HOSPITALITY PROPERTIES TRUST
(a Maryland real estate investment trust)
$150,000,000 8 1/2% Monthly Income Senior Notes due 2009
UNDERWRITING AGREEMENT
December 11, 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Hospitality Properties Trust, a Maryland real estate investment trust
(the "Company"), confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc., ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated, PaineWebber Incorporated and Prudential Securities
Incorporated (collectively, the "Underwriters", which term shall include any
underwriter substituted as hereinafter provided in Section 10 hereof), with
respect to the sale by the Company and the purchase by each such Underwriter,
severally, of the principal amount of the Company's 8 1/2% Monthly Income Senior
Notes due 2009 set forth opposite the name of each such Underwriter listed in
Exhibit A hereto at a purchase price of 97.25% of the principal amount of the
Notes and with respect to the grant by the Company to the Underwriters of the
option described in Section 2 hereof to purchase all or any part of an
additional $22,500,000 aggregate principal amount of such Notes to cover
over-allotments. The aforesaid $150,000,000 principal amount of such Notes (the
"Initial Notes"), together with all or any part of the $22,500,000 additional
principal amount subject to the option described in Section 2 hereof (the
"Option Notes"), are collectively hereinafter called the "Notes." The Notes are
to be issued pursuant to an indenture dated as of February 25, 1998 and a
supplemental indenture dated as of December 16, 1998 (together, the
"Indenture"), each between the Company and State Street Bank and Trust Company
(the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-43573) for the
registration of debt securities, preferred shares of beneficial interest,
depositary shares, common shares of beneficial interest and warrants under the
Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof
from time to time in accordance with Rule 415 of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations"). Such
registration statement has been declared effective by the Commission on January
15, 1998 and the Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended (the "1939 Act"), and the Company has filed such
post-effective amendments thereto as may be required and each such
post-effective amendment has been declared effective by the Commission. Such
registration statement (as so amended, if applicable) is referred to herein as
the "Registration Statement"; and the final prospectus and the final prospectus
supplement relating to the offering of the Notes, in the form first furnished to
the Underwriters by the Company for use in connection with the offering of the
Notes, are collectively referred to herein as the "Prospectus"; provided,
however, that all references to the "Registration Statement" and the
"Prospectus" shall also be deemed to include all documents incorporated therein
by reference pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), prior to the date hereof; provided, further, that if the Company
files a registration statement with the Commission pursuant to Rule 462(b) of
the 1933 Act Regulations (the "Rule 462(b) Registration Statement"), then, after
such filing, all references to "Registration Statement" shall also be deemed to
include the Rule 462 Registration Statement. For purposes of this Underwriting
Agreement, all references to the Registration Statement and Prospectus, or to
any amendment or supplement to either of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Underwriting Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
(or other references of like import) in the Registration Statement or the
Prospectus shall be deemed to mean and include all such financial statements and
schedules and other information which is incorporated by reference in the
Registration Statement or the Prospectus, as the case may be, prior to the
execution of this Underwriting Agreement; and all references in this
Underwriting Agreement to amendments or supplements to the Registration
Statement, Prospectus or preliminary prospectus shall be deemed to mean and
include the filing of any document under the 1934 Act which is incorporated by
reference in the Registration Statement or Prospectus, as the case may be, after
the execution of this Underwriting Agreement.
The 164 hotels described in the Prospectus as being currently owned by
the Company as of the date hereof are collectively referred to herein as the
"Current Hotels". The 3 hotels described in the Prospectus as being proposed to
be acquired by the Company as of the date hereof are collectively referred to
herein as the "Additional Hotels". The Current Hotels and the Additional Hotels
are collectively referred to herein as the "Hotels". It is understood that in
connection with the proposed acquisition of the Additional Hotels, the Company
has entered into purchase and sale agreements and agreements to lease (the
"Acquisition Agreements") contemplating consummation of a series of related
transactions (the "Acquisition Transactions") generally described in the
Prospectus Supplement referred to below under the captions "Summary", "Recent
Developments", "Use of Proceeds" and "The Company", pursuant to which the
Company shall (i) acquire the Additional Hotels, (ii) lease the Additional
Hotels to
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hotel operating companies pursuant to separate operating leases and (iii) to the
extent necessary to finance the pending acquisitions, borrow funds under the
$300 million aggregate principal amount credit facility that the Company
currently maintains with a syndicate of 14 banks (as more fully described in the
Prospectus, the "Credit Facility") or a successor credit facility.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter, as of the date hereof, as follows:
(1) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. The Registration
Statement (including any Rule 462(b) Registration Statement) has become
effective under the 1933 Act and no stop order suspending the effectiveness
of the Registration Statement (or such Rule 462(b) Registration Statement)
has been issued under the 1933 Act and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. In addition,
the Indenture has been duly qualified under the 1939 Act.
At the respective times the Registration Statement (including any Rule
462(b) Registration Statement) and any post-effective amendments thereto
(including the filing of the Company's most recent Annual Report on Form
10-K with the Commission (the "Annual Report on Form 10-K")) became
effective and as of the date hereof, the Registration Statement (including
any Rule 462(b) Registration Statement) and any amendments thereto complied
and will comply in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and the 1939 Act and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act
Regulations") and did not and 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 statements therein not misleading. At the
date of the Prospectus and at the Closing Time as defined below, neither
the Prospectus nor any amendments and supplements thereto included or will
include an untrue statement of a material fact or omitted or will 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.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or the Prospectus.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and the
Prospectus delivered to the Underwriters for use in connection with the
offering of the Notes will, at the time of such delivery, be identical to
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any electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(2) Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and 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 1934
Act and the rules and regulations of the Commission thereunder (the "1934
Act Regulations") and, when read together with the other information in the
Prospectus, at the date of the Prospectus and at the Closing Time did not
and will not include an 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.
(3) Independent Accountants. The accountants who certified the
financial statements and any supporting schedules thereto included in the
Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(4) Financial Statements. The financial statements of the Company
included in the Registration Statement and the Prospectus, together with
the related schedules and notes, as well as those financial statements,
schedules and notes of any other entity included therein, present fairly
the financial position of the Company and its consolidated subsidiaries, or
such other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries, or such other entity, as the case may
be, for the periods specified. Such financial statements have been prepared
in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement and
the Prospectus present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the summary
financial information included in the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration
Statement and the Prospectus. In addition, any pro forma financial
statements of the Company and its subsidiaries and the related notes
thereto included in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(5) No Material Adverse Change in Business. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no
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transactions entered into by the Company or any of its subsidiaries, other
than those arising in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one
enterprise and (C) except for regular dividends on the Company's common
stock or preferred stock, in amounts per share that are consistent with
past practice or the applicable charter document or supplement thereto,
respectively, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(6) Good Standing of the Company. The Company has been duly organized
and is validly existing as a real estate investment trust in good standing
under the laws of the State of Maryland and has 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, or
as contemplated under, this Underwriting Agreement. The Company is duly
qualified to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not result in
a Material Adverse Effect.
(7) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the 1933 Act) (each, a "Subsidiary" and, collectively,
the "Subsidiaries"), if any, has been duly organized and is validly
existing as a corporation or a real estate investment trust, as the case
may be, in good standing under the laws of the jurisdiction of its
incorporation or formation, as the case may be, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation or a real estate investment trust, 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 where the failure to
so qualify or be in good standing would not result in a Material Adverse
Effect. Except as otherwise stated in the Registration Statement and the
Prospectus, all of the issued and outstanding capital stock of each
Subsidiary has been duly authorized and is validly issued, fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. None of the outstanding shares of
capital stock of any Subsidiary was issued in violation of preemptive or
other similar rights of any securityholder of such Subsidiary.
(8) Capitalization. The authorized, issued and outstanding shares of
capital stock of the Company is as set forth in the column entitled
"Actual" under "Capitalization" in the Prospectus (except for subsequent
issuances thereof, if any, contemplated under this Underwriting Agreement,
pursuant to reservations, agreements or employee benefit plans referred to
in the Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). Except for 500 common shares of
beneficial interest, 250 of which are held by ▇▇▇▇ ▇. ▇▇▇▇▇▇ and 250 of
which are held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, such shares of capital stock have been
duly authorized and validly issued by the Company and are fully paid and
non-assessable, and none of such shares of capital
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stock was issued in violation of preemptive or other similar rights of any
securityholder of the Company.
(9) Authorization of this Underwriting Agreement. This Underwriting
Agreement has been duly authorized, executed and delivered by the Company.
(10) Authorization of the Notes. The Notes have been duly authorized
by the Company for issuance and sale pursuant to this Underwriting
Agreement. The Notes, when issued and authenticated in the manner provided
for in the Indenture and delivered against payment of the consideration
therefor specified herein, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding
in equity or at law).
(11) Authorization of the Indenture. The Indenture has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(12) Descriptions of the Notes and the Indenture. The Notes and the
Indenture will conform in all material respects to the statements relating
thereto contained in the Prospectus and will be in substantially the form
filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement.
(13) Absence of Defaults and Conflicts. Neither the Company nor any of
its subsidiaries is in violation of its declaration of trust, charter or
by-laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
assets, properties or operations of the Company or any of its subsidiaries
is subject (collectively, "Agreements and Instruments"), except for such
defaults that would not result in a Material Adverse Effect. The execution,
delivery and performance of this Underwriting Agreement and the Indenture
and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Registration Statement and the
Prospectus and the consummation of the transactions contemplated herein and
in the Registration Statement and the Prospectus (including the issuance
and sale of the Notes and the use of the proceeds from the sale of the
Notes as described under the caption "Use of Proceeds") and compliance by
the Company with its obligations hereunder and thereunder have been
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duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, properties or operations of the
Company or any of its subsidiaries pursuant to, any Agreements and
Instruments, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any of its subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or
any of their assets, properties or operations. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of
its subsidiaries.
(14) Absence of Labor Dispute. To the knowledge of the Company, no
labor problem exists or is imminent with employees of the Company or any of
its subsidiaries that could have a Material Adverse Effect.
(15) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or to the knowledge of
the Company threatened, against or affecting the Company or any of its
subsidiaries which is required to be disclosed in the Registration
Statement and the Prospectus (other than as stated therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated under the Prospectus, this
Underwriting Agreement, the Indenture or the performance by the Company of
its obligations hereunder and thereunder. The aggregate of all pending
legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective assets,
properties or operations is the subject which are not described in the
Registration Statement and the Prospectus, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(16) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and filed as required.
(17) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
domestic or foreign, is necessary or required for the due authorization,
execution and delivery by the Company of this Underwriting Agreement or for
the performance by the Company of the transactions contemplated under the
Prospectus, this Underwriting Agreement, or the Indenture, except such as
may be required and will be obtained at or prior to the Closing Time and
such as may be required by the securities or Blue Sky laws or real estate
syndication laws of the various
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states in connection with the offer and sale of the Notes and, in the case
of the performance thereof, except as are contemplated by the express terms
of such documents to occur after the Closing Time and except (x) such as
are otherwise described in the Prospectus and (y) such that the failure to
obtain would not have a Material Adverse Effect.
(18) Possession of Intellectual Property. The Company and each of its
subsidiaries owns, or possesses adequate rights to use, all patents,
trademarks, trade names, service marks, copyrights, licenses and other
rights necessary for the conduct of their respective businesses as
described in the Registration Statement and in the Prospectus, and neither
the Company nor any of its subsidiaries has received any notice of conflict
with, or infringement of, the asserted rights of others with respect to any
such patents, trademarks, trade names, service marks, copyrights, licenses
and other such rights (other than conflicts or infringements that, if
proven, would not have a Material Adverse Effect), and neither the Company
nor any of its subsidiaries knows of any basis therefor.
(19) Possession of Licenses and Permits. To the best knowledge of the
Company, each lessee of the Current Hotels has, and as of the Closing Time
will have, all permits, licenses, approvals, certificates, franchises and
authorizations of governmental or regulatory authorities ("Approvals") as
may be necessary to lease, operate or manage the Current Hotels in the
manner described in or contemplated by the Prospectus, except for those
Approvals the absence of which would not have a Material Adverse Effect.
(20) Title to Property. The Company and its subsidiaries have good and
marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind, except (A) as otherwise
stated in the Registration Statement and the Prospectus, (B) in the case of
personal property located at certain Hotels, such as are subject to
equipment lease financing arrangements which have been entered into in the
ordinary course of business and have an aggregate outstanding balance not
in excess of $1 million or (C) those which do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries. All of the leases and subleases
material to the business of the Company and its subsidiaries considered as
one enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Prospectus, are in full force and effect,
and neither the Company nor any of its subsidiaries has received any notice
of any material claim of any sort that has been asserted by anyone adverse
to the rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the rights
of the Company or such subsidiary of the continued possession of the leased
or subleased premises under any such lease or sublease.
(21) Commodity Exchange Act. The Notes, upon issuance, will be
excluded or exempted under, or beyond the purview of, the Commodity
Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and
regulations of the Commodity
8
Futures Trading Commission under the Commodity Exchange Act (the "Commodity
Exchange Act Regulations").
(22) Investment Company Act. The Company is not, and upon the issuance
and sale of the Notes as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act").
(23) Environmental Laws. (a) The Company has received and reviewed
certain environmental reports on each Current Hotel's property, has
obtained certain representations and warranties relating to environmental
matters from the sellers of the Current Hotels set forth in purchase
agreements therefor and has conducted physical inspections of each Current
Hotel's property.
(b) Except as described in the Prospectus, (i) the Company, and, to
its knowledge, each Current Hotel's property, is, and as of the Closing
Time will be, in compliance with all applicable federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment, hazardous or toxic substances and wastes, pollutants and
contaminants ("Environmental Laws"), (ii) the Company, or, to its
knowledge, its lessees have received, or as of the Closing Time will
receive, all permits, licenses or other approvals required under applicable
Environmental Laws to conduct the respective hotel businesses presently
conducted at each Current Hotel's property and (iii) the Company or, to its
knowledge, its lessees are, or as of the Closing Time will be, in
compliance with all terms and conditions of any such permit, license or
approval, except, in respect of clauses (i), (ii) and (iii), as otherwise
disclosed in the Prospectus or as would not, singly or in the aggregate,
have a Material Adverse Effect.
(c) To the best knowledge of the Company, except as described in the
Prospectus, there are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, remediation or closure of properties or compliance
with Environmental Laws and any potential liabilities to third parties)
that, as of the date hereof, would, or as of the Closing Time will, singly
or in the aggregate, have a Material Adverse Effect.
(d) The Company has received and reviewed engineering reports on each
Current Hotel's property, has obtained certain representations and
warranties from the sellers of the Current Hotels set forth in purchase
agreements therefor and has conducted physical inspections of each Current
Hotel's property.
(e) In respect of each Current Hotel, (i) each Current Hotel is not in
violation of any applicable building code, zoning ordinance or other law or
regulation, except where such violation of any applicable building code,
zoning ordinance or other law or regulation would not, singly or in the
aggregate, have a Material Adverse Effect; (ii) the Company has not
received notice of any proposed material special assessment or any proposed
change in any property tax, zoning or land use laws or availability of
water affecting any Current Hotel that would have, singly or in the
aggregate, a Material Adverse Effect; (iii) except as disclosed in the
Prospectus, there does not exist any
9
material violation of any declaration of covenants, conditions and
restrictions with respect to any Current Hotel that would have, singly or
in the aggregate, a Material Adverse Effect, or any state of facts or
circumstances or condition or event which could, with the giving of notice
or passage of time, or both, constitute such a violation; and (iv) the
improvements comprising any portion of each Current Hotel (the
"Improvements") are free of any and all material physical, mechanical,
structural, design and construction defects that would have, singly or in
the aggregate, a Material Adverse Effect and the mechanical, electrical and
utility systems servicing the Improvements (including, without limitation,
all water, electric, sewer, plumbing, heating, ventilation, gas and air
conditioning) are in good condition and proper working order and are free
of defects that would have, singly or in the aggregate, a Material Adverse
Effect.
(24) REIT Qualification. The Company is organized in conformity with
the requirements for qualification, and, as of the date hereof the Company
operates, and as of Closing Time the Company will use its best efforts to
operate, in a manner that qualifies the Company as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations thereunder, for 1998 and subsequent
years. The Company qualified as a real estate investment trust under the
Code for each of the taxable years ended December 31, 1995 through December
31, 1997.
(25) Possession of Insurance. The Company and its Current Hotels are,
and as of the Closing Time will be, insured in the manner described in the
Prospectus by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are customary in the businesses in
which the Company is engaged and proposes to engage and the Company has no
reason to believe that it or its tenants will not be able to renew such
insurance coverage as and when such coverage expires or to obtain similar
coverage as may be necessary to continue its business at economically
viable rates. The Company and/or its subsidiaries, as applicable, has
obtained an ALTA Extended Coverage Owner's Policy of Title Insurance or its
local equivalent (or an irrevocable commitment to issue such a policy) on
all of the Current Hotels owned by the Company or its subsidiaries and such
title insurance is in full force and effect.
(26) Acquisition Agreements. The Acquisition Agreements pursuant to
which the Company expects to acquire the Additional Hotels (including any
Additional Hotels which the Company may determine to acquire after the
Closing Time) are in full force and effect. The Company intends and
reasonably expects to consummate the acquisition and lease of all
Additional Hotels not owned or acquired by it as of the Closing Time as
expeditiously as possible after the Closing Time, including as and when the
construction of certain of such properties is completed.
(27) Absence of Indebtedness. At the Closing Time after giving effect
to repayment of amounts then outstanding under the Credit Facility on or
prior to such date, the Company will have no indebtedness for money
borrowed except (i) the Credit Facility, (ii) the Company's 8 1/4% Monthly
Income Senior Notes due 2005, (iii) the Company's 7% Senior Notes due 2008,
(iv) equipment financing arrangements in respect of personal property
located at certain Current Hotels which have been entered into in the
10
ordinary course of business and have an aggregate outstanding balance not
in excess of $1 million, and (v) any indebtedness as to which ▇▇▇▇▇▇▇ ▇▇▇▇▇
shall have given its prior written consent.
(28) Good Standing of the Advisor. Except as otherwise disclosed in
the Prospectus, since the respective dates as of which information is given
in the Prospectus, there has been no material adverse change in the
business, operations, earnings, prospects, properties or condition
(financial or otherwise) of REIT Management & Research, Inc. (the
"Advisor"), whether or not arising in the ordinary course of business, that
would have a Material Adverse Effect. The Advisor (A) is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and (B) has the requisite corporate power and authority
to conduct its business as described in the Prospectus and to own and
operate its material properties. The Advisory Agreement, dated as of
January 1, 1998 (the "Advisory Agreement"), between the Company and the
Advisor, has been duly authorized, executed and delivered by the parties
thereto and constitutes the valid agreement of the parties thereto,
enforceable in accordance with its terms, except as limited by (a) the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting the rights or
remedies of creditors or (b) the effect of general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
(b) Officers' Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries and delivered to any Underwriter or to
counsel for the Underwriters in connection with the offering of the Notes shall
be deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby on the date of such certificate.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Notes. The several commitments of the Underwriters to purchase the
Notes pursuant to the terms hereof shall be deemed to have been made on the
basis of the representations, warranties and agreements herein contained and
shall be subject to the terms and conditions herein set forth.
(b) Over-allotment Option. In addition, on the basis of the representations
and warranties herein included and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional $22,500,000 principal amount of
Notes at the purchase price set forth on the first page of this Agreement. The
option hereby granted will expire 30 days after the date of this Agreement and
may be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial Notes upon notice by ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the Company
setting forth the principal amount of Option Notes as to which the several
Underwriters are then exercising the option and the time, date and place of
payment and delivery for such Option Notes. Any such time and date of delivery
(a "Date of Delivery") shall be determined by ▇▇▇▇▇▇▇ ▇▇▇▇▇ but shall not be
later than seven full business days, nor earlier than two full business days,
after the exercise of said option, nor in any event prior to Closing Time,
unless otherwise agreed upon by the Underwriters and the Company. If the option
is exercised as to all or any portion of the Option Notes, such Option
11
Notes shall be purchased by the Underwriters, severally and not jointly, in
proportion to their respective Initial Note underwriting obligations as set
forth in Exhibit A.
(c) Payment. Payment of the purchase price for, and delivery of, the
Initial Notes shall be made at the offices of ▇▇▇▇▇▇▇▇ & Worcester LLP, Boston,
Massachusetts, or at such other place as shall be agreed upon by ▇▇▇▇▇▇▇ ▇▇▇▇▇
and the Company, at 9:00 A.M. (Eastern time) on December 16, 1998 (unless
postponed in accordance with the provisions of Section 10 hereof), or such other
time not later than ten business days after such date as shall be agreed upon by
▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company (such time and date of payment and delivery being
herein called "Closing Time"). In addition, in the event that the over-allotment
option described in (b) above is exercised by the Underwriters, payment of the
purchase price for and delivery of the Option Notes shall be made at the
above-mentioned office of ▇▇▇▇▇▇▇▇ & Worcester LLP, or at such other place as
shall be agreed upon by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company on each Date of Delivery
as specified in the notice to the Company. Payment shall be made to the Company
by wire transfer of immediately available funds to a bank account designated by
the Company, against delivery to ▇▇▇▇▇▇▇ ▇▇▇▇▇ for the respective accounts of
the Underwriters of the Notes to be purchased by them. It is understood that
each Underwriter has authorized ▇▇▇▇▇▇▇ ▇▇▇▇▇, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the Notes
which it has severally agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Notes to be purchased by any Underwriter
whose funds have not been received by the Closing Time or the Date of Delivery,
as the case may be, but such payment shall not relieve such Underwriter from its
obligations hereunder.
(d) Denominations; Registration. The Notes shall be issued in such
authorized denominations and registered in such names as ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall
request not later than one business day prior to the Closing Time or the Date of
Delivery, as the case may be. The Notes shall be made available for inspection
not later than 10:00 a.m. (Eastern Time) on the business day prior to the
Closing Time or the Date of Delivery, as the case may be, at the office of The
Depository Trust Company or its designated custodian.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Immediately following the execution of this Agreement, the Company will
prepare a Prospectus Supplement setting forth the aggregate principal amount of
Notes covered thereby and their terms not otherwise specified in the Prospectus,
the Underwriters' names, the price at which the Notes are to be purchased by the
Underwriters from the Company, and such other information as the Underwriters
and the Company deem appropriate in connection with the offering of the Notes;
and the Company will promptly transmit copies of the Prospectus Supplement to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations
and will furnish to the Underwriters as many copies of the Prospectus (including
such Prospectus Supplement) as they shall reasonably request.
(b) Until the termination of the initial offering of the Notes, the Company
will notify the Underwriters immediately, and confirm the notice in writing, (i)
of the effectiveness of any amendment to the Registration Statement, (ii) of the
transmittal to the Commission for filing of
12
any supplement or amendment to the Prospectus or any document to be filed
pursuant to the 1934 Act, (iii) of the receipt of any comments from the
Commission with respect to the Notes, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus with respect to the Notes or for additional information relating
thereto, and (v) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every reasonable effort to
prevent the issuance of any such stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(c) Until the termination of the initial offering of the Notes, the Company
will give the Underwriters notice of its intention to file or prepare any
post-effective amendment to the Registration Statement or any amendment or
supplement to the Prospectus (including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Notes which differs from the prospectus on file at the Commission at the time
that the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Underwriters with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such amendment or supplement or use any
such prospectus to which counsel for the Underwriters shall reasonably object.
(d) The Company will deliver to each of the Underwriters a conformed copy
of the Registration Statement as originally filed and of each amendment thereto
filed prior to the termination of the initial offering of the Notes (including
exhibits filed therewith or incorporated by reference therein and the documents
incorporated by reference into the Prospectus pursuant to Item 12 of Form S-3).
(e) The Company will furnish to the Underwriters, from time to time during
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as the Underwriters may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or 1934 Act
Regulations.
(f) Until the termination of the initial offering of the Notes, if any
event shall occur as a result of which it is necessary, in the opinion of
counsel for the Underwriters, to amend or supplement the Prospectus in order to
make the Prospectus not misleading in the light of the circumstances existing at
the time it is delivered, the Company will either (i) forthwith prepare and
furnish to the Underwriters an amendment of or supplement to the Prospectus or
(ii) make an appropriate filing pursuant to Section 13, 14 or 15 of the 1934
Act, in form and substance reasonably satisfactory to counsel for the
Underwriters, which will amend or supplement the Prospectus so that it will not
include an 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 existing at the time it is delivered, not misleading.
(g) The Company will endeavor in good faith, in cooperation with the
Underwriters, to qualify the Notes for offering and sale under the applicable
securities laws and real estate
13
syndication laws of such states and other jurisdictions of the United States as
the Underwriters may designate; provided that, in connection therewith, the
Company shall not be required to qualify as a foreign corporation or trust or to
file any general consent to service of process. In each jurisdiction in which
the Notes have been so qualified the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as required for the distribution of the
Notes.
(h) The Company will make generally available to its security holders as
soon as reasonably practicable, but not later than 90 days after the close of
the period covered thereby, an earning statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a period of at least twelve months beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the Registration
Statement. "Earning statement", "make generally available" and "effective date"
will have the meanings contained in Rule 158 of the 1933 Act Regulations.
(i) The Company will use the net proceeds received by it from the sale of
the Notes in the manner specified in the Prospectus under the caption "Use of
Proceeds" in all material respects.
(j) The Company currently intends to continue to qualify as a "real estate
investment trust" under the Code, and use its best efforts to continue to meet
the requirements to qualify as a "real estate investment trust" under the Code.
(k) The Company will timely file any document which it is required to file
pursuant to the 1934 Act prior to the termination of the offering of the Notes.
(l) The Company will not, between the date of this Agreement and the
termination of any trading restrictions or Closing Time, whichever is later,
with respect to the Notes, without ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ prior written consent, offer
or sell, grant any option for the sale of, or enter into any agreement to sell,
any debt securities of the Company with a maturity of more than one year (other
than the Notes which are to be sold pursuant to this Agreement and additional or
expanded commitments to participate in the Company's revolving line of credit)
except as may otherwise be provided in this Agreement.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Underwriting Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, issuance and delivery of the Notes and any
certificates for the Notes to the Underwriters, including any transfer taxes and
any stamp or other duties payable upon the sale, issuance or delivery of the
Notes to the Underwriters, (iii) the fees and disbursements of the Company's
counsel, accountants and other advisors or agents, as well as the fees and
disbursements of the Trustee, and their respective counsel, (iv) the
qualification of the Notes under state securities laws in accordance with the
provisions of Section 3(g) hereof, including filing fees and the reasonable fees
and disbursements of counsel in connection therewith and in connection with the
preparation, printing and delivery of the Blue Sky Survey,
14
and any amendment thereto, (v) the printing and delivery to the Underwriters of
copies of the Prospectus and any amendments or supplements thereto, (vi) the
fees charged by nationally recognized statistical rating organizations for the
rating of the Notes, (vii) the filing fees incident to, and the reasonable fees
and disbursements of counsel to the Underwriters in connection with, the review,
if any, by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of the sale of the Notes, and (viii) the fees and expenses of any
Underwriter acting in the capacity of a "qualified independent underwriter" (as
defined in Section 2(l) of Schedule E of the bylaws of the NASD), if applicable.
(b) Termination of Agreement. If this Underwriting Agreement is terminated
by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Notes pursuant to the terms hereof are
subject to the accuracy of the representations and warranties of the Company
contained in Section 1 hereof or in certificates of any officer of the Company
or any of its subsidiaries delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective under the
1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall have been instituted or be pending or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing information relating to the
description of the Notes, the specific method of distribution and similar
matters shall have been filed with the Commission in accordance with Rule
424(b)(1), (2), (3), (4) or (5), as applicable.
(b) Opinion of Counsel for Company. At Closing Time, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall
have received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇▇▇ &
Worcester, LLP, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of such
letter for each of the other Underwriters, to the effect set forth in Exhibit B
hereto. In rendering their opinion, such counsel may rely on an opinion dated
the Closing Time of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, as to matters
governed by the laws of the State of Maryland. In addition, in rendering their
opinion, such counsel may state that their opinion as to laws of the State of
Delaware is limited to the Delaware General Corporation Law.
(c) Opinion of Special Maryland Counsel for Company. At Closing Time,
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, special Maryland counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect as counsel to the Underwriters may reasonably
request.
15
(d) Opinion of Counsel for Underwriters. At Closing Time, ▇▇▇▇▇▇▇ ▇▇▇▇▇
shall have received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇ &
Wood LLP counsel for the Underwriters, together with signed or reproduced copies
of such letter for each of the other Underwriters, with respect to the matters
set forth in paragraphs (7), (8), (9), (10), (18), (19) and (22) of Exhibit B
and to the following effect: nothing has come to their attention that would lead
them to believe that the Registration Statement (including any Rule 462(b)
Registration Statement) or any post-effective amendment thereto (except for
financial statements and supporting schedules and other financial data included
therein or omitted therefrom and for the Form T-1s, as to which they make no
statement), at the time the Registration Statement (including any Rule 462(b)
Registration Statement) or any post-effective amendment thereto (including the
filing of the Company's Annual Report on Form 10-K with the Commission) 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 or any amendment or
supplement thereto (except for financial statements and supporting schedules and
other financial data included therein or omitted therefrom, as to which they
make no statement), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time, included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In giving such opinion, such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and may
rely on an opinion dated the Closing time of ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ LLP as to matters governed by the laws of the State of Maryland. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial officer or chief accounting officer of the Company, dated
as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a) are true
and correct with the same force and effect as though expressly made at and as of
the Closing Time, except with respect to any issuances of common shares of
beneficial interest of the Company or with respect to transactions as to which
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have given its prior written consent, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted, are pending or, to the
best of such officer's knowledge, are threatened by the Commission.
16
(f) Advisor's Certificate. At Closing Time, there shall not have been,
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Advisor, whether or not arising in the ordinary course of
business; and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received, at Closing Time, a certificate
of the President or a Vice President of the Advisor evidencing compliance with
this subsection (f).
(g) Accountant's Comfort Letter. At the time of the execution of this
Underwriting Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP a letter dated such date, in form and substance satisfactory to ▇▇▇▇▇▇▇
▇▇▇▇▇, together with signed or reproduced copies of such letter for each of the
other Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have
received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (g) of this Section 5, except that the specified date referred to
shall be a date not more than three business days prior to the Closing Time.
(i) Ratings. At Closing Time, the Notes shall have the ratings of Baa3 by
▇▇▇▇▇'▇ Investors Service, Inc. and BBB- by Standard & Poor's Rating Service.
Since the time of execution of this Underwriting Agreement, there shall not have
occurred a downgrading in, or withdrawal of, the rating assigned to the Notes or
any of the Company's other securities by any such rating organization, and no
such rating organization shall have publicly announced that it has under
surveillance or review its rating of the Notes or any of the Company's other
securities.
(j) No Objection. If the Registration Statement or the offering of the
Notes has been filed with the NASD for review, the NASD shall not have raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Notes as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Notes as herein contemplated shall
be reasonably satisfactory in form and substance to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and counsel
for the Underwriters.
(l) Date of Delivery Documentation. In the event the Underwriters exercise
the option described in Section 2 hereof to purchase all or any portion of the
Option Notes, the representations and warranties of the Company included herein
and the statements in any certificates furnished by the Company hereunder shall
be true and correct as of the Date of Delivery (except those which speak as of a
certain date, in which case as of such date), and the Underwriters shall have
received:
17
(i) A certificate of the President or a Vice President and of the
chief financial officer or chief accounting officer of the Company,
dated such Date of Delivery, confirming that their certificate delivered
at Closing Time pursuant to Section 5(e) hereof remain true as of such
Date of Delivery, except with respect to any issuances of common shares
of beneficial interest of the Company or with respect to transactions as
to which ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have given its prior written consent.
(ii) The favorable opinion of ▇▇▇▇▇▇▇▇ & Worcester LLP, counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option Notes
and otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(iii) Certificate of the President of the Advisor confirming that
his certificate delivered at Closing Time pursuant to Section 5(f)
hereof remains true as of such Date of Delivery.
(iv) The favorable opinion of ▇▇▇▇▇ & Wood LLP, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option Notes
and otherwise to the same effect as the opinion required by Section 5(d)
hereof.
(v) A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, dated such Date of
Delivery, substantially the same in scope and substance as the letter
furnished to the Underwriters pursuant to Section 5(h) hereof.
(m) Termination of this Agreement. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be fulfilled,
this Underwriting Agreement may be terminated by ▇▇▇▇▇▇▇ ▇▇▇▇▇ by notice to the
Company at any time at or prior to the Closing Time, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), 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 arising out of any untrue statement or
alleged untrue statement of a material fact included 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;
18
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter, or the benefit of any person
controlling any Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto and excluding documents incorporated or deemed to be incorporated by
reference therein) was not sent or given by or on behalf of such Underwriter to
such person asserting any such losses, claims, damages or liabilities at or
prior to the written confirmation of the sale of such Notes to such person, if
required by law so to have been delivered, and if the Prospectus (as so amended
or supplemented) would have cured the defect giving rise to such loss, claim,
damage or expense.
(b) Indemnification of Company, Trustees and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its trustees, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇
▇▇▇▇▇ expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the
19
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. The indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified parties and payment of all fees and expenses. The indemnified
parties shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified parties unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume the
defense and employ counsel or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified parties and the
indemnifying party and the indemnified parties shall have been advised by such
counsel that there may be one or more legal defenses available to them which are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the indemnified parties, which firm shall be
designed in writing by indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred). No indemnifying party shall, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other hand, from the offering of the Notes
pursuant hereto or (ii) if the allocation provided
20
by clause (i) 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
Underwriters, on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the Notes
pursuant hereto shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of such Notes (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, bear to
the aggregate initial public offering price of such Notes as set forth on such
cover.
The relative fault of the Company, on the one hand, and the
Underwriters, 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 or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such 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 within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations
21
to contribute pursuant to this Section 7 are several in proportion to the number
or aggregate principal amount, as the case may be, of the Notes set forth
opposite their respective names in the Exhibit A hereto, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Underwriting
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto or thereto shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or on behalf of the Company, and
shall survive delivery of and payment for the Notes.
SECTION 9. Termination.
(a) The Underwriters may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company or the
Advisor, whether or not arising in the ordinary course of business, which would
make it, in the Underwriters' reasonable judgment, impracticable or inadvisable
to market the Notes or enforce contracts for the sale of the Notes, (ii) if
there has occurred any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation of existing
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the Underwriters'
reasonable judgment, impracticable or inadvisable to market the Notes or enforce
contracts for the sale of the Notes, or (iii) if trading in the Company's common
shares of beneficial interest has been suspended by the Commission, or if
trading generally on either the New York Stock Exchange or the American Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by Federal or New York
authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided further that Sections 6 and 7 hereof shall
survive such termination.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time to purchase the Initial Notes
which it or they are obligated to purchase hereunder (the "Defaulted
Securities"), then ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall not have completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of the Initial Notes to be
purchased on such date pursuant hereto, the non-defaulting Underwriters
shall be obligated, severally and not
22
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities exceeds 10%
of the aggregate principal amount of the Initial Notes to be purchased on such
date pursuant hereto, this Underwriting Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of the applicable Terms Agreement, either ▇▇▇▇▇▇▇ ▇▇▇▇▇ or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
the Prospectus or in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ at World Financial Center, North
Tower, New York, New York 10281-1201, attention of ▇▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇; and
notices to the Company shall be directed to it at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 12. Parties. This Underwriting Agreement shall inure to the benefit
of and be binding upon the Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the other Underwriters and
their respective successors. Nothing expressed or mentioned in this Underwriting
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons and officers and trustees referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Underwriting
Agreement or any provision herein contained. This Underwriting Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the parties hereto and their respective successors, and said
controlling persons and officers and trustees and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of the Notes from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein are
for convenience only and shall not affect the construction hereof.
23
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Underwriting Agreement, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
Very truly yours,
HOSPITALITY PROPERTIES TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
Acting on behalf of itself and the
other named Underwriters
24
Exhibit A
Principal Amount
Name of Underwriter of Initial Notes
------------------- ----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated........................... $ 21,600,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc............................. 21,400,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc............................. 21,400,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated................. 21,400,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.................... 21,400,000
PaineWebber Incorporated............................. 21,400,000
Prudential Securities Incorporated................... 21,400,000
----------
Total........................................ $150,000,000
============
A-1
Exhibit B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(1) The Company is a real estate investment trust duly formed and
validly existing under and by virtue of the laws of the State of Maryland and is
in good standing with the State Department of Assessments and Taxation of
Maryland.
(2) The Company has trust power and authority to own and lease its
properties and to conduct its business in all material respects as described in
the Prospectus and to enter into and perform its obligations under, or as
contemplated under, the Underwriting Agreement.
(3) The Company is duly qualified to transact business and is in good
standing in each jurisdiction other than the State of Maryland in which the
ownership or leasing of its properties requires such qualification, except where
the failure to so qualify or be in good standing would not result in a Material
Adverse Effect.
(4) Each Subsidiary (a) is a real estate investment trust duly formed
and validly existing under and by virtue of the laws of the State of Maryland
and is in good standing with the State Department of Assessments and Taxation of
Maryland, (b) has the trust power and authority to own and lease its properties
and to conduct its business, in all material respects as described in the
Prospectus, and (c) is duly qualified to transact business and is in good
standing in each jurisdiction other than the State of Maryland in which the
ownership or leasing of its properties requires such qualification, except where
the failure to so qualify or be in good standing would not result in a Material
Adverse Effect.
(5) Except as otherwise stated in the Registration Statement and the
Prospectus, all of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued, are fully paid and
non-assessable, and, to the best of our knowledge, are owned by the Company,
directly or through subsidiaries, free and clear of any adverse claim. None of
such shares of capital stock of any Subsidiary was issued in violation of
preemptive or other similar rights of any holder (other than the Company) of
capital stock of such Subsidiary.
(6) The authorized, issued and outstanding shares of capital stock of
the Company is as set forth in the column entitled "Actual" under the caption
"Capitalization" in the Prospectus Supplement. Except as otherwise set forth in
the opinions expressed in paragraph 4 of the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, set forth as Exhibit 1 hereto, all of such shares of capital
stock have been duly authorized and validly issued by the Company and are fully
paid and non-assessable (except as otherwise described in the Registration
Statement), and none of such shares of capital stock was issued in violation of
preemptive or, to such counsel's knowledge, other similar rights of any holder
of capital stock of the Company.
(7) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
B-1
(8) The Notes have been duly authorized by the Company for issuance and
sale pursuant to the Underwriting Agreement. When the Notes are issued and
authenticated in the manner provided for in the Indenture and delivered against
payment of the consideration therefor specified in the Underwriting Agreement,
(a) the Notes will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, and (b) each
registered holder thereof will be entitled to the benefits of the Indenture. The
Notes are in the form contemplated by the Indenture.
(9) The Indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(10) The Notes and the Indenture conform in all material respects to the
descriptions thereof in the Prospectus.
(11) (a) The statements under the captions (i) "Recent Developments,"
"The Company -- Leases," "Management" and "Description of Notes" in the
Prospectus Supplement and (ii) "Description of Debt Securities," "Limitation of
Liability; Shareholder Liability" and "Redemption; Trustees; Business
Combinations and Control Share Acquisitions" in the Prospectus, in each case as
of the date of the Prospectus, and (b) the statements under the captions (i)
"Items 1 and 2. Business and Properties -- The Company --Principal Lease
Features," "Items 1 and 2. Business and Properties -- Investment Advisor," "Item
5. Market for Registrant's Common Equity and Related Stockholder Matters," and
"Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Overview" and "Item 7. Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Liquidity and
Capital Resources" in the Annual Report on Form 10-K, (ii) "Other Information --
Certain Relationships and Related Transactions" in the Company's Proxy Statement
relating to the May 19, 1998 Annual Meeting of Shareholders (incorporated by
reference in the Form 10-K), other than the last paragraph thereof, as to which
we express no opinion, and (iii) "Item 5. Other Events -- New Credit Facility"
in the Company's Current Report on Form 8-K dated April 15, 1998, and in each
case as of the date of filing of such Incorporated Document, insofar as such
statements constitute a summary of legal matters, documents or proceedings
referred to therein, fairly present in all material respects the information
called for with respect to such legal matters, documents and proceedings.
(12) The statements under the captions "Certain Federal Income Tax
Considerations" in the Prospectus Supplement, as of the date of the Prospectus,
and the statements under the captions "Federal Income Tax Considerations" and
"ERISA Plans, ▇▇▇▇▇ Plans and Individual Retirement Accounts" under the caption
"Items 1 and 2. Business and Properties" in the Annual Report on Form 10-K, as
of the date of filing of the Annual Report on Form 10-K, insofar as such
statements constitute a summary of legal matters or documents referred to
therein, fairly present in all material respects the information called for with
respect to such legal matters and documents.
(13) To such counsel's knowledge, except as disclosed in the Prospectus
neither the Company nor any Subsidiary is in violation of its declaration of
trust or by-laws and no default by the Company or any of the Subsidiaries exists
in the due performance or observance of any
B-2
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement and to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound or to which any of the assets,
properties or operations of the Company or any Subsidiary is subject, except for
such violations or defaults which would not result in a Material Adverse Effect.
(14) The execution, delivery and performance of the Underwriting
Agreement and the Indenture and the consummation of the transactions
contemplated in the Underwriting Agreement and in the Registration Statement and
the Prospectus (including the issuance and sale of the Notes and the Use of the
proceeds from the sale of the Notes as described under the caption "Use of
Proceeds" in the Prospectus Supplement) and compliance by the Company with its
obligations thereunder do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event under, or result in the creation or imposition of
any lien, charge or encumbrance upon any assets, properties or operations of the
Company or of any Subsidiary pursuant to, any material contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument that is described or referred to in the Registration
Statement or the Prospectus or filed or incorporated by reference as an exhibit
to the Registration Statement and to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound or to which
any of the assets, properties or operations of the Company or any Subsidiary is
subject, nor will such action result in any violation of the provisions of the
declaration of trust or by-laws of the Company or any Subsidiary or in any
material respect any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to such counsel, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets, properties or
operations, in each case except as disclosed in the Prospectus.
(15) To such counsel's knowledge, except as disclosed in the Prospectus
there is not pending or threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any Subsidiary is a party or to which the
assets, properties or operations of the Company or any Subsidiary is subject,
before or by any court or government agency or body which would, if determined
adversely to the Company or such Subsidiary, result in a Material Adverse Effect
or materially and adversely affect the consummation of the transactions
contemplated under the Underwriting Agreement or the Indenture or the right or
ability of the Company to perform its obligations thereunder.
(16) To such counsel's knowledge, there is no contract or other document
which is required to be described in the Registration Statement or the
Prospectus that is not described therein or is required to be filed as an
exhibit to the Registration Statement which is not so filed.
(17) To such counsel's knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.
(18) The Registration Statement has been declared effective under the
1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and
B-3
within the time period required by Rule 424(b). To such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
initiated or are pending or threatened by the Commission.
(19) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than financial statements and other financial and statistical data and schedules
and the Trustee's Statement of Eligibility on Form T-1, as to which such counsel
need not express any opinion), complied as to form in all material respects with
the requirements of the 1933 Act.
(20) Each Incorporated Document (other than financial statements and
other financial and statistical data and schedules, as to which such counsel
need not express any opinion) complied as to form in all material respects with
the 1934 Act when filed with the Commission.
(21) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any federal, Massachusetts,
Delaware or Maryland court or governmental authority or agency is necessary or
required for the due authorization, execution or delivery by the Company of the
Underwriting Agreement or for the performance by the Company of the transactions
contemplated under the Prospectus, the Underwriting Agreement or the Indenture,
other than those which have already been made, obtained or rendered as
applicable.
(22) The Indenture has been duly qualified under the 1939 Act.
(23) The Company is not, and upon the issuance and sale of the Notes as
contemplated by the Underwriting Agreement and the application of the net
proceeds therefrom as described in the Prospectus will not be, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(24) The Company has qualified to be taxed as a real estate investment
trust pursuant to Sections 856-860 of the Code for each of the taxable years
ended December 31, 1995 through December 31, 1997, and the Company's current
anticipated investments and its current plan of operation will enable it to
continue to meet the requirements for qualification and taxation as a real
estate investment trust under the Code; actual qualification of the Company as a
real estate investment trust, however, will depend upon the Company's continued
ability to meet, and its meeting, through actual annual operating results and
distributions, the various qualification tests imposed under the Code.
(25) The Advisor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has the requisite
corporate power and authority to conduct its business as described in the
Prospectus and to own and operate its material properties.
B-4
(26) The Advisory Agreement has been duly authorized, executed and
delivered by the parties thereto and constitutes the valid agreement of the
parties thereto, enforceable in accordance with its terms.
(27) No facts have come to such counsel's attention that would lead them
to believe that (x) the Registration Statement, as of the time it became
effective under the 1933 Act, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading or (y) the Prospectus, as
of the date of issuance thereof or at the date hereof, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that such counsel need not
express any views as to the financial statements and other financial and
statistical data and schedules included in the Registration Statement or the
Prospectus.
Such counsel need not express any opinion as to compliance with, or
filings with or authorizations, approvals, consents, licenses, orders,
registrations, qualifications or decrees under, state securities or "Blue Sky"
laws. Such counsel's opinions with respect to the validity or enforceability of
agreements may be qualified to the extent that the obligations, rights and
remedies of parties may be limited to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting generally creditors'
rights and remedies, and (ii) general principles of equity (regardless of
whether considered in a proceeding at law or in equity), and otherwise in a
manner acceptable to the Underwriters.