Exhibit 1.1
2,750,000 SHARES OF COMMON STOCK
WINSTON HOTELS, INC.
UNDERWRITING AGREEMENT
March 19, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
BB&T CAPITAL MARKETS, A DIVISION OF
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, INC.
c/o Raymond ▇▇▇▇▇ & Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Winston Hotels, Inc., a North Carolina corporation (the "COMPANY"),
proposes to issue and sell to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. and BB&T Capital
Markets, a Division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. (the "UNDERWRITERS," which
term shall also include any underwriters substituted as provided in Section 10
hereof) an aggregate of 2,750,000 shares of Common Stock, $.01 par value per
share (the "COMMON STOCK") of the Company (the "FIRM SHARES"). The Company also
proposes to sell to the Underwriters, upon the terms and conditions set forth in
Section 2 hereof, up to an additional 412,500 shares (the "ADDITIONAL SHARES")
of Common Stock. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "SHARES." Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the Registration
Statement (as defined below).
Upon consummation of the transactions contemplated hereby and
application of the net proceeds from the sale of the Shares, the Company will
own an approximate 93.8% general partnership interest in ▇▇▇▇ Limited
Partnership, a North Carolina limited partnership (the "PARTNERSHIP") and will
own 100% of the Preferred Units (as defined below) of the Partnership. The
Company through its subsidiaries currently owns 48 hotels (individually, a
"HOTEL" and collectively, the "HOTELS") as described in the Prospectus
Supplement (as defined below) and a 49% interest in three Joint Ventures (as
defined below), each of which owns a hotel (collectively, the "JOINT VENTURE
HOTELS"). The Partnership or the Company, as applicable, leases 46 of the Hotels
to CapStar Winston Company, L.L.C., a wholly owned subsidiary of MeriStar Hotels
and Resorts, Inc. (the "LESSEE"), one of the Hotels to Bristol W. Tenant
Company, a wholly owned subsidiary of Six Continents Hotels, Inc. ("SIX
CONTINENTS") and one of the Hotels to Secaucus Holding Corporation, a wholly
owned subsidiary of Prime Hospitality Corp. ("PRIME") pursuant to separate
leases (the "LEASES"). Thirty-eight of the Hotels are operated by the Lessee,
one Hotel is operated by Six Continents and one Hotel is operated by Prime
pursuant to the terms of the Leases. Seven of the Hotels are operated by
Interstate Management and Investment Company, a South Carolina corporation
("IMIC") and one Hotel is managed by Hilton Hotels Corporation ("HILTON")
pursuant to separate management agreements (the "MANAGEMENT AGREEMENTS"). The
Lessee also leases and operates two Joint Venture Hotels and Six Continents
leases and operates one Joint Venture Hotel.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
and the Partnership jointly and severally represent and warrant to each of the
Underwriters as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a Registration Statement on Form S-3
(Commission File No. 333-32713) and Amendment No. 1 thereto, with
respect to the Shares, including the related base prospectus included
in the Registration Statement, for the registration under the
Securities Act of 1933, as amended (the "1933 ACT"), and the rules and
regulations of the Commission thereunder (the "1933 ACT REGULATIONS"),
of the offering and sale of up to $200,000,000 aggregate issue price of
securities, including the shares of Common Stock. The Company has filed
with, or shall promptly hereafter file with, the Commission a final
prospectus supplement specifically relating to the Shares pursuant to
Rule 424 under the 1933 Act. The Company has included in such
Registration Statement, as amended or supplemented at the time of
execution of this Agreement (the "EXECUTION TIME"), and has included or
will include in the Prospectus (as defined below) all information
required by the 1933 Act to be included therein with respect to the
Shares and the offering thereof, which information, except to the
extent the Underwriters shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to the
Underwriters prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such additional
information and other changes as the Company has advised the
Underwriters, prior to the Execution Time, will be included or made
therein.
The term "REGISTRATION STATEMENT" as used in this Agreement
shall mean such registration statement at the time such registration
statement became effective (the "EFFECTIVE TIME") including any
prospectus included with such Registration Statement, each document
incorporated therein by reference and, in the event any post-effective
amendment thereto becomes effective prior to the Closing Time (as
defined below), shall also mean such registration statement as so
amended; PROVIDED, HOWEVER, that such term shall also include (i) all
Rule 430A Information (as defined below) deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the 1933 Act Regulations and (ii)
the information contained in the form of any final prospectus or
prospectus supplement filed with the Commission pursuant to Rule 424(b)
of the 1933 Act. The term "PROSPECTUS" as used in this Agreement shall
mean the final prospectus supplement relating to the Shares,
accompanied by the form of base prospectus included in the Registration
Statement, in the form in which it is filed with the Commission after
the Execution Time pursuant to Rule 424(b) of the 1933 Act Regulations
and each document incorporated therein by reference. The term "RULE
430A INFORMATION" means information with respect to the Shares and the
offering thereof permitted pursuant to Rule 430A of the 1933 Act
Regulations to be omitted from the Registration Statement when it
becomes effective.
(b) The Registration Statement has been declared effective by
the Commission under the 1933 Act, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the Company, threatened by the Commission.
- 2 -
(c) When the Prospectus is first filed pursuant to Rule 424(b)
of the 1933 Act Regulations, when any post-effective amendment to the
Registration Statement becomes effective, when any amendment or
supplement to the Prospectus is filed with the Commission and at the
Closing Time or Option Closing Time (as defined below) as applicable,
(i) the Registration Statement, the Prospectus and any amendments
thereof and supplements thereto will conform in all material respects
with the applicable requirements of the 1933 Act and the 1933 Act
Regulations and (ii) neither the Registration Statement, the Prospectus
nor any amendment or supplement thereto will contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter expressly authorizing its use in the
Registration Statement, which information is identified in Section 6(b)
hereof.
(d) Each document incorporated by reference in the
Registration Statement (an "INCORPORATED DOCUMENT"), as of the date
such Incorporated Document became effective with or was filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the 1933 Act or the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
thereunder (the "EXCHANGE ACT") (as applicable), and when read together
with the other information in the Prospectus, as of the Execution Time
and at the Closing Time or Option Closing Time, as applicable, did not
and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
and any further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective with or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the 1933 Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder,
and when read together with the other information in the Prospectus, as
of the Execution Time and at the Closing Time or Option Closing Time,
as applicable, did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter expressly authorizing its use therein.
(e) The conditions for the use by the Company of a
registration statement on Form S-3 set forth in the General
Instructions to Form S-3 have been satisfied and the Company is
entitled to use such form for the transactions contemplated herein.
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of North Carolina with all requisite corporate power and authority to
own, lease and operate its properties and the properties it proposes to
own, lease and operate as described in the Registration Statement and
the Prospectus and to conduct its business as now conducted and as
proposed to be conducted as described in the Registration Statement and
the Prospectus.
- 3 -
The Company has been duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of its
business as now conducted requires such qualification, except where the
failure to do so would not have a material adverse effect on the
condition (financial or otherwise), business, properties or results of
operations of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect"). Except for the entities listed on SCHEDULE
B hereto, the Company does not own or control, directly or indirectly,
or own any capital stock or other beneficial interest in any
corporation, association or other entity.
(g) The Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the North
Carolina Revised Uniform Limited Partnership Act (the "NORTH CAROLINA
ACT") with all requisite partnership power and authority to own, lease
and operate its properties and the properties it proposes to own, lease
and operate as described in the Registration Statement and the
Prospectus and to conduct its business as now conducted and as proposed
to be conducted as described in the Registration Statement and the
Prospectus. The Partnership has been duly qualified or registered to do
business and is in good standing as a foreign partnership in each other
jurisdiction in which the ownership or leasing of its properties or the
nature or conduct of its business as now conducted or proposed to be
conducted as described in the Registration Statement and the Prospectus
requires such qualification, except where the failure to do so would
not have a Material Adverse Effect. The Company is the sole general
partner of the Partnership, and at the Closing Time, will be the sole
general partner of the Partnership and will own a 93.8% interest in the
Partnership, and will hold all of the 3,000,000 9.25% Series A
Cumulative Preferred units in the Partnership (the "PREFERRED UNITS").
(h) All of the joint ventures in which the Company or the
Partnership owns any interest (the "JOINT VENTURES") are listed on
SCHEDULE B hereto. The Company's or Partnership's ownership interest in
such Joint Venture is set forth on SCHEDULE B.
(i) The Company has full corporate right, power and authority
to enter into and perform its obligations under this Agreement, to
issue, sell and deliver the Shares as provided herein and to consummate
the transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable in accordance
with its terms, except to the extent that enforceability may be limited
by bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general
equity principles and except to the extent the indemnification
provisions set forth in Section 6 of this Agreement may be limited by
federal or state securities laws or the public policy underlying such
laws.
(j) The Partnership has full partnership right, power and
authority to enter into and perform this Agreement and to consummate
the transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Partnership and constitutes a
valid and binding agreement of the Partnership, enforceable in
accordance with its terms, except to the extent that enforceability may
be limited by
- 4 -
bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general
equity principles and except to the extent the indemnification
provisions set forth in Section 6 of this Agreement may be limited by
federal or state securities laws or the public policy underlying such
laws.
(k) The Second Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended and supplemented prior to
the date hereof (the "PARTNERSHIP AGREEMENT"), has been duly
authorized, executed and delivered by the Company, as general partner
and constitutes a valid and binding agreement of the parties thereto,
enforceable in accordance with its terms, except to the extent that the
enforceability of the Partnership Agreement may be limited by
bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights or by general
equity principles.
(l) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares and the execution, delivery
and performance of this Agreement and the consummation by the Company
and the Partnership of the transactions contemplated hereby has been
made or obtained and is in full force and effect, except where the
failure to obtain or make any such consent, approval, authorization,
order, license, certificate, permit, registration, designation or
filing by or with any governmental agency or body would not,
individually or in the aggregate, have a Material Adverse Effect.
(m) Neither the issuance, sale and delivery by the Company of
the Shares, nor the execution, delivery and performance of this
Agreement, nor the consummation of the transactions contemplated hereby
by the Company or the Partnership, as applicable, will conflict with or
result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or the passage of time or
both) constitute a default under, (i) the articles of incorporation,
by-laws, certificate of limited partnership or Partnership Agreement,
as the case may be, of the Company or the Partnership; (ii) any
indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which the Company or the Partnership
is a party or to which they, either of them, any of their respective
properties or other assets or any Hotel or Joint Venture Hotel is
subject; or (iii) any applicable statute, judgment, decree, order, rule
or regulation of any court or governmental agency or body applicable to
the Company or the Partnership or any of their respective properties,
except in the case of clauses (ii) and (iii) where such conflict,
breach, violation or default would not have a Material Adverse Effect;
or result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or the
Partnership, except for any lien, charge, claim or encumbrance that
would not have a Material Adverse Effect.
(n) The issuance and sale of the Shares to the Underwriters
hereunder have been duly authorized by the Company. When issued and
delivered against payment therefor as provided in this Agreement, the
Shares will be duly authorized and validly issued, fully paid and
nonassessable. No preemptive rights of shareholders exist with respect
to any of the Shares. The Shares conform to the description of the
Common
- 5 -
Stock contained in the Prospectus. No person or entity holds a right to
require or participate in the registration under the 1933 Act of the
Shares pursuant to the Registration Statement. No person or entity has
a right of participation or first refusal with respect to the sale of
the Shares by the Company. The form of certificates evidencing the
Shares complies with all applicable requirements of North Carolina law.
(o) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption
"Capitalization." Immediately after the Closing Time, 19,674,433 shares
of Common Stock will be issued and outstanding, 3,000,000 shares of
Preferred Stock will be issued and outstanding and no shares of any
other class of capital stock will be issued and outstanding. All of the
issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable
and conform to the description of the Common Stock and Preferred Stock
contained in the Prospectus. None of the issued shares of capital stock
of the Company have been issued in violation of any preemptive or
similar rights of shareholders. Except as disclosed in the Prospectus
or the Incorporated Documents, there is no outstanding option, warrant
or other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the
Company.
(p) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered under the
1933 Act or exempt from the registration requirements of the 1933 Act
and were duly registered or the subject of an available exemption from
the registration requirements of the applicable state securities or
blue sky laws.
(q) All of the issued units of limited partnership interest in
the Partnership (the "UNITS") have been duly and validly authorized and
issued and are fully paid. None of the issued Units has been issued or
is owned or held in violation of any preemptive or similar right. None
of the issued Units or Preferred Units has been issued in violation of
any preemptive right. The Units and Preferred Units have been offered,
sold and issued by the Partnership in compliance with all applicable
laws (including, without limitation, federal and state securities
laws).
(r) The financial statements (including the related notes)
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the financial position of the Company
and, to the knowledge of the Company without independent investigation
or inquiry, the Lessee as of the dates indicated and the results of
operations and cash flows for the Company and, to the knowledge of the
Company without independent investigation or inquiry, the Lessee for
the periods specified, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods specified. The financial statement schedules included in the
Registration Statement and the amounts in the Prospectus under the
caption "PROSPECTUS SUPPLEMENT SUMMARY - SUMMARY CONSOLIDATED FINANCIAL
DATA" present fairly the information shown therein and have been
compiled on a basis consistent with the financial statements included
or incorporated by reference in the Registration Statement
- 6 -
and the Prospectus. No other financial statements or schedules are
required by Form S-3 or otherwise to be included in the Registration
Statement or the Prospectus.
(s) PricewaterhouseCoopers LLP, who have examined and reported
upon the audited financial statements and schedules of the Company
included or incorporated by reference in the Registration Statement,
are, and were during the periods covered by their reports included or
incorporated by reference in the Registration Statement and the
Prospectus, independent public accountants within the meaning of the
1933 Act and the 1933 Act Regulations. To the Company's knowledge
without independent investigation or inquiry, KPMG LLP, who have
examined or reported upon the audited financial statements and
schedules of the Lessee included or incorporated by reference in the
Registration Statement, are, and were during the periods covered by
their reports included or incorporated by reference in the Registration
Statement and the Prospectus, independent public accountants within the
meaning of the 1933 Act and the 1933 Act Regulations.
(t) Neither the Company, the Partnership nor, to the knowledge
of the Company without independent investigation or inquiry, the Lessee
has sustained, since December 31, 2001, any material loss or
interference with its business, taken as a whole, from fire, explosion,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or arbitrators' or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration
Statement and Prospectus, there has not been (i) any material change in
the capital stock or partnership interests, as applicable, long-term
debt, obligations under capital leases or short-term borrowings of the
Company and the Partnership, taken as a whole, (ii) any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, assets,
results of operations or condition (financial or other) of the Company,
the Partnership or, to the knowledge of the Company without independent
investigation or inquiry, the Lessee, (iii) any liability or
obligation, direct or contingent, incurred or undertaken by the Company
or the Partnership, which is material to the business or condition
(financial or other) of the Company and the Partnership, taken as a
whole, except for liabilities or obligations incurred in the ordinary
course of business, (iv) any declaration or payment of any dividend or
distribution of any kind on or with respect to the capital stock of the
Company or with respect to the partnership interests of the
Partnership, or (v) any transaction that is material to the Company and
the Partnership, except transactions in the ordinary course of business
or as otherwise disclosed in the Registration Statement and the
Prospectus.
(u) The Company, the Partnership or, to the knowledge of the
Company, the Joint Ventures, as applicable, will have, at the Closing
Time and any Option Closing Time good and marketable title in fee
simple to all real property and the improvements located thereon owned
by them and described in the Prospectus, free and clear of all liens,
encumbrances, claims, security interests, restrictions and defects
except such as are described in the Prospectus or such as do not,
individually or in the aggregate, materially affect the value thereof
and do not materially interfere with the Company's, the
- 7 -
Partnership's or the Joint Venture's use of the property. No person has
an option or right of first refusal to purchase all or part of any
Hotel or Joint Venture Hotel or any interest therein, except as
disclosed in the Prospectus. Each of the Hotels and, to the knowledge
of the Company, Joint Venture Hotels complies with all applicable
codes, laws and regulations (including, without limitation, building
and zoning codes, laws and regulations and laws relating to access to
the Hotels and Joint Venture Hotels), except to the extent disclosed in
the Prospectus and except for such failures to comply that would not
individually or in the aggregate have a Material Adverse Effect.
Neither the Company nor the Partnership has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding
or action that will in any manner affect the size of, use of,
improvements on, construction on or access to any Hotel or Joint
Venture Hotel, except such proceedings or actions that would not,
individually or in the aggregate, have a Material Adverse Effect.
(v) Neither the Company nor the Partnership is in violation of
its articles of incorporation, by-laws, certificate of limited
partnership or partnership agreement, as the case may be, and except as
disclosed in the Prospectus, no default exists, and no event has
occurred, nor state of facts exists, which, with notice or after the
lapse of time to cure or both, would constitute a default in the due
performance and observance of any obligation, agreement, term,
covenant, consideration or condition contained in any material
indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which any such entity is a party or to
which any such entity or any of its properties is subject, except for
such violations or defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor the
Partnership is in violation of, or in default with respect to, any
statute, rule, regulation, order, judgment or decree, except as may be
properly described in the Prospectus or such as in the aggregate do not
now have and will not in the future reasonably be expected to have a
Material Adverse Effect.
(w) Except as described in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened, any action,
suit, proceeding, inquiry or investigation against the Company or the
Partnership or any of the Company's officers or directors, or to which
the properties, assets or rights of such entities are subject, before
or brought by any court or governmental agency or body or board of
arbitrators, which could result in a Material Adverse Effect or which
could reasonably be expected to adversely affect the consummation of
the transactions contemplated by this Agreement.
(x) The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein
described present fairly the information required to be shown, and
there are no contracts, leases, or other documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
which are not described or filed as required. To the knowledge of the
Company and the Partnership, there are no statutes or regulations
applicable to the Company or the Partnership or certificates, permits
or other authorizations from governmental or regulatory officials or
bodies required to be obtained or maintained by the Company or the
Partnership of a character required to be disclosed in the Registration
Statement or the Prospectus which have not been so
- 8 -
disclosed and properly described therein. All agreements between the
Company or the Partnership and third parties expressly referenced in
the Prospectus are legal, valid and binding obligations of the Company
or the Partnership, enforceable in accordance with their respective
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights or by general
equity principles.
(y) Except as disclosed in the Prospectus, the Company and the
Partnership and, to the knowledge of the Company, each Joint Venture,
owns, possesses or has obtained all material permits, licenses,
franchises, certificates, consents, orders, approvals and other
authorizations of governmental or regulatory authorities or other
entities as are necessary to own or lease, as the case may be, and to
operate its respective properties and to carry on its business as
presently conducted, or as contemplated in the Prospectus to be
conducted, and neither the Company or the Partnership or, to the
knowledge of the Company, any Joint Venture, has received any notice of
proceedings relating to revocation or modification of any such
licenses, permits, certificates, consents, orders, approvals or
authorizations.
(z) Each of the Company and the Partnership and, to the
knowledge of the Company, each Joint Venture, owns or possesses
adequate licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights, software and design licenses,
trade secrets, manufacturing processes, other intangible property
rights and know-how (collectively, "INTANGIBLES") necessary to entitle
any of them to conduct their respective businesses now, and as proposed
to be, conducted or operated as described in the Prospectus, and none
of the Company or the Partnership or, to the knowledge of the Company,
any Joint Venture has received notice of infringement upon or of
conflict with (and the Company and the Partnership know of no such
infringement upon or of conflict with) asserted rights of others with
respect to any Intangibles which could have a Material Adverse Effect.
(aa) To the Company's knowledge, the Company's and the
Partnership's system of internal accounting controls taken as a whole
is sufficient to meet the broad objectives of internal accounting
controls insofar as those objectives pertain to the prevention or
detection of errors or irregularities in amounts that would be material
in relation to the Company's or the Partnership's financial statements;
and, to the Company's knowledge, none of the Company or the
Partnership, nor any employee or agent thereof, has made any payment of
funds of the Company or the Partnership, as the case may be, or
received or retained any funds, and no funds of the Company or the
Partnership, as the case may be, have been set aside to be used for any
payment, in each case in material violation of any law, rule or
regulation.
(bb) Each of the Company and the Partnership (to the extent
not consolidated with the Company) has filed on a timely basis all
necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all
taxes shown as due thereon, and no tax deficiency has been asserted
against either such entity, nor does either such entity know of any tax
deficiency that is likely to be asserted against any such entity which,
if determined adversely to any such entity,
- 9 -
could have a Material Adverse Effect. All tax liabilities of the
Company and the Partnership are adequately provided for on the
respective books of such entities.
(cc) The Company and the Partnership and, to the knowledge of
the Company, each Joint Venture maintain insurance (issued by insurers
of recognized financial responsibility) of the types and in the amounts
generally deemed adequate for their respective businesses and, to the
Company's knowledge, consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the
Company and the Partnership against theft, damage, destruction, acts of
vandalism and all other risks, including liability for personal injury,
customarily insured against, all of which insurance is in full force
and effect.
(dd) To the Company's knowledge, no general labor problem
exists or is imminent with the employees of the Company, the
Partnership or the Lessee.
(ee) Each of the Company and the Partnership, and each of
their officers, directors and controlling persons, has not taken and
will not take, directly or indirectly, any action resulting in a
violation of Rule 102 under Regulation M promulgated under the Exchange
Act, or designed to, or that might reasonably be expected to, cause or
result in or that has constituted or that reasonably might be expected
to constitute the stabilization or manipulation of the price of any
security of the Company or to facilitate the sale (other than to the
Underwriters pursuant to this Agreement) or resale of the Shares.
(ff) The Company has not incurred any liability for a fee,
commission or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement other than as contemplated hereby.
(gg) Except as otherwise disclosed in the Prospectus, neither
the Company, the Partnership, nor, to the knowledge of the Company
without independent investigation or inquiry, the Lessee or any Joint
Venture, has authorized or conducted or has knowledge of the
generation, transportation, storage, presence, use, treatment,
disposal, release, or other handling of any hazardous substance,
hazardous waste, hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, asbestos, radon, polychlorinated
biphenyls ("PCBS"), petroleum product or waste (including crude oil or
any fraction thereof), natural gas, liquefied gas, synthetic gas or
other material defined, regulated, controlled or potentially subject to
any remediation requirement under any environmental law (collectively,
"HAZARDOUS MATERIALS"), on, in, under or affecting any real property
currently leased or owned or by any means controlled by the Company or
the Partnership, including the Hotels and the Joint Venture Hotels (the
"REAL PROPERTY") except in material compliance with applicable laws; to
the knowledge of the Company, the Real Property and the Company's, the
Partnership's and each Joint Venture's operations with respect to the
Real Property are in compliance with all federal, state and local laws,
ordinances, rules, regulations and other governmental requirements
relating to pollution, control of chemicals, management of waste,
discharges of materials into the environment, health, safety, natural
resources, and the environment (collectively, "ENVIRONMENTAL LAWS"),
and the Company, the Partnership and each Joint Venture have,
- 10 -
and are in material compliance with, all licenses, permits,
registrations and government authorizations necessary to operate the
Real Property under all applicable Environmental Laws. Except as
otherwise disclosed in the Prospectus, none of the Company or the
Partnership or, to the knowledge of the Company, any Joint Venture has
received any written or oral notice from any governmental entity or any
other person and, to the knowledge of the Company, there is no pending
or threatened claim, litigation or any administrative agency proceeding
that alleges a violation of any Environmental Laws by the Company, the
Partnership, the Lessee or any Joint Venture or that the Company or the
Partnership is a liable party or a potentially responsible party under
the Comprehensive Environmental Response Compensation and Liability
Act, 42 ▇.▇.▇.▇▇. 9601 ET SEQ. or any state superfund law, has resulted
in or could result in the attachment of an environmental lien on any of
the Real Property or alleges that the Company or the Partnership is
liable for any contamination of the environment, contamination of the
Real Property, damage to natural resources, property damage, or
personal injury based on their activities or the activities of their
predecessors or third parties (whether at the Real Property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
(hh) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "CODE"), and the
Company's method of operation will enable it to meet the requirements
for taxation as a real estate investment trust under the Code. The
Partnership is treated as a partnership for federal income purposes and
not as a corporation or an association taxable as a corporation.
(ii) None of the Company or the Partnership will become, as a
result of the transactions contemplated hereby, or will conduct its
respective business in a manner which would cause such entity to
become, "an investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended (the "1940 ACT") and is not required to be
registered under the 1940 Act.
(jj) The Partnership is not currently prohibited, directly or
indirectly, from making distributions to the Company, from repaying to
the Company any loans or advances to the Partnership or from
transferring any of the Partnership's property or assets to the
Company, except as disclosed in the Prospectus.
(kk) The Company has applied to list the Shares on the New
York Stock Exchange (the "NYSE") and such application has been
approved, subject to notice of issuance.
Any certificate signed by any officer of the Company on behalf of the
Company or the Partnership and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by such entity to
each Underwriter as to the matters covered thereby.
Section 2. SALE AND DELIVERY OF THE SHARES TO THE UNDERWRITERS;
CLOSING.
- 11 -
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the
number of Firm Shares set forth opposite the name of such Underwriter
in SCHEDULE A (the proportion which each Underwriter's share of the
total number of the Firm Shares bears to the total number of Firm
Shares is hereinafter referred to as such Underwriter's "UNDERWRITING
OBLIGATION PROPORTION"), at a purchase price of $8.505 per share (the
"PURCHASE PRICE PER SHARE").
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company contained in
this Agreement and subject to all the terms and conditions set forth in
this Agreement, the Underwriters shall have the right to purchase from
the Company, at the purchase price per share, pursuant to an option
(the "OVER-ALLOTMENT OPTION") which may be exercised at any time prior
to 9:00 P.M., New York City time, on the 30th day after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the NYSE is open for
trading), up to an aggregate of 412,500 Additional Shares. Additional
Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm
Shares. Upon any exercise of the Over-allotment Option, each
Underwriter, severally and not jointly, agrees to purchase from the
Company the number of Additional Shares (subject to such adjustments as
you may determine in order to avoid fractional shares) which bears the
same proportion to the number of Additional Shares to be purchased by
the Underwriters as the Underwriter's underwriting obligation
proportion.
(b) Payment of the purchase price for and delivery of
certificates in definitive form representing the Firm Shares shall be
made at the offices of King & Spalding, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be agreed upon by the
Company and you, at 10:00 a.m. E.S.T., on March 25, 2002 (the "CLOSING
TIME"). The place of closing for the Firm Shares and the Closing Time
may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the office of King
& Spalding mentioned above at such time and on such date (the "OPTION
CLOSING TIME"), which may be the same as the Closing Time but shall in
no event be earlier than the Closing Time nor earlier than two nor
later than ten business days after the giving of the notice hereinafter
referred to, as shall be specified in a written notice from you to the
Company of the Underwriters' determination to purchase a number,
specified in such notice, of Additional Shares. The place of closing
for any Additional Shares and the Option Closing Time for such
Additional Shares may be varied by agreement between you and the
Company.
(c) The certificates or book entries representing the Firm
Shares and any Additional Shares to be purchased by the Underwriters
shall be in such denominations and registered in such names as you may
request in writing at least two full business days before the Closing
Time or any Option Closing Time, as the case may be. The
- 12 -
certificates or book entries representing the Shares will be made
available at the offices of King & Spalding or at such other place as
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. may designate for examination and
packaging not later than 10:00 a.m. on the last business day prior to
the Closing Time. The certificates or book entries evidencing the Firm
Shares and any Additional Shares to be purchased hereunder shall be
delivered to you at the Closing Time or the Option Closing Time, as the
case may be, against payment of the purchase price therefor in
immediately available funds.
(d) You intend to offer the Shares to the public as set forth
in the Prospectus, but after the initial public offering of such Shares
you may in your discretion vary the public offering price.
Section 3. CERTAIN COVENANTS OF THE COMPANY AND THE PARTNERSHIP. The
Company and the Partnership covenant and agree with each Underwriter as follows:
(a) To amend the Partnership Agreement to issue additional
Units to the Company effective upon issuance of the Shares.
(b) If the Company elects to rely upon Rule 430A of the 1933
Act Regulations or the filing of the Prospectus is otherwise required
under Rule 424(b) of the 1933 Act Regulations, the Company will comply
with the requirements of Rule 430A and will file the Prospectus,
properly completed, pursuant to the applicable provisions of Rule
424(b) within the time period prescribed. During the period during
which the Prospectus is required to be delivered under the 1933 Act in
connection with the offering of the Shares, the Company will notify you
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall have
become effective, or any amended Prospectus shall have been filed, (ii)
of any request by the Commission to amend the Registration Statement or
amend or supplement the Prospectus or for additional information, and
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the institution or
threatening of any proceeding for any such purposes. The Company will
use every reasonable effort to prevent the issuance of any such stop
order or of any order preventing or suspending such use and, if any
such order is issued, to obtain the withdrawal thereof at the earliest
possible moment.
(c) The Company will not at any time, during the period during
which the Prospectus is required to be delivered under the 1933 Act in
connection with the offering of the Shares, file or make any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus if you shall not have previously been advised and furnished
a copy thereof a reasonable time prior to the proposed filing, or if
you or counsel for the Underwriters shall reasonably object to such
amendment or supplement.
(d) The Company will deliver to each Underwriter, at the
Company's expense, from time to time as requested during the period
when the Prospectus is
- 13 -
required to be delivered under the 1933 Act, such number of copies of
the Prospectus (as supplemented or amended) as each Underwriter may
reasonably request. The Company will comply to the best of its ability
with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Shares as contemplated in this
Agreement and in the Prospectus. If the delivery of a prospectus is
required at any time prior to the expiration of nine months after the
time of issue of the Prospectus in connection with the offering or sale
of Shares and if at such time any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time such Prospectus is delivered to a
purchaser, not misleading, or, if for any reason it shall be necessary
to amend or supplement the Prospectus in order to comply with the 1933
Act or the Exchange Act, the Company will notify you and, upon your
request, prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus (in form and substance reasonably satisfactory to counsel
for the Underwriters) which will amend or supplement the Prospectus so
that it will not contain an untrue statement or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time it is delivered to a
purchaser, not misleading, and in case any Underwriter is required to
deliver a prospectus in connection with the sale of any Shares at any
time nine months or more after the time of issue of the Prospectus,
upon your request but at the expense of such Underwriter the Company
will prepare and deliver to the Underwriters a reasonable number of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the 1933 Act.
(e) The Company will timely file all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act for so long as the delivery of a Prospectus
is required in connection with the offering or sale of the Shares.
(f) The Company will use its best efforts to qualify the
Shares for offering and sale under the applicable securities laws and
real estate syndication laws of such states and other jurisdictions as
you may designate. 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 a period of not less than one year from the
effective date of the Registration Statement; PROVIDED, HOWEVER, that
the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to make any
undertakings in respect of doing business in any jurisdiction in which
it is not otherwise so subject. The Company will file such statements
and reports as may be required by the laws of each jurisdiction in
which the Shares have been qualified as above provided.
(g) The Company and the Partnership will use the net proceeds
received from the sale of the Shares in the manner specified in the
Prospectus under the caption "USE OF PROCEEDS."
- 14 -
(h) The Company will furnish to its security holders, as soon
as practicable after the end of each respective period, annual reports
(including financial statements audited by independent public
accountants) and unaudited quarterly reports of operations for each of
the first three quarters of the fiscal year. During a period of three
years after the date hereof, the Company will furnish to you promptly
upon request: (i) as soon as available, a copy of each report of the
Company mailed to shareholders and which is not publicly available in
the Commission's ▇▇▇▇▇ database and (ii) from time to time such other
public information concerning the Company as you may reasonably request
and which is not publicly available in the Commission's ▇▇▇▇▇ database.
(i) For a period of 90 days from the date hereof, the Company
will not, without your prior written consent, directly or indirectly,
issue, sell, contract to sell, or otherwise dispose of, any shares of
common stock, any options or warrants to purchase any shares of Common
Stock or any securities convertible into, exercisable for or
exchangeable for shares of Common Stock other than the sale of Shares
as contemplated by this Agreement, the issuance of options or shares of
Common Stock upon the exercise of outstanding options or warrants, the
issuance of options or shares of Common Stock under existing stock
option and incentive plans, the issuance of Units or of other
securities convertible into common stock issued in connection with the
acquisition of hotel properties and the issuance of shares of Common
Stock upon redemption of Units. In addition, the Company will not
consent to the disposition of any shares held by stockholders subject
to lock-up agreements prior to the expiration of their respective
lock-up periods.
(j) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its
Common Stock.
(k) The Company will use its best efforts to maintain the
listing of the Shares on the NYSE.
(l) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(m) The Company and the Partnership will use their reasonable
efforts to conduct their affairs in such a manner so as to ensure that
neither the Company nor the Partnership will be an "investment company"
or an entity "controlled" by an "investment company" within the meaning
of the 1940 Act.
(n) The Company will not, and will use its best efforts to
cause its officers, directors and affiliates not to (i) take, directly
or indirectly, prior to completion of the distribution of the Shares
contemplated by this Agreement, any action resulting in a violation of
Rule 102 under Regulation M promulgated under the Exchange Act, or
designed to, or that might reasonably be expected to, cause or result
in or that has constituted or that reasonably might be expected to
constitute the stabilization or manipulation of the price of any
security of the Company or to facilitate the sale (other than to the
Underwriters pursuant to this Agreement) or resale of the Shares, or
(ii) sell,
- 15 -
bid for, purchase or pay anyone (other than the Underwriters) any
compensation for soliciting purchases of the Shares.
(o) If at any time during the 30-day period after the date of
this Agreement, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your
reasonable opinion the market price of the Common Stock has been or is
likely to be materially or adversely affected (regardless of whether
such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus) and after written notice from you advising
the Company to the effect set forth above, the Company agrees to
consult with you, subject to applicable law, concerning such rumor,
publication or event.
(p) Subject to a determination by the Board of Directors of
the Company to the contrary, the Company will use its best efforts (i)
to meet the requirements to qualify as a real estate investment trust
under the Code and (ii) to cause the Partnership to be treated as a
partnership for federal income tax purposes.
(q) Subject to the terms hereof, the Company and the
Partnership will do and perform their respective obligations to the
extent required to consummate the transactions contemplated hereby.
(r) Prior to the Closing Time and any Option Closing Time, the
Company and the Partnership will notify you in writing immediately if
any event occurs that renders any of the representations and warranties
of the Company or the Partnership contained herein inaccurate or
incomplete in any respect.
Section 4. PAYMENT OF EXPENSES. The Company will pay and bear all
costs, fees and expenses incurred by it in connection with the performance of
its obligations under this Agreement, including (a) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, and the Prospectus and any
amendments or supplements thereto, and the cost of furnishing copies thereof to
the Underwriters, (b) the issuance and delivery of the Shares to the
Underwriters, including any transfer taxes payable upon the sale of the Shares
to the Underwriters (other than transfer taxes on resales by the Underwriters),
(c) the fees and disbursements of the Company's counsel and accountants, (d) all
costs, fees and expenses in connection with the application for listing the
Shares on the NYSE, (e) the transfer agent's and registrar's fees, (f) costs
related to travel and lodging incurred by the Company and its representatives
relating to meetings with and presentations to prospective purchasers of the
Shares reasonably determined by the Underwriters to be necessary or desirable to
effect the sale of the Shares to the public and (g) all other costs and expenses
incident to the performance of the Company's obligations hereunder that are not
otherwise specifically provided for in this section.
If the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 5 hereof is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof other than by reason of default by any of the
Underwriters, the Company will reimburse the Underwriters severally on demand
for all reasonable out-of-pocket
- 16 -
expenses, including fees and disbursements of Underwriters' counsel, reasonably
incurred by the Underwriters in reviewing the Registration Statement and the
Prospectus, and in investigating and making preparations for the marketing of
the Shares.
Section 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for the Shares that they have respectively
agreed to purchase pursuant to this Agreement are subject to the accuracy of the
representations and warranties of the Company and the Partnership contained
herein or in certificates of any officer of the Company and the Partnership
delivered pursuant to the provisions hereof, to the performance by the Company
and the Partnership of their obligations hereunder, and to the following further
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424 within the applicable time prior prescribed for
such filing by such Rule.
(b) At the Closing Time and any Option Closing Time, 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 shall be pending or, to your knowledge or
the knowledge of the Company, shall be contemplated by the Commission,
and any request on the part of the Commission for additional
information shall have been complied with to the satisfaction of
counsel for the Underwriters.
(c) At the Closing Time and any Option Closing Time, you shall
have received the opinion of Hunton & ▇▇▇▇▇▇▇▇, counsel for the Company
and the Partnership, dated as of the Closing Time or the Option Closing
Time, in form and substance reasonably satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing in good standing under the laws of the State
of North Carolina, with the corporate power and authority to
own its properties and conduct its business as described in
the Prospectus.
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the Shares being
delivered at the Closing Time) have been duly and validly
authorized and issued and are fully paid and non-assessable;
and the Shares conform to the description thereof contained in
the Prospectus.
(iii) The Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it is required to be so qualified, except where failure
to be so qualified would not have a Material Adverse Effect
(such counsel being entitled to rely in respect of the opinion
in this clause with respect to matters of fact upon
certificates of officers of the Company, representations and
warranties of the Company herein, and certificates or verbal
advice of public officials in such jurisdictions, provided
that, with respect to certificates of officers of the
- 17 -
Company, such counsel shall state that they believe that both
you and they are justified in relying upon such opinions and
certificates).
(iv) The Partnership is a limited partnership duly
formed and validly existing under the North Carolina Act, with
the partnership power and authority to own and lease its
properties and to conduct its business as described in the
Prospectus. The Partnership has been qualified as a foreign
partnership for the transaction of business under the laws of
each other jurisdiction in which it is required to be so
qualified, except where the failure to be so qualified would
not have a Material Adverse Effect (such counsel being
entitled to rely in respect of the opinion in this sentence
with respect to matters of fact upon certificates of officers
of the Company, the general partner of the Partnership,
representations and warranties of the Partnership herein, and
certificates or verbal advice of public officials of such
jurisdictions provided that, with respect to certificates of
officers of the Company, such counsel shall state that they
believe that both you and they are justified in relying upon
such opinions and certificates). Based solely on a review of
the Partnership Agreement, the Company is the sole general
partner of the Partnership, and at the Closing Time, will be
the sole general partner of the Partnership and will own a
93.8% interest in the Partnership and owns all of the
outstanding Preferred Units. To such counsel's knowledge, the
Company has no other subsidiaries.
(v) Each of the joint venture agreements pursuant to
which the Joint Ventures were formed has been duly authorized,
executed and delivered by the Company or the Partnership, as
applicable, and based solely on a review of the joint venture
agreement, the Company's or the Partnership's interest in such
Joint Venture as described in SCHEDULE B is reflected in the
agreement applicable to such Joint Venture.
(vi) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or
the Partnership is a party or of which any property of the
Company or the Partnership is the subject which, if determined
adversely to the Company or the Partnership would individually
or in the aggregate have a Material Adverse Effect, and, to
such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by
others.
(vii) The execution and delivery of this Agreement
have been duly authorized by the Company and the Partnership
and, this Agreement has been executed and delivered by the
Company and the Partnership. Assuming due authorization,
execution and delivery by the other parties hereto, this
Agreement constitutes a valid and binding agreement of the
Company and the Partnership, respectively, enforceable in
accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating
to or affecting creditors' rights and by general equity
principles and except to the extent that
- 18 -
enforcement of the indemnification provisions set forth in
Section 6 of this Agreement may be limited by federal or state
securities laws or the public policy underlying such laws.
(viii) The issue and sale of the Shares being
delivered at the Closing Time or the Option Closing Time by
the Company and the compliance by the Company and the
Partnership with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001 (except any conflict, breach, violation or
default that (A) would not affect the issuance and sale of the
Shares or consummation of the transactions herein contemplated
or (B) individually or in the aggregate would not have a
Material Adverse Effect, nor will such action result in any
violation of the Articles of Incorporation or Bylaws of the
Company or the certificate of limited partnership and the
Partnership Agreement of the Partnership or any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or the
Partnership or any of their properties.
(ix) No filing, consent, approval, authorization,
order, license, certificate, permit, registration, designation
or filing with any court or governmental agency or body is
required for the valid authorization, issue, delivery and sale
of the Shares or the consummation by the Company and the
Partnership of the transactions contemplated by this
Agreement, except the registration under the 1933 Act of the
Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(x) Neither the Company nor the Partnership is an
"investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the
Investment Company Act.
(xi) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to the Closing Time or the Option Closing
Time (other than the financial statements and related
schedules therein and other financial or statistical data
derived directly therefrom and included therein, as to which
such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the
requirements of the 1933 Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder.
- 19 -
(xii) The Company has all requisite corporate power
and authority to execute, deliver and perform this Agreement,
to issue, sell and deliver the Shares as provided herein and
to consummate the transactions contemplated herein.
(xiii) The Partnership has the partnership power and
authority to execute this Agreement and to consummate the
transactions contemplated herein.
(xiv) All of the issued Units of the Partnership have
been duly and validly issued by the Partnership and are fully
paid. The Units to be issued to the Company at the Closing
Time or the Option Closing Time have been duly and validly
authorized by the Partnership. When issued and delivered
against payment therefor as provided in the Partnership
Agreement, such Units will be duly and validly issued and
fully paid.
(xv) The Registration Statement has become effective
under the 1933 Act and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose
has been instituted or is pending or contemplated under the
▇▇▇▇ ▇▇▇.
(xvi) To such counsel's knowledge, the conditions for
use of a Registration Statement on Form S-3 have been
satisfied with respect to the Company and the transactions
contemplated by this Agreement and the Registration Statement.
(xvii) The Company was organized and has operated in
conformity with the requirements for qualification and
taxation as a REIT under Sections 856 through 860 of the Code
for each of the taxable years ended December 31, 1994 through
2001, and the Company's current organization and method of
operations should permit the Company to continue to qualify as
a REIT under the Code. The descriptions of the law and the
legal conclusions contained in the Prospectus Supplement under
the caption "Federal Income Tax Consequences of our Status as
a REIT" are correct in all material respects and the
discussions thereunder fairly summarize the federal income tax
considerations that are likely to be material to a holder of
the Shares.
(xviii) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to the Closing Time or the Option Closing Time
(other than the financial statements and related schedules and
other financial or statistical data derived directly therefrom
and included therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations
thereunder.
Such counsel shall also state that such counsel has
participated in various conferences with officers and
employees of the Company and with the Company's independent
certified public accountants. At those conferences, the
affairs of the Company and the contents of the Prospectus
Supplement were
- 20 -
discussed and revised. Because of the inherent limitations in
the independent verification of factual matters and the
character of determinations involved in the preparation of
registration statements under the 1933 Act, such counsel is
not passing upon, and does not assume any responsibility for,
and makes no representation that it has independently
verified, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus, except as specifically set forth in paragraphs
(xi), (xvii) and (xviii) above. Also, such counsel does not
express any opinion or belief as to any information furnished
in writing by the Underwriters expressly for use in the
Prospectus Supplement, which information is set forth in the
third and eleventh paragraphs under the caption "Underwriting"
in the Prospectus Supplement. Subject to the foregoing, on the
basis of such counsel's participation in the conferences
referred to above and its examination of the documents
referred to in such opinion, nothing has come to such
counsel's attention that would lead it to believe that, as of
its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the Closing
Time or the Option Closing Time (it being understood that such
counsel expresses no belief as to the financial statements or
schedules or other financial or statistical data derived
directly therefrom included or incorporated by reference in
the Registration Statement or the Prospectus or any amendments
or supplements thereto) 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, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company
prior to the Closing Time or the Option Closing Time (it being
understood that such counsel expresses no belief as to the
financial statements or schedules or other financial or
statistical data derived directly therefrom included or
incorporated by reference in the Registration Statement or the
Prospectus or any amendments or supplements thereto) contained
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading or that, as of the Closing Time or the Option
Closing Time, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made
by the Company prior to the Closing Time or the Option Closing
Time (it being understood that such counsel expresses no
belief as to the financial statements or schedules or other
financial or statistical data derived directly therefrom
included or incorporated by reference in the Registration
Statement or the Prospectus or any amendments or supplements
thereto) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made not misleading; and they do not know of any
amendment to the Registration Statement required to be filed
or of any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus
or required to be described in the Registration Statement or
the Prospectus which are not filed or incorporated by
reference or described as required.
In rendering the foregoing opinion, such counsel may rely on the
following:
- 21 -
(A) as to matters involving the application
of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the
extent such counsel deems proper and to the extent
specified in such opinion, upon an opinion or
opinions of other counsel familiar with the
applicable laws (in form and substance and from
counsel reasonably satisfactory to Underwriters'
counsel). The opinion of counsel for the Company
shall state that the opinion of any other counsel, or
certificate or written statement, on which such
counsel is relying is in form satisfactory to such
counsel and that you and they are justified in
relying thereon. Copies of all such opinions shall be
delivered to Underwriters' counsel.
(B) as to matters of fact, to the extent
they deem proper, representations and warranties of
the Company and the Partnership herein and on
certificates of responsible officers of the Company
and the Partnership.
(d) At the Closing Time, you shall have received a favorable
opinion from King & Spalding, counsel for the Underwriters, dated as of
the Closing Time, with respect to the incorporation of the Company, the
issuance and sale of the Shares, the Registration Statement, the
Prospectus and other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass on such matters.
(e) At the Closing Time, (i) the Registration Statement and
the Prospectus, as they may then be amended or supplemented, shall
contain all statements that are required to be stated therein under the
1933 Act and the 1933 Act Regulations and shall conform to the
requirements of the 1933 Act and the 1933 Act Regulations; the Company
shall have complied with Rule 430A and neither the Registration
Statement nor the Prospectus, as they may then be amended or
supplemented, shall contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) there
shall not have been since the respective dates as of which information
is given in the Registration Statement any material adverse change in
the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company or the Partnership,
whether or not arising in the ordinary course of business, (iii) no
action, suit or proceeding at law or in equity shall be pending or, to
the best of the Company's knowledge, threatened against the Company or
the Partnership that would be required to be set forth in the
Prospectus other than as set forth therein and no proceedings shall be
pending or, to the best knowledge of the Company, threatened against
the Company or the Partnership before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable
decision, ruling or finding could have a Material Adverse Effect, other
than as set forth in the Prospectus, (iv) the Company and the
Partnership shall have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to
the Closing Time, and (v) the representations and warranties of the
Company and the Partnership set forth in Section 1 shall be accurate as
though expressly made at and as of the Closing Time or the Option
- 22 -
Closing Time. At the Closing Time or the Option Closing Time, you shall
have received a certificate executed by the President and Chief
Financial Officer of the Company, dated as of the Closing Time or the
Option Closing Time, to such effect and with respect to the following
additional matters: (A) the Registration Statement has become effective
under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or preventing or suspending the use of the
Prospectus has been issued, and no proceedings for that purpose have
been instituted or are pending or, to the best of their knowledge,
threatened under the 1933 Act; and (B) they have reviewed the
Registration Statement and the Prospectus and, when the Registration
Statement became effective and at all times subsequent thereto up to
the delivery of such certificate, the Registration Statement and the
Prospectus and any amendments or supplements thereto contained all
statements and information required to be included therein or necessary
to make the statements therein not misleading and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto included any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and, since the
effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented Prospectus
that has not been so set forth.
(f) At the time that this Agreement is executed by the
Company, you shall have received from each of PricewaterhouseCoopers
LLP and KPMG LLP a letter, dated the date hereof, in form and substance
satisfactory to you, confirming that they are independent public
accountants with respect to the Company and the Partnership or the
Lessee, respectively, within the meanings of the 1933 Act and 1933 Act
Regulations, and stating in effect that:
(i) in their opinion, the financial statements and
any supplementary financial information and schedules included
or incorporated by reference in the Registration Statement and
covered by their opinion therein comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act and the 1933 Act Regulations;
(ii) on the basis of limited procedures (set forth in
detail in such letter and made in accordance with such
procedures as may be specified by you) not constituting an
audit in accordance with generally accepted auditing
standards, consisting of (but not limited to) a reading of the
latest available unaudited financial statements of the Company
or the Lessee, respectively, a reading of the minute books of
the Company or the Lessee, respectively, inquiries of
officials of the Company or the Lessee, respectively,
responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to
believe that:
(A) at January 31, 2002 there was any change
in the capital stock, increase in long-term debt, or
decrease in consolidated net current assets or
shareholders' equity of the Company as compared with
amounts shown in the December 31, 2001 consolidated
balance sheet;
- 23 -
(B) for the period from January 1, 2002 to
January 31, 2002, there were any decreases as
compared with the corresponding period in the
preceding year, in consolidated net sales or in the
total income or net income applicable to common
shareholders, except as disclosed in such letter;
(C) at a specified date not more than three
days prior to the date of delivery of such letter,
there was any change in the Company's or the
Lessee's, as applicable, capital stock, any increase
in the Company's or the Lessee's notes payable or any
decrease in shareholders' equity or in the Company's
or the Lessee's real estate assets less accumulated
depreciation (except for normal depreciation) or
total assets from that set forth in the Company's or
the Lessee's balance sheet at January 31, 2002, or
changes in any other items specified by the
Underwriters from that set forth in the Company's or
the Lessee's consolidated balance sheet as of January
31, 2002, except as described in such letter, and
(D) for the period from January 31, 2002 to
a specified date not more than three days prior to
the date of delivery of such letter, there were any
decreases in total revenues or net income for the
Company or the Lessee, as applicable, in each case as
compared with the corresponding period of the
preceding year, except in each case for decreases
which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iii) in addition to the procedures referred to in
clause (ii) above and the examination referred to in their
reports included or incorporated by reference in the
Registration Statement, they have carried out certain
specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information
specified by you which are derived from the general accounting
records of the Company or the Lessee, respectively, which
appear or are incorporated by reference in the Registration
Statement or the exhibits or schedules thereto or the
Prospectus and are specified by you, and have compared such
amounts, percentages and financial information with the
accounting records of the Company or the Lessee and with
material derived from such records and have found them to be
in agreement for a period of three years.
(g) At the Closing Time or the Option Closing Time, you shall
have received from each of PricewaterhouseCoopers LLP and KPMG LLP a
letter, in form and substance satisfactory to you and dated as of the
Closing Time or the Option Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to
subsection (f) above, except that the specified date referred to shall
be a date not more than three days prior to the Closing Time or the
Option Closing Time.
(h) In the event that either of the letters to be delivered
pursuant to subsections (f) and (g) above sets forth any such changes,
decreases or increases, it shall
- 24 -
be a further condition to your obligations that you shall have
reasonably determined, after discussions with officers of the Company
or the Lessee, respectively, responsible for financial and accounting
matters and with PricewaterhouseCoopers LLP or KPMG LLP, as applicable,
that such changes, decreases or increases as are set forth in such
letters do not reflect a material adverse change in the capital stock,
long-term debt, total assets, real estate assets less accumulated
depreciation, net current assets or shareholders' equity of the Company
or the Lessee, respectively, as compared with the amounts shown in the
condensed consolidated balance sheet of the Company or the Lessee, as
applicable, at January 31, 2002, or a material adverse change in
revenues or net income for the Company or the Lessee, as applicable, in
each case as compared with the results of the Company or the Lessee, as
applicable, for the corresponding period of the prior year.
(i) At the Closing Time or the Option Closing Time, counsel
for the Underwriters shall have been furnished with all such letters,
documents, certificates and opinions in order to evidence the accuracy
and completeness of any of the representations, warranties or
statements of the Company or the Partnership, the performance of any of
the covenants of the Company or the Partnership, or the fulfillment of
any of the conditions herein contained; and all proceedings taken by
the Company at or prior to the Closing Time or the Option Closing Time
in connection with the authorization, issuance and sale of the Shares
as contemplated in this Agreement shall be satisfactory in form and
substance to you and to counsel for the Underwriters. The Company and
the Partnership will furnish you with such number of conformed copies
of such opinions, certificates, letters and documents as you shall
reasonably request.
(j) You shall have received a lock-up agreement from each
person who is a director or an executive officer of the Company
substantially in the form attached hereto as SCHEDULE C.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4. Not-withstanding
any such termination, the provisions of Sections 6 and 7 shall remain in effect.
Section 6. INDEMNIFICATION.
(a) The Company and the Partnership, jointly and severally,
shall 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(a) of the Exchange Act against any and all
losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to reasonable attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the 1933 Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material
- 25 -
fact contained in the Registration Statement for the registration of
the Shares, as originally filed or any amendment thereof, or the
Prospectus, or in any supplement thereto or amendment thereof, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED, HOWEVER, that the
Company and the Partnership will not be liable in any such case to the
extent but only to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
expressly for use therein. The foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of
any Underwriter who failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery
on or prior to the Closing Time) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission
was cured, as determined by a court of competent jurisdiction in a
decision not subject to further appeal, in such Prospectus and such
Prospectus was required by law to be delivered at or prior to the
written confirmation of sale to such person. This indemnity agreement
will be in addition to any liability which the Company and the
Partnership may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, shall
indemnify and hold harmless the Company, each of the directors and
officers of the Company, and each other person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section
20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited
to reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim, and any and all
amounts paid in settlement of any claim or litigation), jointly or
severally, to which they or any of them may become subject under the
1933 Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares, as originally filed or
any amendment thereof, the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter expressly for use therein; PROVIDED, HOWEVER, that in no
case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discount applicable to the
- 26 -
Shares purchased by such Underwriter hereunder. This indemnity will be
in addition to any liability which any Underwriter may otherwise have
including under this Agreement. The Company and the Partnership
acknowledge that the statements set forth in the third and eleventh
paragraphs under the caption "Underwriting" in the Prospectus
constitute the only information furnished in writing by or on behalf of
any Underwriter expressly for use in the Registration Statement
relating to the Shares as originally filed or in any amendment thereof,
any related preliminary prospectus or the Prospectus or in any
amendment thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claims or the commencement
of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be
sought in writing of the claim or the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve the
indemnifying party from any liability which it may have under this
Section 6 to the extent that it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability
that such indemnifying party may have otherwise than on account of the
indemnity agreement hereunder). In case any such claim or action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, an indemnifying party may
participate, at its own expense, in the defense of such action, and to
the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; PROVIDED HOWEVER, that counsel
to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to have charge of
the defense of such action within a reasonable time after notice of
commencement of the action, (iii) the indemnifying party does not
diligently defend the action after assumption of the defense, or (iv)
such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from
or additional to those available to one or all of the indemnifying
parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall
be borne by the indemnifying parties provided that the indemnifying
party shall only be responsible for the fees and expenses of one set of
legal counsel. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise
of, or consent to the entry of 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 have been sought under Section 6
or 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 the indemnified party
from all liability arising out of such
- 27 -
litigation, investigation, proceeding or claim, (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to
act, by or on behalf of the indemnified party and (iii) the
indemnifying party reaffirms its indemnification obligations pursuant
to this Agreement.
Section 7. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company, the
Partnership and the Underwriters shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company and
the Partnership, any contribution received by the Company or the Partnership
from persons, other than the Underwriters, who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the Exchange Act, directors and
officers of the Company) as incurred to which the Company, the Partnership and
one or more of the Underwriters may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company and the
Partnership on the one hand and the Underwriters on the other hand from the
offering of the Shares or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 6 hereof, in such proportions as
are appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company and the Partnership on the one hand and
the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Partnership on
the one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as (x) the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
bear to (y) the underwriting discount received by the respective Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of each of the Company and the Partnership and of
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Partnership 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
- 28 -
Section 7, (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares 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 such untrue or alleged untrue statement or omission or alleged
omission and (ii) 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. 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 Exchange Act shall
have the same rights to contribution as such Underwriter, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the Exchange Act, and each director and officer of the Company
shall have the same rights to contribution as the Company. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 7 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
Section 7 are several in proportion to the respective number of Firm Shares
purchased by each of the Underwriters hereunder and not joint.
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations. warranties, indemnities, agreements and other
statements of the Company or the Partnership or officers of the Company set
forth in or made pursuant to this Agreement will remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Company, the Partnership or any Underwriter or controlling person, with respect
to an Underwriter or the Company or the Partnership, and will survive delivery
of and payment for the Shares or termination of this Agreement.
Section 9. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective upon its execution.
Notwithstanding the foregoing, the provisions of this Section 9 and of
Sections 1, 4, 6 and 7 hereof shall at all times be in full force and
effect.
(b) You shall have the right to terminate this Agreement at
any time prior to the Closing Time or to terminate the obligations of
the Underwriters to purchase the Additional Shares at any time prior to
the Option Closing Time, as the case may be, if (A) trading in the
Company's Common Stock shall have been suspended by the Commission or
the New York Stock Exchange, (B) trading in securities generally on the
New York Stock Exchange or NASDAQ shall have been suspended or
materially limited, or minimum or maximum prices shall have been
generally established on such exchange, or additional material
governmental restrictions, not in force on the date of this Agreement,
shall have been imposed upon trading in securities generally by any
such exchange or by order of the Commission or any court or other
governmental authority having jurisdiction, (C) a general moratorium on
commercial banking activities shall have been declared by either
federal, North Carolina or New York authorities, (D) any downgrading
shall have occurred in the rating accorded the Company's debt
securities or
- 29 -
preferred stock by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Act or any such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities or preferred stock, or (E) (i) there shall have occurred any
outbreak or escalation of hostilities or acts of terrorism involving
the United States that result in a declaration of a national emergency
or war by the United States or (ii) there shall have been any other
calamity or crisis or any change in political, financial or economic
conditions or other material event the effect of which on the financial
markets of the United States of any such event in (i) or (ii) in your
reasonable judgment makes it impracticable or inadvisable to proceed
with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms and in the manner
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 9 shall
be in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to Section 10(b)), or if
the sale of the Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth herein
is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will, subject to demand by you, reimburse
the Underwriters for all reasonable out-of-pocket expenses (including
the reasonable fees and expenses of their counsel), incurred by the
Underwriters in connection herewith. If this Agreement shall be
terminated pursuant to Section 9(b) hereof, then no party shall have
any liability hereunder.
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 Shares that
it or they are obligated to purchase pursuant to this Agreement (the "DEFAULTED
SECURITIES"), you shall have the right, within 36 hours thereafter, to make
arrangements for 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 set forth in this Agreement; if,
however, you have not complete such arrangements within such 36-hour period,
then:
(a) If the aggregate number of Shares which are Defaulted
Securities does not exceed 10% of the aggregate number of Shares to be
purchased pursuant to this Agreement, the non-defaulting Underwriter
shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting proportions bear to the
aggregate underwriting obligation proportions of all non-defaulting
Underwriters; and
(b) If the aggregate number of Shares which are Defaulted
Securities exceeds 10% of the aggregate number of Shares to be
purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of the non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve the
defaulting Underwriter from liability in respect of its default.
- 30 -
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time or Option Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement or supplements to the
Prospectus that may thereby be made necessary. As used in this Agreement, the
term "UNDERWRITER" includes any person substituted for an Underwriter under this
Section 10.
Section 11. DEFAULT BY THE COMPANY. If the Company shall fail at the
Closing Time or Option Closing Time to sell and deliver the aggregate number of
Shares that it is obligated to sell, then this Agreement shall terminate without
any liability on the part of any non-defaulting party, except to the extent
provided in Section 4 and except that the provisions of Section 6 and 7 shall
remain in effect.
No action taken pursuant to this Section 11 shall relieve the Company
from liability, if any, in respect to such default.
Section 12. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o Raymond ▇▇▇▇▇ & Associates,
Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (with a copy sent in
the same manner to King & Spalding, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.); and notices to the Company and the
Partnership shall be directed to them at Winston Hotels, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
III (with a copy sent in the same manner to Hunton & ▇▇▇▇▇▇▇▇, Riverfront Plaza,
East Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.).
Section 13. PARTIES. This Agreement is made solely for the benefit of
and is binding upon the Underwriters, the Company and the Partnership and, to
the extent provided in Section 6, any person controlling the Company, the
Partnership, or any of the Underwriters, the officers and directors of the
Company, and their respective executors, administrators, successors and assigns
and, subject to the provisions of Section 10, no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from any of the
Underwriters of the Shares.
All of the obligations of the Underwriters hereunder are several and
not joint.
Section 14. GOVERNING LAW AND TIME. This Agreement shall be governed by
the laws of the State of New York. Specified time of the day refers to United
States Eastern Time. Time shall be of the essence of this Agreement.
Section 15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
- 31 -
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Partnership
and the several Underwriters in accordance with its terms.
Very truly yours,
WINSTON HOTELS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Operating
Officer
▇▇▇▇ LIMITED PARTNERSHIP
By: Winston Hotels, Inc., general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Operating Officer
Confirmed and accepted as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
BB&T CAPITAL MARKETS, A DIVISION OF
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, INC.
BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Managing Director
- 32 -
SCHEDULE A
Underwriters Number of Firm Shares to be Purchased
------------ -------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. 1,925,000
BB&T Capital Markets, a Division of
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. 825,000
Total 2,750,000
SCHEDULE B
State of
Name of Subsidiary Parent Ownership Formation
------------------ ------ --------- ---------
Winston Manager Corporation Winston Hotels, Inc. 100% ▇▇▇▇▇▇▇▇
▇▇▇▇ Limited Partnership Winston Hotels, Inc. 93.8%(1) North Carolina
Winston SPE, LLC ▇▇▇▇ Limited Partnership 100% ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Hospitality Services, Inc. Winston Hotels, Inc. 49% North Carolina
Marsh Landing Hotel Associates, LLC(2) ▇▇▇▇ Limited Partnership 49% Delaware
Windsor Hotel Associates, LLC(2) ▇▇▇▇ Limited Partnership 49% Delaware
Evanston Hotel Associates, LLC(2) ▇▇▇▇ Limited Partnership 49% Delaware
In addition to the good standing certificate that the Company will deliver for
Winston Hotels, Inc. in North Carolina at the Closing Time and the Option
Closing Time, if any, good standing certificates will be delivered for each of
the above listed entities at the Closing Time and the Option Closing Time, if
any. In addition, the Company will deliver foreign qualification good standing
certificates for ▇▇▇▇ Limited Partnership in the following jurisdictions:
Georgia
Florida
Texas
New York
New Jersey
South Carolina
Arizona
The opinion of Hunton & ▇▇▇▇▇▇▇▇ regarding valid existence, good standing and
foreign qualification of Winston Hotels, Inc. and the subsidiaries listed above
will be based solely on the good standing certificates obtained and delivered as
described above.
------------------
(1) As adjusted for the offering.
(2) Joint Venture Entity
SCHEDULE C
March 19, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Equity Capital Markets
Re: WINSTON HOTELS, INC. LOCK-UP AGREEMENT
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed public
offering (the "Offering") by Winston Hotels, Inc., a North Carolina corporation
(the "Company"), of its common stock, $.01 par value (the "Stock").
In order to induce you and the other underwriters for which you act as
representatives (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), during the period from the date hereof until
ninety (90) days from the date of the final prospectus for the Offering (the
"Lock-Up Period"), the undersigned (a) will not, directly or indirectly, offer,
sell, agree to offer or sell, solicit offers to purchase, grant any call option
or purchase any put option with respect to, pledge, borrow or otherwise dispose
of any Relevant Security (as defined below), and (b) will not establish or
increase any "put equivalent position" or liquidate or decrease any "call
equivalent position" with respect to any Relevant Security (in each case within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder), or otherwise enter into
any swap, derivative or other transaction or arrangement that transfers to
another, in whole or in part, any economic consequence of ownership of a
Relevant Security, whether or not such transaction is to be settled by delivery
of Relevant Securities, other securities, cash or other consideration. As used
herein "Relevant Security" means the Stock, any other equity security of the
Company or any of its subsidiaries and any security convertible into, or
exercisable or exchangeable for, any Stock or other such equity security. The
foregoing shall not apply to (1) BONA FIDE gifts by the undersigned, provided
that each resulting transferee of Relevant Securities executes and delivers to
you an agreement satisfactory to you certifying that such transferee is bound by
the terms of this Agreement and has been in compliance with the terms hereof
since the date first above written as if it had been an original party hereto,
and (2) redemptions by the undersigned of units of limited partnership interest
in ▇▇▇▇ Limited Partnership in accordance with the terms and conditions of the
Partnership Agreement of ▇▇▇▇ Limited Partnership, provided that any shares of
Stock acquired by the undersigned pursuant to any such redemption shall be
subject to the restrictions contained in this Agreement.
The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities. The undersigned hereby further agrees
that, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, during the Lock-up
Period the undersigned (x) will not file or participate in the filing with the
Securities and Exchange Commission of any registration statement, or circulate
or participate in the circulation of any preliminary or final prospectus or
other disclosure document with respect to any proposed offering or sale of a
Relevant Security and (y) will not exercise any rights the undersigned may have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Delivery of a signed copy of this letter by
telecopier or facsimile transmission shall be effective as delivery of the
original hereof.
Very truly yours,
By:
-------------------------------------
Print Name:
-----------------------------