Exhibit 1.1
5,750,000 Shares
HOSPITALITY PROPERTIES TRUST
(a Maryland real estate investment trust)
Common Shares of Beneficial Interest
UNDERWRITING AGREEMENT
July 31, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
FIRST UNION SECURITIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Hospitality Properties Trust, a Maryland real estate investment trust (the
"Company"), confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc., First Union Securities, Inc. and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, 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
5,750,000 common shares of beneficial interest, par value $.01 per share (the
"Common Shares"), of the Company at a purchase price of $28.05 per Common Share
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
862,500 Common Shares to cover over-allotments. The aforesaid 5,750,000 Common
Shares (the "Initial Shares"), together with all or any part of the 862,500
Common Shares subject to the option described in Section 2 hereof (the "Option
Shares"), are collectively hereinafter called the "Shares."
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 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
Shares, in the form first furnished to the Underwriters by the Company for use
in connection with the offering of the Shares, 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(b)
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 228 hotels described in the Prospectus as being currently owned by the
Company as of the date hereof are collectively referred to herein as the
"Hotels".
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each of the Underwriters, 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.
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
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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 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 the Underwriters 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 Shares will, at the time of such delivery, be identical to
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, shareholders' 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
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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" or a "Material
Adverse Change"), (B) there have been no 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 shares or preferred shares, 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 shares.
(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 ▇▇▇▇ ▇▇▇) (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
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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 shares 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 capital shares 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 capital
shares of the Company 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 capital shares
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 SHARES. The Shares to be issued and sold
pursuant to this Agreement have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided
hereunder, will have been validly issued and will be fully paid,
non-assessable (except as otherwise described in the Registration
Statement) and free of preemptive or similar rights; there are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens related to or entitling any person
to purchase or otherwise to acquire any Common Shares of, or other
ownership interest in, the Company, except as otherwise disclosed in the
Registration Statement or the Prospectus and except for awards under the
Company's Incentive Share Award Plan made in the ordinary course of
business; all outstanding Common Shares, except for shares issued pursuant
to the Company's Incentive Share Award Plan and shares issued to the
Advisor (as defined below) and its affiliates, are listed on the New York
Stock Exchange, Inc. (the "NYSE") and the Company knows of no reason or set
of facts which is likely to result in the delisting of such Common Shares
or the inability to list the Shares; and there are no rights of holders of
securities of the Company to the registration of Common Shares or other
securities that would require inclusion of such Common Shares or other
securities in the offering of the Shares.
(11) DESCRIPTIONS OF THE SHARES. The Shares will conform in all
material respects to the statements relating thereto contained in the
Prospectus.
(12) 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
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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 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 Shares and the use of the proceeds from the sale of the Shares as
described under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder and thereunder have been 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.
(13) 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.
(14) 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, or the performance by the Company of its
obligations hereunder. 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.
(15) ACCURACY OF EXHIBITS. There are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus
or the documents
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incorporated by reference therein or to be filed as exhibits thereto which
have not been so described and filed as required.
(16) 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 or this Underwriting Agreement, 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 states in connection with the offer and sale of the Shares
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.
(17) 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.
(18) POSSESSION OF LICENSES AND PERMITS. To the best knowledge of the
Company, each lessee of the 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 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.
(19) 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
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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 to
the continued possession of the leased or subleased premises under any such
lease or sublease.
(20) INVESTMENT COMPANY ACT. The Company is not, and upon the issuance
and sale of the Shares 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").
(21) ENVIRONMENTAL LAWS. The Company has received and reviewed certain
environmental reports on (which included physical inspection of the surface
of) each Hotel's property and has obtained certain representations and
warranties relating to environmental matters from the sellers of the Hotels
set forth in purchase agreements therefor. Except as described in the
Prospectus, (i) the Company, and, to its knowledge, each 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 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. 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. The Company has received and reviewed
engineering reports on each Hotel's property, has obtained certain
representations and warranties from the sellers of the Hotels set forth in
purchase agreements therefor and has conducted physical inspections of each
Hotel's property. In respect of each Hotel, (i) each 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 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 material violation of any declaration of covenants,
conditions and restrictions with respect to any 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
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passage of time, or both, constitute such a violation; and (iv) the
improvements comprising any portion of each 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.
(22) 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 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 2001 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, 2000.
(23) POSSESSION OF INSURANCE. The Company and its 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 Hotels owned by the Company or its subsidiaries and such title
insurance is in full force and effect.
(24) ABSENCE OF INDEBTEDNESS. At the Closing Time, the Company will
have no indebtedness for money borrowed except (i) amounts outstanding
under the Company's $300 million aggregate principal amount credit facility
(the "Credit Facility"), (ii) the Company's 7% Senior Notes due 2008, (iii)
the Company's 8 1/4% Monthly Income Senior Notes due 2005, (iv) the
Company's 8 1/2% Monthly Income Senior Notes due 2009, (v) the Company's
9 1/8% Senior Notes due 2010, (vi) equipment financing arrangements in
respect of personal property located at certain Hotels which have been
entered into in the ordinary course of business and have an aggregate
outstanding balance not in excess of $1 million, and (vii) any indebtedness
as to which you shall have given your prior written consent.
(25) 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,
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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 the Underwriters or to
counsel for the Underwriters in connection with the offering of the Shares shall
be deemed a representation and warranty by the Company to the Underwriters as to
the matters covered thereby on the date of such certificate.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) SHARES. The commitments of the several Underwriters to purchase the
Shares 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 to purchase
up to an additional 862,500 Shares 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 Shares upon notice
by the Underwriters to the Company setting forth the number of Option Shares as
to which the Underwriters are then exercising the option and the time, date and
place of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Underwriters 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.
(c) PAYMENT. Payment of the purchase price for, and delivery of, the
Initial Shares shall be made at the offices of ▇▇▇▇▇▇▇▇ & Worcester LLP, Boston,
Massachusetts, or at such other place as shall be agreed upon by the
Underwriters and the Company, at 9:00 A.M. (Eastern time) on the third (fourth,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business
day following the date of this Agreement, or such other time not later than ten
business days after such date as shall be agreed upon by the Underwriters 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 Shares shall be made at the above-mentioned
office of ▇▇▇▇▇▇▇▇ & Worcester LLP, or at such other place as shall be agreed
upon by the Underwriters and the Company on each Date of Delivery as specified
in the notice to the
10
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
the Underwriters of certificates for the Shares to be purchased by them.
(d) REGISTRATION. The Shares shall be issued and registered in such names
as the Underwriters shall request not later than two business days prior to the
Closing Time or the Date of Delivery, as the case may be. The Shares 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 of the
Underwriters as follows:
(a) Immediately following the execution of this Agreement, the Company will
prepare a Prospectus Supplement setting forth the number of Shares covered
thereby and their terms not otherwise specified in the Prospectus, the
Underwriters' names, the price at which the Shares 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 Shares;
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 Shares, 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 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 Shares, (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 Shares 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 Shares, 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
Shares 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.
11
(d) The Company will deliver to 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 Shares (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 Shares, 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 Shares for offering and sale under the applicable
securities laws and real estate 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 Shares 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 Shares.
(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 Shares 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.
12
(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 Shares.
(l) The Company will use its best efforts to effect the listing of the
Shares on the NYSE.
(m) The Company will not, during a period of 30 days from the date of this
Agreement, without ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ prior written consent, register, offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
Common Shares or any securities convertible into or exercisable or exchangeable
for Common Shares, or warrants to purchase Common Shares, other than (i) the
Shares which are to be sold pursuant to this Agreement and (ii) Common Shares
issued or to be issued pursuant to the Company's Incentive Share Award Plan.
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 Shares and any
certificates for the Shares to the Underwriters, including any transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Shares to the Underwriters, (iii) the fees and disbursements of the Company's
counsel, accountants and other advisors or agents, as well as their respective
counsel, (iv) the qualification of the Shares 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 any Blue Sky Survey,
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 and expenses incurred in connection with the listing of the Shares on the
NYSE, (vii) the filing fees incident to, and the reasonable fees and
disbursements of counsel for 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 Shares and (viii) the cost of providing any CUSIP or
other identification numbers for the Shares.
(b) TERMINATION OF AGREEMENT. If this Underwriting Agreement is terminated
by the Underwriters 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 Underwriters'
obligations to purchase and pay for the Shares 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
13
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 for the Underwriters. A prospectus containing
information relating to the description of the Shares, 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, the Underwriters 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, 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, 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. 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.
(c) OPINION OF SPECIAL MARYLAND COUNSEL FOR COMPANY. At Closing Time, the
Underwriters 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,
to the effect as counsel for the Underwriters may reasonably request.
(d) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the Underwriters
shall have received the favorable opinion, dated as of Closing Time, of Sidley
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Underwriters, with respect to the
matters set forth in paragraphs (7), (8), (9), (17), and (18) 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, 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 the Underwriters and may
rely on an opinion dated the Closing Time of ▇▇▇▇▇▇▇,
14
▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 and the Underwriters 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 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, (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 officers' knowledge, are
threatened by the Commission.
(f) ADVISOR'S CERTIFICATE. At Closing Time, there shall not have been,
since the respective dates as of which information is given in 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 the Underwriters 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) ACCOUNTANTS' COMFORT LETTER. At the time of the execution of this
Underwriting Agreement, the Underwriters shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP a letter dated such date, in form and substance satisfactory to the
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, the Underwriters 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) NO OBJECTION. If the Registration Statement or the offering of the
Shares 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.
(j) 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 Shares 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
15
with the issuance and sale of the Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Underwriters and counsel
for the Underwriters.
(k) 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 Shares, 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:
(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 remains true as of such Date
of Delivery.
(ii) A certificate of the President or Vice 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.
(iii) 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 Shares
and otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(iv) The favorable opinion of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel
for the Underwriters, dated such Date of Delivery, relating to the Option
Shares 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.
(l) 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 the Underwriters 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 each
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
16
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;
(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 the Underwriters),
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 the
Underwriters 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 Shares 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
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 the Underwriters
17
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 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.
18
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 Shares
pursuant hereto or (ii) if the allocation provided 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 Shares
pursuant hereto shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of such Shares (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 Shares 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 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, the Underwriters shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by the Underwriters and distributed
to the public were offered to the public exceeds the amount of any damages which
the Underwriters have 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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
19
For purposes of this Section 7, each person, if any, who controls each
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 trustee 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.
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
the Underwriters or controlling persons, or by or on behalf of the Company, and
shall survive delivery of and payment for the Shares.
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 and
its subsidiaries considered as one enterprise 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
Shares or enforce contracts for the sale of the Shares, (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 Shares or enforce contracts for the
sale of the Shares, or (iii) if trading in the Company's Common Shares 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.
20
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 Shares
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 number of Defaulted Securities does not exceed 10% of the
Initial Shares to be purchased on such date pursuant hereto, the
non-defaulting Underwriters shall be obligated, severally and not 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 number of Defaulted Securities exceeds 10% of the Initial
Shares 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
this 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.
21
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 you shall be
directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇, World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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 Underwriters and its 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 Shares from an 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.
22
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 you 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.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
FIRST UNION SECURITIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
For themselves and on behalf of the several
Underwriters named in Exhibit A hereto.
23
Exhibit A
NUMBER OF
NAME OF UNDERWRITER INITIAL SECURITIES
------------------- ------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated............................. 2,300,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc............................. 1,150,000
First Union Securities, Inc.......................... 1,150,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated................. 1,150,000
----------------
Total................................................ 5,750,000
================
24
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 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 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 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 capital shares of each Subsidiary
have been duly and validly authorized and issued, are fully paid and
non-assessable, and, to such counsel's knowledge, are owned by the Company,
directly or through subsidiaries, free and clear of any adverse claim. None of
such capital shares of any Subsidiary was issued in violation of preemptive or,
to such counsel's knowledge, other similar rights of any holder (other than the
Company) of capital shares of such Subsidiary.
(6) Except as otherwise set forth in the opinions expressed in paragraph 4
of the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, LLP, set forth as Exhibit 1
to such counsel's opinion, all the authorized, issued and outstanding capital
shares of the Company 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 capital shares was issued in
violation of preemptive or, to such counsel's knowledge, other similar rights of
any holder of capital shares of the Company.
25
(7) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(8) The Shares have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and non-assessable
(except as otherwise described in the Registration Statement), and will be free
of any preemptive or, to such counsel's knowledge, other similar rights that
entitle any person (other than the Underwriters and their successors and
assigns) to acquire any Shares upon the issuance thereof by the Company.
(9) The Shares conform in all material respects to the descriptions thereof
in the Prospectus.
(10) (a) The statements under the captions "Description of Shares,"
"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 - Principal Lease Features," "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 Financial Condition and Results of Operations - 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 15, 2001 Annual Meeting of Shareholders (incorporated by
reference in the Form 10-K), 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.
(11) The statements under the captions "Federal Income Tax and ERISA
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.
(12) 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 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.
26
(13) The execution, delivery and performance of the Underwriting Agreement
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 Shares and the use of the proceeds from the sale of the
Shares 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.
(14) 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 right or ability of the
Company to perform its obligations thereunder.
(15) 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.
(16) 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.
(17) 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 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.
(18) 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
27
respective effective or issue dates (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
requirements of the 1933 Act.
(19) 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.
(20) No authorization, approval, consent, license, order or decree of, or
filing, registration or qualification with, 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 or the Underwriting Agreement, other than
those which have already been made, obtained or rendered as applicable.
(21) The Company is not, and upon the issuance and sale of the Shares 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.
(22) 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, 2000, 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.
(23) 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.
(24) 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.
(25) 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 Closing Time, 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
28
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 by (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.
29