EXHIBIT 1.1
1,000,000 SHARES
RFS HOTEL INVESTORS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
FEBRUARY 14, 2002
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TABLE OF CONTENTS
TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................2
(a) Compliance with Registration Requirements.......................................................2
(b) Offering Materials Furnished to Underwriter.....................................................2
(c) Distribution of Offering Material By the Company................................................2
(d) The Underwriting Agreement......................................................................3
(e) Authorization of the Common Shares..............................................................3
(f) No Applicable Registration or Other Similar Rights..............................................3
(g) No Material Adverse Change......................................................................3
(h) Independent Accountants.........................................................................3
(i) Preparation of the Financial Statements.........................................................3
(j) Incorporation and Good Standing of the Company and its Corporate Subsidiaries...................4
(k) Formation and Good Standing of Partnership and Limited Liability Company Subsidiaries...........4
(l) Capitalization and Other Capital Stock Matters..................................................5
(m) Stock Exchange Listing..........................................................................5
(n) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required......5
(o) No Material Actions or Proceedings..............................................................6
(p) Intellectual Property Rights....................................................................6
(q) All Necessary Permits, etc......................................................................6
(r) Title to Properties.............................................................................7
(s) Tax Law Compliance..............................................................................7
(t) Company Not an "Investment Company".............................................................7
(u) Insurance.......................................................................................8
(v) No Price Stabilization or Manipulation..........................................................8
(w) Related Party Transactions......................................................................8
(x) Exchange Act Compliance.........................................................................8
(y) No Unlawful Contributions or Other Payments.....................................................8
(z) Company's Accounting System.....................................................................8
(aa) Compliance with Environmental Laws.............................................................9
(bb) ERISA Compliance...............................................................................9
(cc) Brokers........................................................................................10
(dd) No Outstanding Loans or Other Indebtedness.....................................................10
(ee) Compliance with Laws...........................................................................10
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES..............................................11
(a) The Firm Common Shares..........................................................................11
(b) The First Closing Date..........................................................................11
(c) The Optional Common Shares; the Second Closing Date.............................................11
(d) Public Offering of the Common Shares............................................................11
(e) Payment for the Common Shares...................................................................12
(f) Delivery of the Common Shares...................................................................12
(g) Delivery of Prospectus to the Underwriter.......................................................12
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY...........................................................12
(a) Underwriter's Review of Proposed Amendments and Supplements.....................................12
(b) Securities Act Compliance.......................................................................13
(c) Amendments and Supplements to the Prospectus and Other Securities Act Matters...................13
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(d) Copies of any Amendments and Supplements to the Prospectus......................................13
(e) Blue Sky Compliance.............................................................................14
(f) Use of Proceeds.................................................................................14
(g) Transfer Agent..................................................................................14
(h) Earnings Statement..............................................................................14
(i) Periodic Reporting Obligations..................................................................14
(j) Company to Provide Interim Financial Statements.................................................14
(k) New York Stock Exchange Listing.................................................................15
(l) Exchange Act Compliance.........................................................................15
(m) Agreement Not to Offer or Sell Additional Securities............................................15
(n) Investment Limitation...........................................................................15
(o) No Manipulation of Price........................................................................15
(p) Additional Documents............................................................................15
(q) Press Releases..................................................................................16
SECTION 4. PAYMENT OF EXPENSES...........................................................................16
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER..............................................16
(a) Accountants' Comfort Letter.....................................................................16
(b) Compliance with Registration Requirements; No Stop Order; No Objection from NASD................17
(c) No Material Adverse Change or Ratings Agency Change.............................................17
(d) Opinion of Counsel for the Company..............................................................17
(e) Opinion of Tax Counsel for the Company..........................................................17
(f) Opinion of Counsel for the Underwriter..........................................................18
(g) Officers' Certificate...........................................................................18
(h) Bring-down Comfort Letter.......................................................................18
SECTION 6. REIMBURSEMENT OF UNDERWRITER'S EXPENSES.......................................................19
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT...............................................................19
SECTION 8. INDEMNIFICATION...............................................................................19
(a) Indemnification of the Underwriter..............................................................19
(b) Indemnification of the Company, its Directors and Officers......................................20
(c) Notifications and Other Indemnification Procedures..............................................20
(d) Settlements.....................................................................................21
SECTION 9. CONTRIBUTION..................................................................................21
SECTION 10. TERMINATION OF THIS AGREEMENT................................................................22
SECTION 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY..........................................23
SECTION 12. NOTICES......................................................................................23
SECTION 13. SUCCESSORS...................................................................................24
SECTION 14. PARTIAL UNENFORCEABILITY.....................................................................24
SECTION 15. GOVERNING LAW PROVISIONS.....................................................................24
SECTION 16. GENERAL PROVISIONS...........................................................................24
UNDERWRITING AGREEMENT
February 14, 0000
XXXX XX XXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. RFS Hotel Investors, Inc., a Tennessee
corporation (the "Company"), proposes to issue and sell to Banc of America
Securities LLC (the "Underwriter") an aggregate of 1,000,000 shares (the "Firm
Common Shares") of its Common Stock, par value $.01 per share (the "Common
Stock"). In addition, the Company has granted to the Underwriter an option to
purchase up to an additional 150,000 shares (the "Optional Common Shares") of
Common Stock, as provided in Section 2. The Firm Common Shares and, if and to
the extent such option is exercised, the Optional Common Shares are collectively
called the "Common Shares."
The Company (i) has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 333-3307), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares, and (ii) has
prepared, and will file with the Commission prior to the First Closing Date (as
defined below) in accordance with Rule 424(b), a prospectus supplement
supplementing such form of prospectus (the "prospectus supplement"). Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933 and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), including all
documents incorporated or deemed to be incorporated by reference therein, and
any information deemed to be a part thereof, at the time of effectiveness
pursuant to Rule 430A under the Securities Act or pursuant to the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act"), is called the "Registration Statement". Such
prospectus, as supplemented by the prospectus supplement, together with the
documents incorporated or deemed to be incorporated by reference therein prior
to the date hereof, is called the "Prospectus." All references in this Agreement
to the Registration Statement, the Prospectus or any amendments or supplements
to any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
All references in this Agreement to financial statements and
schedules and other information which is "contained," "disclosed," "included,"
"filed as part of" or "stated" in the Registration Statement or the Prospectus
(and all other references of like import) shall be deemed to mean and include
all such financial statements and schedules and other information which is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the Exchange Act
which is or is deemed
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to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be.
The Company hereby confirms its agreements with the
Underwriter as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Underwriter
as follows:
(a) Compliance with Registration Requirements.
The Registration Statement has been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the knowledge of the Company, are
contemplated or threatened by the Commission.
The Prospectus when filed, and as of the date of the
prospectus supplement, complied in all material respects with the Securities Act
and, if filed by electronic transmission pursuant to XXXXX (except as may be
permitted by Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriter for use in connection with the offer and
sale of the Common Shares. Each of the Registration Statement, and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, and any
amendment or supplement thereto, as of its date and as of the First Closing
Date, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, or any post-effective amendment thereto, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity with
information relating to the Underwriter furnished to the Company in writing by
the Underwriter expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required.
(b) Offering Materials Furnished to Underwriter.
The Company has delivered to the Underwriter one conformed
copy of the Registration Statement and the Prospectus in such quantities and at
such places as the Underwriter has reasonably requested.
(c) Distribution of Offering Material By the Company.
The Company has not distributed and will not distribute, prior
to the completion of the Underwriter's distribution of the Common Shares, any
offering material in connection with the offering and sale of the Common Shares
other than the Prospectus or the Registration Statement.
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(d) The Underwriting Agreement.
This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, each of the Company and
RFS Partnership, L.P. (the "Operating Partnership"), enforceable in accordance
with its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(e) Authorization of the Common Shares.The Common Shares have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor pursuant to this Agreement,
will be validly issued, fully paid and nonassessable.
(f) No Applicable Registration or Other Similar Rights.
There are no persons with registration or other similar rights
to have any equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement, except for
such rights as have been duly waived.
(g) No Material Adverse Change.
Except as otherwise disclosed in the Prospectus (without
giving effect to any amendment or supplement thereto), subsequent to the
respective dates as of which information is given in the Prospectus (without
giving effect to any amendment or supplement thereto): (i) there has been no
material adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or otherwise,
or in the earnings, business, operations or prospects, whether or not arising
from transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a "Material
Adverse Change"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business or entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) except for regular quarterly dividends on the Common Stock in amounts per
share consistent with past practice, there has been no dividend or distribution
of any kind declared, paid or made by the Company or, except for dividends paid
to the Company or other subsidiaries, any of its subsidiaries on any class of
capital stock or repurchase or redemption by the Company or any of its
subsidiaries of any class of capital stock.
(h) Independent Accountants.
PricewaterhouseCoopers LLP, who have expressed their opinion
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants as required
by the Securities Act and the Exchange Act.
(i) Preparation of the Financial Statements.
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The financial statements filed with the Commission as a part
of the Registration Statement and included in the Prospectus present fairly the
consolidated financial position of the Company and its subsidiaries as of and at
the dates indicated and the results of their operations and cash flows for the
periods specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are
required to be included in the Registration Statement.
(j) Incorporation and Good Standing of the Company and its Corporate
Subsidiaries.
Each of the Company and its subsidiaries that is a corporation
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and, in the case of the
Company, to enter into and perform its obligations under this Agreement. Each of
the Company and each subsidiary that is a corporation is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Change. All
of the issued and outstanding capital stock of each subsidiary that is a
corporation has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
claim. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed on
Schedule l(j) attached hereto.
(k) Formation and Good Standing of Partnership and Limited Liability
Company Subsidiaries.
Each of the Company's subsidiaries that is organized as a
limited partnership or a limited liability company has been duly organized or
formed, as the case may be, and is validly existing as a limited partnership or
limited liability company, as the case may be, in good standing under the laws
of the jurisdiction of its organization or formation, as the case may be, and
has partnership or limited liability company, as the case may be, power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and, in the case of the Operating Partnership, to
enter into and perform its obligations under this Agreement. Each of the
Company's subsidiaries that is organized as a limited partnership or a limited
liability company is duly qualified as a foreign partnership or limited
liability company, as the case may be, to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change. The Company directly or indirectly owns all outstanding general
partnership interests and limited partnership interests of each subsidiary that
is organized as a limited partnership and all membership interests of each
subsidiary that is organized as a limited liability company, except for an
approximately 9% limited partnership interest in the Operating Partnership and
except for a 25% interest in Wharf
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Associates. All such general partnership interests, limited partnership
interests and membership interests, as the case may be, directly or indirectly
owned by the Company have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim.
(l) Capitalization and Other Capital Stock Matters.
The authorized capital stock of the Company is as set forth,
and the issued and outstanding capital stock of the Company is in all material
respects as set forth, in the Prospectus under the caption "Capitalization." The
Common Stock (including the Common Shares) conforms in all material respects to
the description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any capital stock, partnership interests or membership interests of
any of its subsidiaries other than those described in the Prospectus. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights. All of the
issued and outstanding limited partnership interests of the Operating
Partnership have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state
securities laws; the Company is the sole general partner of and owns an
approximately 91.0% limited partnership interest in the Operating Partnership.
(m) Stock Exchange Listing.
The Common Shares have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance. The Company
has not been informed of any withdrawal, revocation, cancellation or
conditioning of such approval.
(n) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required.
Neither the Company nor any of its subsidiaries is in
violation of its charter, by-laws, partnership agreement, operating agreement or
similar organizational documents and is not in default (or, with the giving of
notice or lapse of time, would be in default) ("Default") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject (each,
an "Existing Instrument"), except for such Defaults as would not, individually
or in the aggregate, result in a Material Adverse Change. The Company's
execution, delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company or the
partnership agreement,
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operating agreement or similar organizational documents of any subsidiary, (ii)
will not conflict with or constitute a breach of, or Default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, or require the
consent of any other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change and (iii)
will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company's and the Operating Partnership's execution, delivery
and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus, except such as have been obtained or
made by the Company and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the National Association
of Securities Dealers, Inc. (the "NASD").
(o) No Material Actions or Proceedings.
There are no legal or governmental actions, suits or
proceedings pending or, to the Company's knowledge, threatened (i) against or
affecting the Company or any of its subsidiaries, (ii) which has as the subject
thereof any officer or director of, or property owned or leased by, the Company
or any of its subsidiaries or (iii) relating to environmental or discrimination
matters, where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement. No labor dispute with the employees of the Company or any of its
subsidiaries, or with the employees of any principal supplier of the Company,
exists or, to the Company's knowledge, is threatened or imminent which, if
determined adversely to the Company could reasonably be expected to result in a
Material Adverse Change.
(p) Intellectual Property Rights.
The Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, domain names, licenses,
approvals, trade secrets and other similar rights (collectively, "Intellectual
Property Rights") reasonably necessary to conduct their businesses as described
in the Prospectus; and the expected expiration of any of such Intellectual
Property Rights would not result in a Material Adverse Change. Neither the
Company nor any of its subsidiaries has received any notice of infringement or
conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change. To the Company's knowledge, none of the
technology employed by the Company has been obtained or is being used by the
Company in violation of any contractual obligation binding on the Company or any
of its officers, directors or employees or otherwise in violation of the rights
of any persons.
(q) All Necessary Permits, etc.
The Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and neither the
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Company nor any subsidiary has received any notice of proceedings relating to
the revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(r) Title to Properties.
Except as described in the Prospectus, the Company and its
subsidiaries have good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1(i) above
(or elsewhere in the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal property
by the Company or such subsidiary.
(s) Tax Law Compliance.
The Company and each of its subsidiaries have accurately
prepared and timely filed all federal, state, foreign and other tax returns that
are required to be filed by it and have paid or made provision for the payment
of all taxes, assessments, governmental or other similar charges, including
without limitation, all sales and use taxes, fines, penalties, and all taxes
which the Company and each of its subsidiaries is obligated to withhold from
amounts owing to employees, creditors and third parties, with respect to the
periods covered by such tax returns (whether or not such amounts are shown as
due on any tax return), except, in all cases, for any such tax, assessment or
similar charge that the Company is contesting in good faith and except in any
case in which the failure to so file or pay would not in the aggregate result in
a Material Adverse Change. The Company has made adequate charges, accruals and
reserves in the applicable financial statements referred to in Section 1(i)
above in respect of all federal, state and foreign income and franchise taxes
for all periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined, except where failure to make such
charges, accruals and reserves would not result in a Material Adverse Change. No
deficiency assessment with respect to a proposed adjustment of the Company's or
any of its subsidiaries' federal, state, or other taxes is pending or, to the
best of the Company's knowledge, threatened which could reasonably be expected
in the aggregate to result in a Material Adverse Change. There is no tax lien,
whether imposed by any federal, state, or other taxing authority, outstanding
against the assets, properties or business of the Company or any of its
subsidiaries.
(t) Company Not an "Investment Company".
The Company has been advised of the rules and requirements
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). The Company is not, and after receipt of payment for the Common Shares
will not be, an "investment company" within the meaning of Investment Company
Act and intends to conduct its business in a manner so that it will not become
subject to the Investment Company Act.
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(u) Insurance.
Except as disclosed in the Prospectus, each of the Company and
its subsidiaries are insured by recognized, financially sound and reputable
institutions with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal
property owned or leased by the Company and its subsidiaries against theft,
damage, destruction, acts of vandalism and earthquakes. Except as disclosed in
the Prospectus, the Company has no reason to believe that it or any subsidiary
will not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change.
(v) No Price Stabilization or Manipulation.
The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Shares. The Company
acknowledges that the Underwriter may engage in passive market making
transactions in the Common Shares in accordance with Regulation M under the
Exchange Act.
(w) Related Party Transactions.
There are no business relationships or related-party
transactions involving the Company or any subsidiary or any other person
required to be described in the Prospectus which have not been described as
required.
(x) Exchange Act Compliance.
The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the Exchange Act, and, when read together with the other
information in the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the First Closing Date will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(y) No Unlawful Contributions or Other Payments.
Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any subsidiary, has
made any contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(z) Company's Accounting System.
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The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(aa) Compliance with Environmental Laws.
Except as otherwise disclosed in the Prospectus or as would
not otherwise require disclosure under federal securities laws, (i) to the
knowledge of the Company, neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign law or regulation relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environment Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Company or its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or any
of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges that
the Company or any of its subsidiaries is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company has
received notice, and no notice by any person or entity, alleging potential
material liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal injuries,
attorneys' fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern at any location or alleging a potential or actual violation of
Environmental Laws (collectively, "Environmental Claims"), pending or, to the
Company's knowledge, threatened against the Company or any of its subsidiaries
or any person or entity whose liability for any Environmental Claim the Company
or any of its subsidiaries has retained or assumed either contractually or by
operation of law; and (iii) to the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Materials of Environmental Concern, that reasonably could result
in a material violation of any Environmental Law or form the basis of a
potential material Environmental Claim against the Company or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law.
(bb) ERISA Compliance.
10
The Company and its subsidiaries and any "employee benefit
plan" (as defined under the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance in
all material respects with ERISA. "ERISA Affiliate" means, with respect to the
Company or a subsidiary, any member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder (the "Code") of
which the Company or such subsidiary is a member. No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(cc) Brokers.
Except as otherwise disclosed in the Prospectus, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(dd) No Outstanding Loans or Other Indebtedness.
There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees or indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of any of them,
except as disclosed in the Prospectus.
(ee) Compliance with Laws.
The Company has not been advised, and has no reason to
believe, that it and each of its subsidiaries are not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, except where failure to be so in compliance
would not result, individually or in the aggregate, in a Material Adverse
Change.
Any certificate signed by an officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed
to be a representation and warranty by the Company to the Underwriter as to the
matters set forth therein.
The Company acknowledges that the Underwriter and, for
purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel
to
11
the Company and counsel to the Underwriter, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents to such
reliance.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) The Firm Common Shares.
The Company agrees to issue and sell to the Underwriter the
Firm Common Shares upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Underwriter agrees to
purchase from the Company all of the Firm Common Shares. The purchase price per
Firm Common Share to be paid by the Underwriter to the Company shall be $12.50
per share.
(b) The First Closing Date.
Delivery of the Firm Common Shares to be purchased by the
Underwriter and payment therefor shall be made at 9:00 a.m., New York City time,
on February 20, 2002 or such other time and date as the Underwriter shall
designate by notice to the Company (the time and date of such delivery for the
Firm Common Shares are called the "First Closing Date"). The Company hereby
acknowledges that circumstances under which the Underwriter may provide notice
to postpone the First Closing Date as originally scheduled include, but are in
no way limited to, any determination by the Company or the Underwriter to
recirculate to the public copies of an amended or supplemented Prospectus.
(c) The Optional Common Shares; the Second Closing Date.
In addition, on the basis of the representations, warranties
and agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Company hereby grants an option to the
Underwriter to purchase up to an aggregate of 150,000 Optional Common Shares
from the Company at the purchase price per share to be paid by the Underwriter
for the Firm Common Shares. The option granted hereunder is for use by the
Underwriter solely in covering any over-allotments in connection with the sale
and distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the Underwriter to
the Company, which notice may be given at any time within 30 days from the date
of this Agreement. Such notice shall set forth (i) the aggregate number of
Optional Common Shares as to which the Underwriter is exercising the option,
(ii) the names and denominations in which the certificates for the Optional
Common Shares are to be registered and (iii) the time, date and place at which
such certificates will be delivered (which time and date may be simultaneous
with, but not earlier than, the First Closing Date; and in such case the term
"First Closing Date" shall refer to the time and date of delivery of
certificates for the Firm Common Shares and the Optional Common Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called
the "Second Closing Date" and shall be determined by the Underwriter and shall
not be earlier than three nor later than five full business days after delivery
of such notice of exercise. The Underwriter may cancel the option at any time
prior to its expiration by giving written notice of such cancellation to the
Company.
(d) Public Offering of the Common Shares.
12
The Underwriter hereby advises the Company that the
Underwriter intends to offer for sale to the public, as described in the
Prospectus, the Common Shares as soon after this Agreement has been executed as
the Underwriter, in its sole judgment, has determined is advisable and
practicable.
(e) Payment for the Common Shares.
Payment for the Common Shares shall be made at the First
Closing Date (and, if applicable, at the Second Closing Date) by wire transfer
of immediately available funds to the order of the Company.
(f) Delivery of the Common Shares.
The Company shall deliver, or cause to be delivered, to the
Underwriter, through the facilities of the Depository Trust Company ("DTC"), for
the account of the Underwriter, the Firm Common Shares at the First Closing
Date, against receipt of a wire transfer of immediately available funds for the
amount of the purchase price therefor. The Company shall also deliver, or cause
to be delivered, to the Underwriter, through the facilities of DTC, for the
account of the Underwriter, any Optional Common Shares the Underwriter has
agreed to purchase at the First Closing Date or the Second Closing Date, as the
case may be, against receipt of a wire transfer of immediately available funds
for the amount of the purchase price therefor. The certificates for the Common
Shares shall be in definitive form and registered in such names and
denominations as the Underwriter shall have requested at least two full business
days prior to the First Closing Date (or Second Closing Date, as the case may
be) and shall be made available for inspection on the business day preceding the
First Closing Date (or Second Closing Date, as the case may be) at the office of
DTC or its designated custodian or at such other location in New York City as
the Underwriter may designate (the "Designated Office"). The documents to be
delivered on the First Closing Date (or Second Closing Date, as the case may be)
on behalf of the parties hereto pursuant to this Agreement shall be delivered at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (or at such other location as the
Underwriter may designate) and the Common Shares shall be delivered at the
Designated Office, all on the First Closing Date (or Second Closing Date, as the
case may be). Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriter.
(g) Delivery of Prospectus to the Underwriter.
Not later than 12:00 p.m. on the second business day following
the date the Common Shares are first released by the Underwriter for sale to the
public, the Company shall deliver or cause to be delivered, copies of the
Prospectus in such quantities and at such places as the Underwriter shall
request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY.
The Company further covenants and agrees with the Underwriter
as follows:
(a) Underwriter's Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on
the later of the First Closing Date (or the Second Closing Date, as the case may
be) or such date, as in
13
the opinion of counsel for the Underwriter, the Prospectus is no longer required
by law to be delivered in connection with sales by the Underwriter or dealer
(the "Prospectus Delivery Period"), prior to amending or supplementing the
Registration Statement (including any registration statement filed under Rule
462(b) under the Securities Act) or the Prospectus (including any amendment or
supplement through incorporation by reference of any report filed under the
Exchange Act), the Company shall furnish to the Underwriter for review a copy of
each such proposed amendment or supplement and shall permit the Underwriter a
reasonable opportunity to comment thereon, and shall consider in good faith any
comments made by, or changes requested by, or objections to the filing of any
such amendment or supplement communicated within three business days to the
Company by, the Underwriter or its attorneys or advisors.
(b) Securities Act Compliance.
During the Prospectus Delivery Period, the Company shall
promptly advise the Underwriter in writing (i) of the receipt of any comments
of, or requests for additional or supplemental information from, the Commission,
(ii) of the time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to the Prospectus, (iii)
of the time and date that any post-effective amendment to the Registration
Statement becomes effective and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or suspending the
use of the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Common Stock from any securities exchange upon
which it is listed for trading or included or designated for quotation, or of
the threatening or initiation of any proceedings for any of such purposes. If
the Commission shall enter any such stop order at any time, the Company will use
its best efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b) and 430A, as applicable, under the Securities Act and
will use its reasonable efforts to confirm that any filings made by the Company
under Rule 424(b) were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters.
If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Underwriter or counsel for the
Underwriter it is otherwise necessary to amend or supplement the Prospectus to
comply with law, the Company agrees to promptly prepare (subject to Section 3(a)
hereof), file with the Commission and furnish at its own expense to the
Underwriter and to dealers, amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
(d) Copies of any Amendments and Supplements to the Prospectus.
The Company agrees to furnish the Underwriter, without charge,
during the Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Underwriter may reasonably request and
as many copies of the
14
documents incorporated or deemed incorporated by reference therein as the
Underwriter may reasonably request.
(e) Blue Sky Compliance.
The Company shall cooperate with the Underwriter and counsel
for the Underwriter to qualify or register the Common Shares for sale under (or
obtain exemptions from the application of) the state securities or blue sky laws
or Canadian provincial securities laws of those jurisdictions designated by the
Underwriter, shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution
of the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The Company will advise
the Underwriter promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company shall use its best efforts
to obtain the withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds.
The Company shall apply the net proceeds from the sale of the
Common Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(g) Transfer Agent.
The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Common Stock.
(h) Earnings Statement.
As soon as practicable, the Company will make generally
available to its security holders and to the Underwriter an earnings statement
(which need not be audited) that satisfies the provisions of the last paragraph
of Section 11(a) of the Securities Act.
(i) Periodic Reporting Obligations.
During the Prospectus Delivery Period the Company shall file,
on a timely basis, with the Commission and the New York Stock Exchange all
reports and documents required to be filed under the Exchange Act.
(j) Company to Provide Interim Financial Statements.
Prior to each of the First Closing Date and the Second Closing
Date, the Company will furnish the Underwriter, as soon as they have been
prepared by or are available to the Company, a copy of any unaudited interim
financial statements of the Company for any period subsequent to the period
covered by the most recent financial statements appearing in the Registration
Statement and the Prospectus.
15
(k) New York Stock Exchange Listing.
The Company will use its best efforts to maintain the listing
of the Common Shares on the New York Stock Exchange.
(l) Exchange Act Compliance.
During the Prospectus Delivery Period, the Company will file
all documents required to be filed with the Commission pursuant to Section 13,
14 or 15 of the Exchange Act in the manner and within the time periods required
by the Exchange Act.
(m) Agreement Not to Offer or Sell Additional Securities.
During the period commencing on the date hereof and ending on
the 30th day following the date of the Prospectus, the Company will not, without
the prior written consent of the Underwriter (which consent may be withheld at
the sole discretion of the Underwriter), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the Common
Shares); provided, however, that the Company may issue shares of its Common
Stock or options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, upon redemption of units of the
Operating Partnership or pursuant to any other agreement obligating the Company
to issue common stock in effect on the date hereof, subject to the terms of any
"lock up" agreements to which holders of such shares, options or Common Stock
may be bound.
(n) Investment Limitation.
The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Common Shares in such a manner as
would require the Company or any of its subsidiaries to register as an
investment company under the Investment Company Act.
(o) No Manipulation of Price.
The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(p) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, as the case may be, the Company will provide to the
Underwriter and counsel for the Underwriter such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Common Shares as contemplated herein, or
in order to evidence the accuracy of any of the representations and warranties,
or the satisfaction of any of the conditions or agreements, herein contained.
16
(q) Press Releases During the Prospectus Delivery Period, the Company
shall furnish to the Underwriter for review a copy of any press release that the
Company, the Operating Partnership or any of their affiliates proposes to issue
with respect to or that otherwise references the offering of the Common Shares,
and shall not issue any such press release or make any public statement with
respect to or otherwise referring to the offering of the Common Shares without
the approval of the Underwriter.
The Underwriter may, in its sole discretion, waive in writing
the performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriter, (iv) all fees and expenses of
the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriter in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state securities or blue sky laws or the provincial
securities laws of Canada, and, if requested by the Underwriter, preparing and
printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriter of such qualifications, registrations and exemptions,
(vii) the filing fees incident to, and the reasonable fees and expenses of
counsel for the Underwriter in connection with, the NASD's review and approval
of the Underwriter's participation in the offering and distribution of the
Common Shares, (viii) the fees and expenses associated with listing the Common
Shares on the New York Stock Exchange, and (ix) all other fees, costs and
expenses referred to in Item 14 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the
Underwriter shall pay its own expenses, including the fees and disbursements of
its counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter to purchase and pay for the Common Shares as
provided herein on the First Closing Date and the Second Closing Date, as the
case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth in Section 1 hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Second Closing Date, as of the Second Closing Date as though then
made, to the timely performance by the Company of its covenants and other
obligations hereunder and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Underwriter
shall have received from PricewaterhouseCoopers LLP, independent public or
certified public accountants for the Company, a letter dated the date hereof
addressed to the Underwriter, in form and substance satisfactory to the
Underwriter, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to underwriters, delivered
17
according to Statement of Auditing Standards No. 72 (or any successor bulletin),
with respect to the audited and unaudited financial statements and certain
financial information contained in the Registration Statement and the
Prospectus.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and the Second Closing Date, as
the case may be:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective
amendment shall have become effective;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment to the
Registration Statement shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the First Closing Date
and the Second Closing Date, as the case may be:
(i) in the judgment of the Underwriter there shall not
have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any securities of the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On the First Closing Date and
the Second Closing Date, as the case may be, the Underwriter shall have received
the favorable opinion of Hunton & Xxxxxxxx, counsel for the Company, dated the
First Closing Date and, with respect to the Second Closing Date, dated the
Second Closing Date, in each case with respect to the substantive matters set
forth on Exhibit A-1 attached hereto, in a form to be negotiated in good faith
prior to the First Closing Date.
(e) Opinion of Tax Counsel for the Company. On the First Closing Date
and the Second Closing Date, as the case may be, the Underwriter shall have
received the favorable opinion of Hunton & Xxxxxxxx, tax counsel for the
Company, dated the First Closing Date and, with respect to the Second Closing
Date, dated the Second Closing Date, in each case with respect to the
substantive matters set forth on Exhibit A-2 attached hereto, in a form to be
negotiated in good faith prior to the First Closing Date.
18
(f) Opinion of Counsel for the Underwriter. On the First Closing Date
and the Second Closing Date, as the case may be, the Underwriter shall have
received from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Underwriter, such opinion or opinions, dated the First Closing Date and, with
respect to the Second Closing Date, dated the Second Closing Date, with respect
to such maters as the Underwriter may reasonably require.
(g) Officers' Certificate. On the First Closing Date and the Second
Closing Date, as the case may be, the Underwriter shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated the First Closing Date and, with respect to the
Second Closing Date, dated the Second Closing Date, to the effect set forth in
subsections (b)(ii) and (c)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this
Agreement and prior to the First Closing Date and the Second Closing
Date, as the case may be, there has not occurred any Material Adverse
Change;
(ii) the representations and warranties of the Company set
forth in Section 1 of this Agreement that are qualified as to
materiality or Material Adverse Change are true and correct (and those
not so qualified are true and correct in all material respects), in
each case, with the same force and effect as though expressly made on
and as of the First Closing Date and, with respect to the Second
Closing Date, as though expressly made on and as of the Second Closing
Date;
(iii) the Company has complied in all material respects
with all the agreements and covenants on its part to be performed
hereunder and has satisfied all the conditions on its part to be
satisfied hereunder at or prior to the First Closing Date and, with
respect to the Second Closing Date, at or prior to the Second Closing
Date; and
(iv) they have examined the Registration Statement and the
Prospectus (including all documents incorporated or deemed to be
incorporated by reference therein), and nothing has come to their
attention that would lead them to believe that (A) either the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or any documents incorporated by reference therein,
as of their respective effective, issue or filing dates, as the case
may be, or (B) the Prospectus, as amended or supplemented, and when
read together with the documents incorporated by reference therein, as
of the First Closing Date or the Second Closing Date, as the case may
be, contained or contains, as of such date, any untrue statement of a
material fact, or omitted or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(h) Bring-down Comfort Letter. On First Closing Date and the Second
Closing Date, as the case may be, the Underwriter shall have received from
PricewaterhouseCoopers LLP, independent public or certified public accountants
for the Company, a letter dated such date, in form and substance satisfactory to
the Underwriter, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date and,
with respect to the Second Closing Date, no more than three business days prior
to the Second Closing Date
19
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Underwriter by notice to the Company at any time on or prior to the First
Closing Date or the Second Closing Date, as the case may be, which termination
shall be without liability on the part of any party to any other party, except
that Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITER'S EXPENSES. If this Agreement
is terminated by the Underwriter pursuant to Section 5 or if the sale to the
Underwriter of the Common Shares on the First Closing Date (or the Second
Closing Date, as the case may be) is not consummated because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or to comply with any provision hereof, the Company agrees to reimburse the
Underwriter upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Underwriter in connection with the proposed purchase
and the offering and sale of the Common Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall become
effective upon the execution and delivery of this Agreement by the parties
hereto.
SECTION 8. INDEMNIFICATION. (a) Indemnification of the Underwriter. The
Company and the Operating Partnership, jointly and severally, agree to indemnify
and hold harmless the Underwriter, its officers and employees, and each person,
if any, who controls the Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) upon any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and to reimburse the Underwriter and each such controlling person
for any and all reasonable expenses (including reasonable legal fees and
disbursements of counsel) as such expenses are reasonably incurred by the
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use in the Registration Statement or
the Prospectus (or any amendment or supplement thereto). The indemnity agreement
set forth in this Section 8(a) shall be in addition to any liabilities that the
Company and the Operating Partnership may otherwise have.
20
(b) Indemnification of the Company, its Directors and Officers. The
Underwriter agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, and the Operating Partnership against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter expressly for use therein; and to reimburse the Company, or any such
director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Company
hereby acknowledges that the only information that the Underwriter has furnished
to the Company expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) are the
statements set forth (A) in the sixth paragraph on the cover page of the
prospectus supplement and (B) in the third, ninth and tenth paragraphs under the
caption "Underwriting" in the prospectus supplement; and the Underwriter
confirms that such statements are correct. The indemnity agreement set forth in
this Section 8(b) shall be in addition to any liabilities that the Underwriter
may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the
21
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of such
indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party, representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION. If the indemnification provided for in Section
8 is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Underwriter,
on the other hand, from the offering of the Common Shares pursuant to this
Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the Underwriter, on the other hand,
in connection with the statements or omissions herein which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriter, on the other hand, in connection with the
offering of the Common Shares pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Common Shares pursuant to this Agreement (before deducting expenses)
received by the Company, and the total underwriting discount received by the
Underwriter, in each case as set forth on the front cover page of the Prospectus
bear to the aggregate initial public offering price of the Common Shares as set
forth on such cover. The relative fault of the Company, on the one hand, and the
Underwriter, on the other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Underwriter, on the other hand,
and the
22
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company, the Operating Partnership and the Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 9.
Notwithstanding the provisions of this Section 9, the
Underwriter shall not be required to contribute any amount in excess of the
underwriting commissions received by the Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each officer and employee of the Underwriter and each person, if any, who
controls the Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company with
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.
SECTION 10. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date, this Agreement may be terminated by the Underwriter by notice given to the
Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the New
York Stock Exchange, or trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market shall have been suspended or limited, or
minimum or maximum prices shall have been generally established on any of such
stock exchanges by the Commission or the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States; (ii) a general
banking moratorium shall have been declared by any of federal, New York,
Tennessee or California authorities; (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Underwriter is material and adverse and
makes it impracticable or inadvisable to market the Common Shares in the manner
and on the terms described in the Prospectus or to enforce contracts for the
sale of securities; (iv) in the judgment of the Underwriter there shall have
occurred any Material Adverse Change; or (v) the Company or the Operating
Partnership shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character that in the judgment of the
Underwriter could, individually or in the aggregate, reasonably be expected to
result in a Material Adverse
23
Change. Any termination pursuant to this Section 11 shall be without liability
on the part of (a) the Company or the Operating Partnership to the Underwriter,
(b) the Underwriter to the Company or the Operating Partnership, or (c) of any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of the Operating Partnership, of their respective
officers and of the Underwriter set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter; the officers or employees of the Underwriter; any person
controlling the Underwriter; any person controlling the Company or the Operating
Partnership; or the respective officers and employees of the Company, of the
Operating Partnership or of any person controlling the Company or the Operating
Partnership, (ii) acceptance of the Common Shares and payment for them hereunder
and (iii) termination of this Agreement.
SECTION 12. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Underwriter:
Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Child/Xxxxxxx X. XxXxxx, Xx.
with a copy to:
Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to the Company or to the Operating Partnership:
RFS Hotel Investors, Inc
000 Xxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
24
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 13. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, and to the benefit of the employees,
officers and directors and controlling persons referred to in Section 8 and
Section 9, and in each case their respective successors, and personal
representatives, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Common
Shares as such from the Underwriter merely by reason of such purchase.
SECTION 14. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 15. GOVERNING LAW PROVISIONS. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in such state.
SECTION 16. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement and the Prospectus (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Operating Partnership, the Underwriter, the Underwriter's officers and
employees, any controlling persons referred to herein, the Company's and the
Operating Partnership's respective directors and the Company's and the Operating
Partnership's respective officers and their respective successors and assigns,
all as and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the Common
Shares from the Underwriter merely because of such purchase.
25
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
RFS HOTEL INVESTORS, INC.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President and Chief Operating
Officer
RFS PARTNERSHIP, L.P.
By: RFS Hotel Investors, Inc.,
its General Partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President and Chief Operating
Officer
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Underwriter in San Francisco, California as of the date first
above written.
BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxx XxXxxx
-------------------------------------
Xxxx XxXxxx
Co-Head, Equity Capital Markets
SCHEDULE 1(J)
SUBSIDIARIES
1. RFS Partnership, L.P.
2. Ridge Lake LLC
3. Ridge Lake General Partner, Inc.
4. Ridge Lake L.P.
5. RFS Managers, Inc.
6. RFS Financing Corporation
7. RFS Financing Partnership, L.P.
8. RFS MM 1 1998 Corporation
9. RFS SPE 1 1998 LLC
10. RFS MM 2 1998 Corporation
11. RFS SPE 2 1998 LLC
12. RFS MM 2000 Corporation
13. RFS SPE 1 2000 LLC
14. RFS MM 2 2000 Corporation
15. RFS SPE 2 2000 LLC
16. RFS TRS Holdings, Inc.
17. RFS Leasing II, Inc.
18. RFS Leasing III, Inc.
19. RFS Leasing IV, Inc.
20. RFS Leasing V, Inc.
21. RFS Leasing VI, Inc.
22. RFS Leasing VII, Inc
23. RFS Wharf Property Corporation
24. RFS Financing Partnership II, LP
25. Wharf Associates
EXHIBIT A-1
References to the Prospectus in this Exhibit A-1 include any
supplements thereto at First Closing Date and the Second Closing Date, as the
case may be.
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Tennessee. The Operating Partnership has been duly organized and is
validly existing as a limited partnership in good standing under the
laws of the State of Tennessee.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement. The Operating Partnership
has the power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under the Underwriting Agreement.
(iii) Each subsidiary of the Company listed on Schedule
(iii) hereto has been duly incorporated, organized or formed, as the
case may be, and is validly existing as a corporation, limited
partnership or limited liability company, as the case may be, and is in
good standing under the laws of the jurisdiction set forth opposite its
name on Schedule (iii) hereto, and has the corporate, limited
partnership or limited liability company, as the case may be, power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.
(iv) Each subsidiary of the Company listed on Schedule
(iv) hereto (each, a "Significant Subsidiary") is duly qualified as a
foreign corporation, limited partnership or limited liability company,
as the case may be, to transact business and is in good standing in
each jurisdiction set forth below its name of Schedule (iv) hereto.
(v) All of the issued and outstanding capital stock,
partnership interests and membership interests of each Significant
Subsidiary have been duly authorized and validly issued, are, assuming
that the consideration approved therefor has been received, fully paid
and nonassessable and are owned by the Company, directly or through
subsidiaries, and, to the knowledge of such counsel, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or any
pending or threatened claim.
(vi) All of the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable and, to the knowledge of such counsel, have been issued
in compliance with the registration and qualification requirements of
federal and state securities laws. The form of certificate used to
evidence the Common Stock is in due and proper form and complies with
all applicable requirements of the charter and by-laws of the Company
and the Tennessee Business Corporation Act. The description of the
Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights.
(vii) No stockholder of the Company or any other person has
any preemptive right, right of first refusal or other similar right to
subscribe for or purchase securities of
2
the Company arising by operation of the charter or by-laws of the
Company or the Tennessee Business Corporation Act.
(viii) The Underwriting Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of,
each of the Company and the Operating Partnership, enforceable in
accordance with its terms, except as rights to indemnification
thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.
(ix) The Common Shares to be purchased by the Underwriter
from the Company have been duly authorized for issuance and sale
pursuant to the Underwriting Agreement and, when issued and delivered
by the Company pursuant to the Underwriting Agreement against payment
of the consideration set forth therein, will be validly issued, fully
paid and nonassessable.
(x) The Registration Statement and the Prospectus (in
each case, other than the financial statements and supporting schedules
and other financial or statistical data included or incorporated by
reference therein or in exhibits thereto, as to which no opinion need
be rendered) comply as to form in all material respects with the
requirements for registration statements on Form S-3 under the
Securities Act and the applicable rules and regulations of the
Commission thereunder.
(xi) The statements contained in (or incorporated by
reference in) the Prospectus under the captions "Risk Factors" and
"Description of Capital Stock", insofar as such statements constitute
matters of law, summaries of legal matters, the Company's charter or
by-law provisions, documents or legal proceedings, or legal
conclusions, has been reviewed by such counsel and fairly present and
summarize, in all material respects, the matters referred to therein.
(xii) To the knowledge of such counsel, there are no legal
or governmental actions, suits or proceedings pending or threatened
against the Company, the Operating Partnership, any Significant
Subsidiary or any of the Company's officers or directors or to which
the properties, assets or rights of either such entity are subject,
which if determined adversely to such entity or person, would,
individually or in the aggregate, result in a Material Adverse Change.
(xiii) No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental
authority or agency, is required for the Company's or the Operating
Partnership's execution, delivery and performance of the Underwriting
Agreement and consummation of the transactions contemplated thereby and
by the Prospectus, except such as have been obtained under the
Securities Act, or as may be required by applicable state securities or
blue sky laws or from the NASD.
(xiv) The execution and delivery of the Underwriting
Agreement by each of the Company and the Operating Partnership and the
performance by each of the Company and the Operating Partnership of its
obligations thereunder (other than performance by each of the Company
and the Operating Partnership of its obligations under the
indemnification section of the Underwriting Agreement, as to which no
opinion need be rendered) (i) have been duly authorized by all
necessary corporate action on the
3
part of the Company and all necessary limited liability company action
on the part of the Operating Partnership; (ii) will not result in any
violation of the provisions of the charter or by-laws of the Company or
the limited partnership agreement, operating agreement or similar
organizational documents of any Significant Subsidiary; (iii) will not
constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, (A) the
Fourth Amended and Restated Revolving Credit Agreement, dated as of
January 7, 2000, as thereafter amended, supplemented and modified prior
to the date of this Agreement, made and entered into by and among RFS
Partnership, L.P., the Company, the Lenders party thereto and Bank of
America, N.A., as the Agent; the Loan Agreement, dated as of August 9,
2000, by and between RFS SPE 2000 LLC, as Borrower, the Company and
Bank of America, N.A., as Lender; the Loan Agreement, dated as of
August 9, 2000, by and between RFS SPE2 2000 LLC, as Borrower, the
Company and Bank of America, N.A., as Lender; the terms of the
Company's Series B Preferred Stock; or the Limited Partnership
Agreement of the Operating Partnership, as in effect on the date
hereof; or (B) to the knowledge of such counsel, any other material
Existing Instrument; or (iv) to the knowledge of such counsel, will not
result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any
Significant Subsidiary.
(xv) The Company is not, and after receipt of payment for
the Common Shares will not be, an "investment company" within the
meaning of Investment Company Act.
We have been advised by the staff of the Commission that the
Registration Statement has been declared effective by the Commission under the
Securities Act and that as of the date hereof no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings for such purpose have been instituted or are pending or
are contemplated or threatened by the Commission.
We have further been advised by the staff of the New York
Stock Exchange that the Common Shares have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public or certified public
accountants for the Company and with representatives of the Underwriter at which
the contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, and related matters were discussed and,
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified above), and
any supplements or amendments thereto, on the basis of the foregoing, nothing
has come to their attention which would lead them to believe that either the
Registration Statement or any amendments thereto, at the time the Registration
Statement or such amendments became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or at the First Closing Date or the Second Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief as to
the
4
financial statements or schedules or other financial or statistical data
included or incorporated by reference in the Registration Statement or the
Prospectus or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
Tennessee Business Corporation Act or the federal law of the United States, to
the extent they deem proper and specified in such opinion, upon the opinion
(which shall be dated the First Closing Date or the Second Closing Date, as the
case may be, shall be satisfactory in form and substance to the Underwriter,
shall expressly state that the Underwriter may rely on such opinion as if it
were addressed to the Underwriter and shall be furnished to the Underwriter) of
other counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriter; provided, however, that such
counsel shall further state that they believe that they and the Underwriter are
justified in relying upon such opinion of other counsel, and (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible officers
of the Company and public officials.
5
SCHEDULE (III)
OWNING SUBSIDIARIES
1. RFS Partnership, L.P.
2. RFS Financing Partnership, LP
3. RFS SPE 2 1998 LLC
4. RFS SPE 1 2000 LLC
5. RFS SPE 2 2000 LLC
6. RFS SPE 1 1998 LLC
7. Wharf Associates
6
SCHEDULE (IV)
SIGNIFICANT SUBSIDIARIES AND FOREIGN QUALIFICATIONS
1. RFS PARTNERSHIP, L.P.
Arizona
California
Florida
Michigan
Minnesota
New York
Texas
2. RFS FINANCING PARTNERSHIP, LP
California
Florida
Illinois
Michigan
Texas
3. RFS SPE2 1998 LLC
California
4. WHARF ASSOCIATES
California
5. RFS SPE 2 2000 LLC
Georgia
Missouri
Michigan
6. RFS SPE 1 2000 LLC
California
EXHIBIT A-2
References to the Prospectus in this Exhibit A-2 include any
supplements thereto at First Closing Date and the Second Closing Date, as the
case may be.
(i) The Company qualified to be taxed as a REIT pursuant
to sections 856 through 860 of the Code for its taxable years ended
December 31, 1998 through December 31, 2001, and the Company's
organization and current and proposed method of operation will enable
it to continue to qualify as a REIT for its taxable year ending
December 31, 2002, and in the future;
(ii) The descriptions of the law and the legal conclusions
contained (or incorporated by reference) in the Prospectus Supplement
under the caption "Federal Income Tax Consequences" are correct in all
material respects and the discussions thereunder fairly describe the
U.S. federal income tax considerations that are likely to be material
to a holder of the Common Stock.
