conditions herein contained; and all proceedings taken
by the Company at or prior to that Closing Date in connection with the
authorization, issuance and sale of the Shares as contemplated in this
Agreement, shall be satisfactory in form and substance to you and to your
counsel. The Company, the General Partner and the Partnership will furnish you
with such number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request. Any certificate signed by any
officer, partner, or other official of the Company, the General Partner or the
Partnership and delivered to you or your counsel shall be deemed a
representation and warranty by the Company, the General Partner and the
Partnership to you as to the statements made therein.
(j) Adverse Events. Subsequent to the date hereof, there shall
not have occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the New York Stock Exchange or American
Stock Exchange or the Nasdaq National Market, (ii) a general moratorium on
commercial banking activities in Virginia or New York declared by either federal
or state authorities, as the case may be, (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war if the effect of any such event specified in this
clause (iii) in your reasonable judgment makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares on the terms
and in the manner contemplated in the Prospectus, or (iv) such a substantial
adverse change in general economic, political, financial or international
conditions affecting financial markets in the United States having a substantial
adverse impact on trading prices of securities in general, as, in your
reasonable judgment, makes it impracticable or inadvisable to proceed with the
public offering of the Shares or the delivery of the Shares on the terms and in
the manner contemplated in the Prospectus.
(k) Stock Restrictions. As described in Section hereof,
Xxxxxxxx shall have agreed in writing as to the matters set forth in such
section.
(l) NASD Review. The NASD, upon review of the terms of the
public offering of the Shares, shall not have objected to such offering, the
terms of the offering or your participation in the offering.
30
(m) Nasdaq Quotation. The Shares are quoted on the
Nasdaq National Market.
If any of the conditions specified in this Section shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you on notice to the Company at any time at or prior to the
Initial Closing Date, and such termination shall be without liability of any
party to any other party, except as provided in Sections and . Notwithstanding
any such termination, the provisions of Section shall remain in effect.
7. Indemnification and Contribution.
(a) Indemnification by the Company, the General Partner and
Partnership. The Company, the General Partner and the Partnership, jointly and
severally, will indemnify and hold you harmless against any losses, claims,
damages, or liabilities, joint or several, to which you may become subject under
the 1933 Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any breach of any warranty or covenant of the Company, the General
Partner or the Partnership herein contained or any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or are based upon the
Transactions, and will reimburse you for any legal or other expenses reasonably
incurred by you in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the Company, the
General Partner or the Partnership shall not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by you expressly
for use therein; provided further, that the indemnity agreement contained in
Section with respect to any Preliminary Prospectus shall not inure to your
benefit if you failed to send or give a copy of the Prospectus to such person at
or prior to the written confirmation of the sale of such Shares to such person
in any case where such delivery is required by the 1933 Act or the Rules and
Regulations and if the Prospectus would have cured any untrue statement or
alleged untrue statement or omission or alleged omission giving rise to such
loss, claim, damage, or liability. In addition to its other obligations under
this Section , the Company, the General Partner and the Partnership agree that,
as an interim measure during the pendency of any such claim, action,
investigation, inquiry, or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section , they will reimburse you on a monthly basis for all reasonable legal
and other expenses incurred in connection with investigating or defending any
such claim, action,
31
investigation, inquiry, or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's,
the General Partner's and the Partnership's obligation to reimburse you for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. Any such interim reimbursement
payments that are not made to you within thirty (30) days of a request for
reimbursement shall bear interest at the prime rate (or reference rate or other
commercial lending rate for borrowers of the highest credit standing) published
from time to time by The Wall Street Journal (the "Prime Rate") from the date of
such request. This indemnity agreement shall be in addition to any liabilities
that the Company, the General Partner and the Partnership may otherwise have.
For purposes of this Section , the information set forth in the last paragraph
on the front cover page (insofar as such information relates to you) and under
"Underwriting" in any Preliminary Prospectus and in the Prospectus constitutes
the only information furnished by you to the Company for inclusion in any
Preliminary Prospectus, the Prospectus, or the Registration Statement. None of
the Company, the General Partner or the Partnership will, without your prior
written consent, settle or compromise or consent to the entry of any judgment in
any pending or threatened action or claim or related cause of action or portion
of such cause of action in respect of which indemnification may be sought
hereunder (whether or not you are a party to such action or claim), unless such
settlement, compromise, or consent includes an unconditional release of you from
all liability arising out of such action or claim (or related cause of action or
portion thereof).
The indemnity agreement in this Section shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls you within the meaning of the 1933 Act or the 1934
Act to the same extent as such agreement applies to you.
(b) Indemnification by You. You will indemnify and hold
harmless the Company, the General Partner and the Partnership against any
losses, claims, damages, or liabilities to which the Company, the General
Partner or the Partnership may become subject, under the 1933 Act, the 1934 Act,
or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any breach of any
warranty or covenant by you herein contained or any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement, or the Prospectus or any such amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company, the General Partner or the Partnership by you expressly for use
therein; and will reimburse the Company or the Partnership for any legal or
other expenses reasonably incurred by the
32
Company, the General Partner or the Partnership in connection with investigating
or defending any such loss, claim, damage, liability, or action. In addition to
its other obligations under this Section , you agree that, as an interim measure
during the pendency of any such claim, action, investigation, inquiry, or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section , they will reimburse
the Company, the General Partner or the Partnership on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry, or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of their obligation to reimburse the Company, the General Partner
or the Partnership for such expenses and the possibility that such payments
might later been held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to the
Company within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement shall be in addition to any liabilities that you may otherwise have.
The indemnity agreement in this Section shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
officer and director of the Company, the General Partner and the Partnership and
each person, if any, who controls the Company, the General Partner or the
Partnership within the meaning of the 1933 Act or the 1934 Act to the same
extent as such agreement applies to the Company, the General Partner or the
Partnership.
(c) Notices of Claims; Employment of Counsel. Any party that
proposes to assert the right to be indemnified under this Section promptly shall
notify in writing each party against which a claim is to be made under this
Section of the institution of such action but the omission so to notify such
indemnifying party of any such action shall not relieve it from any liability it
may have to any indemnified party except (i) to the extent that the omission to
notify shall have caused or increased the indemnifying party's liability, and
(ii) that the indemnifying party shall be relieved of its indemnity obligation
for expenses of the indemnified party incurred before the indemnifying party is
notified. Such indemnifying party or parties shall assume the defense of such
action, including the employment of counsel (satisfactory to the indemnified
party) and payment of fees and expenses. An indemnified party shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless the
employment of such counsel shall have been authorized in writing by the
indemnifying party or parties in connection with the defense of such action or
the indemnifying party or parties shall not have employed counsel to have charge
of the defense of such action or such indemnified party or parties reasonably
shall have concluded that there may be defenses available to it or them that are
different from or additional to those available to such indemnifying party or
parties (in which case such indemnifying party or parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by such
indemnifying party or
33
parties. Anything in this paragraph to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any such claim or
action effected without its written consent.
(d) Arbitration. It is agreed that any controversy arising out
of the operation of the interim reimbursement arrangements set forth in Sections
and hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
a written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such arbitration
will be limited to the operation of the interim reimbursement provisions
contained in Sections and hereof and will not resolve the ultimate propriety or
enforceability of the obligation to indemnify for expenses that is created by
the provisions of Sections and .
(e) Contribution. If the indemnification provided for in
Section or is unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, or liabilities (or actions in
respect thereof) referred to therein, then the Company, the General Partner and
the Partnership on the one hand and you on the other shall contribute to the
amount paid or payable as a result of such losses, claims, damages, or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
General Partner and the Partnership on the one hand and you on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then the
Company, the General Partner and the Partnership and you shall contribute to
such amount paid or payable in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company, the
General Partner and the Partnership on the one hand and you on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company, the General Partner and the Partnership on the one hand and you on the
other shall be deemed to be in the same proportion as the total net proceeds
from the Offering (before deducting expenses) received by the Company, the
General Partner and the Partnership bear to the total selling commissions
received by you in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or allegedly untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company, the General Partner or the Partnership on
the one hand or to information with respect to you and furnished by you
respectively, in writing
34
specifically for inclusion in the Prospectus on the other and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. The Company, the General Partner and the
Partnership and you agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to above in this Section . The amount paid or payable as
a result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by any such party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) with respect to the transactions giving rise to the right of
contribution provided in this Section shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The obligations
in this Section for you to contribute are several in proportion to your
respective underwriting obligations and not joint. For purposes of this Section
, each person, if any, who controls you within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as you, and each director of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company, the General Partner or the Partnership within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as the
Company, the General Partner or the Partnership.
8. Representations and Agreements to Survive. Except as the context
otherwise requires, all representations, warranties, covenants and agreements
contained in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by you, or on your behalf, or by any
controlling person, or by or on behalf of the Company, the General Partner or
the Partnership, and shall survive until the fifth anniversary of the date of
this Agreement.
9. Termination of Agreement.
(a) Termination of Agreement. You shall have the right to
terminate this Agreement at any time prior to the Initial Closing Date (i) if
any representation or warranty of the Company, the General Partner or the
Partnership hereunder shall be found to have been incorrect or misleading when
made or the Company, the General Partner or the Partnership shall fail, refuse,
or be unable to perform any of their respective agreements hereunder or to
fulfill any condition of your obligations hereunder, (ii) if any other condition
of your obligations hereunder shall not be satisfied, (iii) if there shall have
been since the respective dates as of which information is given in the
Registration Statement, a material adverse change, or any development involving
a prospective material adverse change, in or affecting the business, prospects,
management, properties, assets, results of operations, or condition (financial
or otherwise) of the Company, the General Partner, the Partnership, or any
Hotel, whether or not arising in the ordinary course of business, or (iv) any
federal or state statute, regulation, rule, or order of any court or other
governmental authority has been
35
enacted, published, decreed, or otherwise promulgated that in your sole judgment
materially adversely affects or will materially adversely affect the business or
operations of the Company, the General Partner or the Partnership. You shall
have no liability to the Company, the General Partner or the Partnership
pursuant to this Agreement or otherwise as a result of any such termination.
(b) Result of Termination.
(i) If the sale of the Shares provided for
herein is not consummated (A) because of any termination of this Agreement
pursuant to Section , (B) because of any refusal, inability or failure on the
part of the Company or the Partnership to perform any agreement herein or comply
with any provision hereof other than by reason of your default, (C) by June 30,
1998 due to reasons within the control of the Company, the General Partner, the
Partnership or any of their affiliates, or (D) because the Company abandons this
Offering and obtains financing from other sources and you are not retained as a
senior investment banker in connection with such financing, then in addition to
its obligations with respect to expenses as set forth in Section , the Company
will reimburse you on demand for all your reasonable out-of-pocket expenses
(including the fees and expenses of your counsel), including disbursements
reasonably incurred by you in reviewing the Registration Statement and the
Prospectus, and in investigating and making preparations for the marketing of
the Shares.
(ii) If the sale of the Shares provided for
herein is not consummated for any other reason, the Company, the General Partner
and the Partnership shall pay expenses as required by Section , and the Company,
the General Partner and the Partnership shall have no additional liability to
you except for such liabilities, if any, as may exist or thereafter arise under
Section .
10. Notices.
(a) Method and Location of Notices. All communications
hereunder, except as herein otherwise specifically provided, shall be in writing
and shall be sent by overnight courier, hand-delivered or telecopied and
confirmed as follows:
To the Company, the General Partner or the Partnership:
Xxxxxxxx Hospitality Trust, Inc.
00000 Xxx Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
36
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
To You:
Xxxxxxxx & Strudwick, Incorporated
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. X. XxXxxxxx Xxxxx, III
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx & Savage, P.C.
0000 XxxxxxxXxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) Time of Notices. Notice shall be deemed to be given by you
to the Company, the General Partner or the Partnership or by the Company, the
General Partner or the Partnership to you when it is sent by overnight courier,
hand-delivered or telecopied as
provided in Section .
11. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon you, the Company, the General Partner and the Partnership
and the controlling persons referred to in Section , and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have a legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
12. Governing Law, Construction, and Time. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia. Specified time of day refers to United States Eastern Time. Time shall
be of the essence of this Agreement.
37
13. Description Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, and if executed in more than one counterpart, the executed
counterparts shall together constitute a single instrument.
If the foregoing correctly sets forth the understanding between you,
the Company, the General Partner and the Partnership, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
XXXXXXXX HOSPITALITY TRUST, INC.
By:
Xxxxx X. Xxxxxxxx, Xx.
President
XXXXXXXX HOSPITALITY REIT TRUST
By:
Xxxxx X. Xxxxxxxx, Xx.
Trustee
XXXXXXXX HOSPITALITY LIMITED
PARTNERSHIP
By: Xxxxxxxx Hospitality REIT Trust,
General Partner
By:
Xxxxx X. Xxxxxxxx, Xx.
Trustee
Confirmed and accepted as of
the date first above written:
XXXXXXXX & STRUDWICK, INCORPORATED
38
By:
X. XxXxxxxx Xxxxx, III
Senior Vice President
39
