EXHIBIT 1.1
ASHFORD HOSPITALITY TRUST, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
August __, 2003
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
CREDIT LYONNAIS SECURITIES (USA) INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Ashford Hospitality Trust, Inc., a Maryland corporation (the "Company")
and Ashford Hospitality Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), each confirms its agreement with each of the
Underwriters listed on Schedule II hereto (collectively, the "Underwriters"),
for whom Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
Incorporated and Credit Lyonnais Securities (USA) Inc. are acting as
Representatives (in such capacity, the "Representatives"), with respect to (i)
the sale by the Company of [35,000,000] shares (the "Initial Shares") of common
stock, par value $.01 per share, of the Company ("Common Stock"), and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto, and (ii) the grant of the option described in
Section 1(b) hereof to purchase all or any part of [5,250,000] additional shares
of Common Stock to cover over-allotments (the "Option Shares"), if any, from the
Company to the Underwriters, acting severally and not jointly, in the respective
numbers of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto. The [35,000,000] Initial Shares and all or
any part of the [5,250,000] Option Shares are hereinafter called, collectively,
the "Shares."
At or before the Closing Time (as defined herein) for the purchase and
sale of the Initial Shares, the Company and the Operating Partnership will
complete a series of transactions described in the Preliminary Prospectus (as
defined herein) and the Prospectus (as defined herein) under the captions
"Summary - Formation Transactions" and "Certain Relationships and Transactions -
Contribution of Initial Properties" (such transactions, the "Formation
Transactions"). As part of the Formation Transactions, (i) six partnerships (the
"Contributing Partnerships") will each contribute or sell one property and
related assets to the Operating Partnership in exchange for units of limited
partnership interest in the Operating Partnership ("Units"), shares of Common
Stock or cash or a combination of the foregoing, (ii) Ashford Financial
Corporation ("AFC") will contribute eight asset management and consulting
agreements (the "Asset Management Agreements") to the Operating Partnership in
exchange for Units, (iii) the Company, in
exchange for Units, will contribute to the Operating Partnership the net
proceeds from the sale of the Initial Shares to the several Underwriters, (iv)
the Operating Partnership will assume certain liabilities relating to the six
properties and obligations arising after such Closing Time under the eight asset
management and consulting agreements and satisfy certain assumed obligations for
borrowed money, and (v) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ("▇. ▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇▇") will each acquire 250,000 shares of Common Stock from the
Company. In addition, to the extent any or all of the Option Shares are
purchased by the several Underwriters, the Company, at the Closing Time for such
purchase will contribute to the Operating Partnership the net proceeds from the
sale of such Option Shares. As used in this Agreement, the term "Formation
Agreements" means (i) the omnibus option agreement, described in the Prospectus,
among the Operating Partnership and the Contributing Partnerships dated May 15,
2003 (the "Omnibus Option Agreement"); (ii) the option agreement, described in
the Prospectus, dated May 15, 2003, between the Operating Partnership and AFC
(the "AFC Option Agreement"); (iii) each of the Asset Management Agreements,
(iv) the mutual exclusivity agreement, described in the Prospectus, among the
Company, the Operating Partnership, Remington Hotel Corporation and Remington
Lodging and Hospitality, L.P. ("Remington Lodging"), which is consented and
agreed to by ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇, as affiliates, (v) the lease agreements,
described in the Prospectus, between the Operating Partnership and Ashford TRS
Corporation ("Ashford TRS") with respect to the properties to be contributed
pursuant to the Formation Transactions, (vi) the subscription agreement dated
May 15, 2003, between the Company and ▇. ▇▇▇▇▇▇▇, (vii) the subscription
agreement dated May 15, 2003, between ▇. ▇▇▇▇▇▇▇ and the Company, (viii) the
guaranty, described in the Prospectus, by AFC in favor of the Company with
respect to the Asset Management Agreements, and (ix) registration rights
agreement, described in the Prospectus, among the Company, the Operating
Partnership, the Contributing Partnerships, Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc., ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇ (the "Registration Rights Agreement").
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
Commission"), a registration statement on Form S-11 (No. 333-105277) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and agrees
to file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement, as amended at the time it
became effective (including all information deemed to be a part of the
registration statement at the time it becomes effective pursuant to Rule 430A of
the Securities Act Regulations), is hereinafter called the "Registration
Statement," except that, if the Company files a post-effective amendment to such
registration statement that becomes effective prior to the Closing Time,
"Registration Statement" shall refer to such registration statement as so
amended. Any registration statement filed pursuant to Rule 462(b) of the
Securities Act Regulations is hereinafter called the "Rule 462(b)
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Registration Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. The term "Preliminary
Prospectus" means the preliminary prospectus, dated July 31, 2003, relating to
the Shares, as such prospectus shall have been amended or supplemented from time
to time prior to the date of the Prospectus. The term "'Prospectus" means the
final prospectus, as first filed with the Commission pursuant to Rule 424(b) of
the Securities Act Regulations, and any amendments thereof or supplements
thereto.
The Company, the Operating Partnership and the Underwriters agree as
follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of [$________], the Company agrees to sell to the Underwriters
the Initial Shares, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Initial Shares set forth in Schedule I
opposite such Underwriter's name, plus any additional number of Initial Shares
that such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case, to such adjustments among
the Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to the Underwriters, acting severally and not jointly, to purchase from the
Company, all or any part of the Option Shares, plus any additional number of
Option Shares that such Underwriter may become obligated to purchase pursuant to
the provisions of Section 8 hereof. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Shares upon notice
by the Representatives to the Company setting forth the number of Option Shares
as to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Shares. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives,
but shall not be later than five full business days after the exercise of such
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Shares, the
Company will sell that number of Option Shares then being purchased, and each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Shares then being purchased which the
number of Initial Shares set forth in Schedule I opposite the name of such
Underwriter bears to the total number of Initial Shares, subject in each case to
such adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
2. Payment and Delivery
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as
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the Representatives may request upon at least 48 hours' prior notice to the
Company shall be delivered by or on behalf of the Company to the
Representatives, including, at the option of the Representatives, through the
facilities of The Depository Trust Company ("DTC") for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified in writing to the Representatives by the Company upon at least 48
hours' prior notice. The Company will cause the certificates representing the
Initial Shares to be made available for checking and packaging at least 24 hours
prior to the Closing Time (as defined below) with respect thereto at the office
of Friedman, Billings, ▇▇▇▇▇▇ & Co., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at the office of DTC or its designated custodian, as the case may be
(the "Designated Office"). The time and date of such delivery and payment shall
be 9:30 a.m., New York City time, on the third (fourth, if pricing occurs after
4:30 p.m., New York City time) business day after the date hereof (unless
another time and date shall be agreed to by the Representatives and the
Company). The time at which such payment and delivery are actually made is
hereinafter sometimes called the "Closing Time" and the date of delivery of both
Initial Shares and Option Shares is hereinafter sometimes called the "Date of
Delivery."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representatives may request upon at least 48
hours' prior notice to the Company shall be delivered by or on behalf of the
Company to the Representatives, including, at the option of the Representatives,
through the facilities of DTC for the account of such Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same-day) funds to the account specified in writing to
the Representatives by the Company upon at least 48 hours' prior notice. The
Company will cause the certificates representing the Option Shares to be made
available for checking and packaging at least 24 hours prior to the Date of
Delivery with respect thereto at the Designated Office. The time and date of
such delivery and payment shall be 9:30 a.m., New York City time, on the date
specified by the Representatives in the notice given by the Representatives to
the Company of the Underwriters' election to purchase such Option Shares or on
such other time and date as the Company and the Representatives may agree upon
in writing.
(c) Directed Shares. It is understood that approximately [__________]
shares of the Initial Shares ("Directed Shares") initially will be reserved by
the Underwriters for offer and sale to employees and persons having business
relationships with the Company ("Directed Share Participants") upon the terms
and conditions set forth in the Prospectus and in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"Directed Share Program"). Under no circumstances will the Representatives or
any Underwriter be liable to the Company or to any Directed Share Participant
for any action taken or omitted to be taken in good faith in connection with
such Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share Participant on or
immediately after the date of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated herein.
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3. Representations and Warranties of the Company and the Operating
Partnership: The Company and the Operating Partnership, jointly and severally,
represent and warrant to the Underwriters that:
(a) the Company has an authorized capitalization, and will have
immediately after the Closing Time for the purchase and sale of the Initial
Shares, an actual capitalization, as set forth in the Prospectus; the
outstanding shares of capital stock or, as applicable partnership or membership
interests, of the Company and each subsidiary of the Company, including the
Operating Partnership and its subsidiaries (each, a "Subsidiary"), have been
duly and validly authorized and issued and are fully paid and, with respect to
shares of capital stock, membership interests and limited partnership interests,
non-assessable (except to the to the extent such non-assessability may be
affected by Section 17-607 of the Delaware Revised Uniform Limited Partnership
Act or Section 18-607 of the Delaware Limited Liability Company Act), and all of
the outstanding shares of capital stock or partnership or membership interests
of the Subsidiaries are directly or indirectly owned of record and beneficially
by the Company, free and clear of any pledge, lien, encumbrance, security
interest or other claim, and, except as disclosed in the Prospectus, there are
no outstanding (i) securities or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable or redeemable for any capital
stock or other equity interests of the Company or any such Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or other equity interests or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company or any such Subsidiary to issue any shares of capital stock or other
equity interests, any such convertible or exchangeable or redeemable securities
or obligation, or any such warrants, rights or options;
(b) each of the Company and the Subsidiaries (all of which Subsidiaries
are named in Exhibit 21 to the Registration Statement) has been duly
incorporated or organized and is validly existing as a corporation, limited
partnership or limited liability company, as applicable, in good standing under
the laws of its respective jurisdiction of incorporation or organization with
full corporate or other power and authority to own its respective properties and
to conduct its respective businesses as described in the Registration Statement
and Prospectus and, in the case of each of the Company, the Operating
Partnership and Ashford TRS, to execute and deliver this Agreement and the
Formation Agreements to which it is a party and to consummate the transactions
contemplated herein and therein;
(c) each of the Company and the Subsidiaries is duly qualified or
licensed and is in good standing in each jurisdiction in which the nature or
conduct of its business requires such qualification or license and in which the
failure, individually or in the aggregate, to be so qualified or licensed could
reasonably be expected have a material adverse effect on the assets, business,
operations, earnings, properties or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole (a "Material Adverse Effect");
except as disclosed in the Prospectus, no Subsidiary is prohibited or
restricted, directly or indirectly, from paying dividends to the Company, or
from making any other distribution with respect to such Subsidiary's capital
stock or other equity interests or from repaying to the Company or any other
Subsidiary any
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amounts that may from time to time become due under any loans or advances to
such Subsidiary from the Company or such other Subsidiary, or from transferring
any such Subsidiary's property or assets to the Company or to any other
Subsidiary; other than as disclosed in the Prospectus, the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
other corporation or any ownership interest in any partnership, joint venture or
other association;
(d) the Agreement of Limited Partnership of the Operating Partnership
(the "Partnership Agreement") has been duly and validly authorized, executed and
delivered by or on behalf of the partners of the Operating Partnership and
constitutes a valid and binding agreement of the parties thereto, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity;
(e) upon completion of the offering of the Shares (i) Ashford OP
Limited Partner, LLC (the "Limited Partner") will be a holder of Units
representing an ownership interest in the Operating Partnership in the amount
described in the Prospectus, (ii) Ashford OP General Partner, LLC (the "General
Partner") will be the holder of the sole general partner interest in the
Operating Partnership, and (iii) the Company will own a 100% membership interest
in the General Partner and in the Limited Partner, in case free and clear of any
pledge, lien, encumbrance, security interest or other claim;
(f) the Company and the Subsidiaries are, and will be upon consummation
of the Formation Transactions, in compliance with all applicable federal, state,
local or foreign laws, regulations, rules, decrees, judgments and orders,
including those relating to transactions with affiliates, except where any
failures to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(g) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under) its respective
organizational documents, or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties is bound, except for such breaches or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect;
(h) the execution, delivery and performance of this Agreement and the
Formation Agreements, and consummation of the transactions contemplated herein
or therein will not (A) conflict with, or result in any breach of, or constitute
a default under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of, or default under), (i) any provision of the
organizational documents of the Company or any Subsidiary, or (ii) any provision
of any license, indenture, mortgage, deed of trust, loan or credit agreement or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which any of them or their respective assets or properties (including
those to be acquired upon consummation of the Formation Transactions) may be
bound or affected, or under any federal, state, local or foreign law,
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regulation or rule or any decree, judgment or order applicable to the Company or
any Subsidiary, except in the case of this clause (ii) for such breaches or
defaults that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; or (B) result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company or any Subsidiary or any of the properties or assets to be
acquired pursuant to the Formation Transactions;
(i) this Agreement has been duly authorized, executed and delivered by
the Company and the Operating Partnership and is a legal, valid and binding
agreement of the Company enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable principles, and
except to the extent that the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(j) no approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency or any other third party is required in connection
with the Company's or the Operating Partnership's execution, delivery and
performance of this Agreement, their consummation of the transactions
contemplated herein or the Company's sale and delivery of the Shares or in
connection with the execution, delivery and performance of the Formation
Agreements or the consummation of the transactions contemplated therein by any
party thereto, other than (i) such as have been obtained, or will have been
obtained at the Closing Time or the relevant Date of Delivery, as the case may
be, under the Securities Act and the Securities Exchange Act of 1934 (the
"Exchange Act"), (ii) such approvals as have been obtained in connection with
the approval of the listing of the Shares on the New York Stock Exchange, (iii)
any necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters, and
(iv) such approvals, authorizations, consents or orders or filings, the absence
of which could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;
(k) each of the Company and the Subsidiaries has, and will have upon
consummation of the Formation Transactions, all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or to
obtain any such authorizations, consents or approvals could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect;
neither the Company nor any of the Subsidiaries is in violation of, in default
under, or has received any notice regarding a possible violation, default or
revocation of any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree, judgment
or order applicable to the Company or any of the Subsidiaries, the effect of
which could reasonably be expected to result in a Material Adverse Effect; and
no such license, authorization, consent or approval contains a materially
burdensome restriction that is not adequately disclosed in the Registration
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Statement and the Prospectus; neither the Company nor any of the Subsidiaries is
required by any applicable law to obtain accreditation or certification from any
governmental agency or authority in order to provide the products and services
that it currently provides or that it proposes to provide as set forth in the
Prospectus except to the extent that any failure to have such accreditation or
certification could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(l) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and, to the
knowledge of the Company, the Company has complied to the Commission's
satisfaction with any request on the part of the Commission for additional
information;
(m) the Preliminary Prospectus and the Registration Statement comply,
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply, in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
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, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), 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, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement, the Preliminary Prospectus or the Prospectus, in
reliance upon and in conformity with the information concerning the Underwriters
and furnished in writing by or on behalf of the Underwriters through the
Representatives to the Company expressly for use in the Registration Statement,
the Preliminary Prospectus or the Prospectus (that information being limited to
that described in the penultimate sentence of the first paragraph of Section
9(b) hereof);
(n) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
respective version of the Preliminary Prospectus or Prospectus created to be
transmitted to the Commission under the Securities Act for filing via the
Electronic Data Gathering Analysis and Retrieval System ("▇▇▇▇▇"), except to the
extent permitted by Regulation S-T;
(o) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or any of their respective officers and directors
or to which the properties, assets or rights
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of any such entity (including any to be acquired upon consummation of the
Formation Transactions) are subject, at law or in equity, before or by any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority, arbitral panel or agency, where in any such case (A) there is a
reasonable possibility that such action, suit or proceeding will be determined
adversely to the Company or such Subsidiary and (B) if so determined adversely,
could reasonably be expected to result in a judgment, decree, award or order
having a Material Adverse Effect;
(p) the financial statements, including the related supporting
schedules and notes, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the entities to which such
financial statements relate (the "Covered Entities") as of the dates indicated
and the consolidated results of operations and changes in financial position and
cash flows of the Covered Entities for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States and on a consistent basis during the
periods involved (except as may be expressly stated in the related notes
thereto) and in accordance with Regulation S-X promulgated by the Commission;
the financial data in the Prospectus under the captions "Summary - Summary
Selected Financial Information," and "Selected Financial Information" fairly
present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration Statement
and the Prospectus; no other financial statements or supporting schedules are
required to be included in the Registration Statement; the unaudited pro forma
financial information (including the related notes) included in the Prospectus
complies as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Securities Act Regulations, and
management of the Company believes that the assumptions underlying the pro forma
adjustments are reasonable; such pro forma adjustments have been properly
applied to the historical amounts in the compilation of the information and such
information fairly presents with respect to the Company and the Subsidiaries,
the financial position, results of operations and other information purported to
be shown therein at the respective dates and for the respective periods
specified; no other pro forma financial information is required to be included
in the Registration Statement;
(q) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Contributing Partnerships are filed with the Commission as
part of the Registration Statement and Prospectus or are incorporated by
reference therein and any other accounting firm that has certified financial
statements of the Contributing Partnerships and delivered its reports with
respect thereto, are, and were during the periods covered by their reports,
independent public accountants as required by the Securities Act and the
Securities Act Regulations;
(r) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus (including the description of
the Formation Transactions contained therein), there has not been (i) any
change, or any development or event that reasonably could be expected to result
in a change, that has or reasonably could be expected to have a Material Adverse
Effect, whether or not arising in the ordinary course of business, (ii) any
transaction that is material to the Company and the
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Subsidiaries taken as a whole entered into or agreed to be entered into by the
Company or any of the Subsidiaries, (iii) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company or any Subsidiary that
is material to the Company and Subsidiaries taken as a whole or (iv) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock or by the Operating Partnership on any of its
partnership interests;
(s) the Shares and the Units to be issued in the Formation Transactions
conform in all material respects to the description thereof contained in the
Registration Statement and the Prospectus;
(t) there are no persons with registration or other similar rights to
have any equity or debt securities, including securities that are convertible
into or exchangeable or redeemable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company or the
Operating Partnership under the Securities Act except for those registration or
similar rights that have been waived with respect to the offering contemplated
by this Agreement, all of which registration or similar rights are fairly
summarized in the Prospectus;
(u) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise;
(v) the Common Stock and the Units to be issued in the Formation
Transactions have been duly authorized and, when issued and duly delivered
against payment therefor as contemplated by the Omnibus Option Agreement or the
AFC Option Agreement (to the extent applicable), will be validly issued, fully
paid and, except to the to the extent such non-assessability may be affected by
Section 17-607 of the Delaware Revised Uniform Limited Partnership Act,
non-assessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim, and the issuance and sale of such Common Stock by the
Company and such Units by the Operating Partnership is not subject to preemptive
or other similar rights arising by operation of law, under the organizational
documents of the Company or the Operating Partnership or under any agreement to
which the Company or any Subsidiary is a party or otherwise;
(w) the Shares have been registered under Section 12(b) of the Exchange
Act and approved for listing on the New York Stock Exchange, subject to official
notice of issuance;
(x) the Company has not taken, and will not take, directly or
indirectly, any action that is designed to or that has constituted or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares;
-10-
(y) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD")) any member firm of the NASD;
(z) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(aa) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(bb) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the organizational documents of the Company and the
requirements of the New York Stock Exchange;
(cc) upon consummation of the Formation Transactions, the Company and
the Subsidiaries will have good and indefeasible title in fee simple to, or a
valid leasehold interest in, all real property described in the Prospectus, and
good title to all personal property owned (or to be owned upon consummation of
the Formation Transactions) by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, encroachments, restrictions,
mortgages and defects, except such as are disclosed in the Prospectus or such as
do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; any real property improvements, equipment and
personal property held under lease (or to be held under lease upon the
consummation of the Formation Transactions) by the Company or any Subsidiary
will be held under valid, existing and enforceable leases, with such exceptions
as are disclosed in the Prospectus or are not material and do not interfere with
the use made or proposed to be made of such property improvements, equipment and
personal property by the Company or such Subsidiary; the Company or a Subsidiary
will have obtained an owner's or leasehold title insurance policy, from a title
insurance company licensed to issue such policy, on any real property owned in
fee or leased (or to be so owned or leased upon the consummation of the
Formation Transactions), as the case may be, by the Company or any Subsidiary,
that insures the Company's or the Subsidiary's fee or leasehold interest, as the
case may be, in such real property, which policies include only commercially
reasonable exceptions, and with coverages in amounts at least equal to amounts
that are generally deemed in the Company's industry to be commercially
reasonable in the markets where the Company's properties are located, or a
lender's title insurance policy insuring the lien of its mortgage securing the
real property with coverage equal to the maximum aggregate principal amount of
any indebtedness held by the Company or a Subsidiary and secured by the real
property;
-11-
(cc) all real property owned or leased by the Company or a Subsidiary
(or to be owned or leased upon consummation of the Formation Transactions) is
free of material structural defects and all building systems contained therein
are in good working order in all material respects, subject to ordinary wear and
tear or, in each instance, the Company has created an adequate reserve to effect
reasonably required repairs, maintenance and capital expenditures; to the
knowledge of the Company and the Operating Partnership, water, storm water,
sanitary sewer, electricity and telephone service are all available at the
property lines of such property over duly dedicated streets or perpetual
easements of record benefiting such property; except as described in the
Prospectus, to the knowledge of the Company and the Operating Partnership, there
is no pending or threatened special assessment, tax reduction proceeding or
other action that, individually or in the aggregate, could reasonably be
expected to increase or decrease the real property taxes or assessments of any
of such property, that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(dd) the mortgages and deeds of trust encumbering, or upon consummation
of the Formation Transactions to be encumbering, any real property owned in fee
or leased by the Company or a Subsidiary (or to be owned or leased upon
consummation of the Formation Transactions) (i) are not convertible (in the
absence of foreclosure) into an equity interest in the Real Property or in the
Company, the Operating Partnership or any Subsidiary, and none of the Company,
the Operating Partnership or the Subsidiaries hold a participating interest
therein, (ii) except as set forth in the Prospectus, are not and will not be
cross-defaulted to any indebtedness other than indebtedness of the Company or
any of the Subsidiaries and (iii) are not and will not be cross-collateralized
to any property not owned by the Company, the Operating Partnership or any of
the Subsidiaries;
(ee) the descriptions in the Registration Statement and the Prospectus
of the legal or governmental proceedings, contracts, leases and other legal
documents therein described present fairly the information required to be shown,
and there are no legal or governmental proceedings, 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 that
are not described or filed as required; all agreements between the Company or
any of the Subsidiaries and third parties expressly referenced in the Prospectus
are legal, valid and binding obligations of the Company or one or more of the
Subsidiaries, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general equitable principles and, to the knowledge of the Company and the
Operating Partnership, no party is in breach or default under any such
agreements;
(ff) the Company and each Subsidiary owns or possesses, and upon
completion of the Formation Transactions will own or possess, 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 the Company and each Subsidiary to conduct
its business as described in the Prospectus, and neither the Company nor any
Subsidiary has received notice of infringement of or conflict with (and
-12-
the Company knows of no such infringement of or conflict with) asserted rights
of others with respect to any Intangibles that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;
(gg) the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(hh) each of the Company, the Operating Partnership and the
Subsidiaries has filed on a timely basis (including in accordance with any
applicable extensions) all necessary federal, state, local and foreign income
and franchise tax returns required to be filed through the date hereof or have
properly requested extensions thereof, and have paid all taxes shown as due
thereon, and if due and payable, any related or similar assessment, fine or
penalty levied against the Company, the Operating Partnership or any of the
Subsidiaries; no tax deficiency has been asserted against any such entity, and
the Company and the Subsidiaries do not know of any tax deficiency that is
likely to be asserted against any such entity that, individually or in the
aggregate, if determined adversely to any such entity, could reasonably be
expected to have a Material Adverse Effect; all tax liabilities are adequately
provided for on the respective books of the Company and the Subsidiaries;
(ii) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
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 Subsidiaries against theft,
damage, destruction, environmental liabilities, acts of vandalism, terrorism,
earthquakes, flood and all other risks customarily insured against, all of which
insurance is in full force and effect;
(jj) neither the Company nor any of the Subsidiaries is in violation,
or has received notice of any violation with respect to, any applicable
environmental, safety or similar law, regulation or rule applicable to the
business of the Company or any of the Subsidiaries; the Company and the
Subsidiaries have received, and will have upon completion of the Formation
Transactions, all permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health and environmental
laws, regulations and rules to conduct their respective businesses, and the
Company and the Subsidiaries are in compliance with all terms and conditions of
any such permit, license or approval, except any such violation of law,
regulation or rule, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect;
-13-
(kk) neither the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state law,
regulation or rule relating to discrimination in the hiring, termination,
promotion, employment or pay of employees, nor any applicable federal or state
wages and hours law, nor any state law, regulation or rule precluding the denial
of credit due to the neighborhood in which a property is situated, the violation
of any of which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect;
(ll) the Company and each of the Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of the Subsidiaries would have any material
liability; the Company and each of the Subsidiaries have not incurred and do not
expect to incur material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and each "pension plan" for
which the Company or any of its Subsidiaries would have any material liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, that would cause the loss of such qualification;
(mm) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any officer or director purporting to act on behalf of the
Company or any of the Subsidiaries has at any time (i) made any payment outside
the ordinary course of business to any investment officer or loan broker or
person charged with similar duties of any entity to which the Company or any of
the Subsidiaries sells or from which the Company or any of the Subsidiaries buys
loans or servicing arrangements for the purpose of influencing such agent,
officer, broker or person to buy loans or servicing arrangements from or sell
loans to the Company or any of the Subsidiaries, or (ii) engaged in any
transactions, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company and the Subsidiaries;
(nn) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Subsidiaries or any of the
members of the families of any of them;
(oo) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company or the Operating Partnership, any employee or agent of
the Company or any of the Subsidiaries, has made any payment of funds of the
Company or of any Subsidiary or received or retained any funds in violation of
any law, rule or regulation or of a character required to be disclosed in the
Prospectus;
(pp) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance
-14-
with (i) all applicable federal and state securities laws and the laws of the
applicable jurisdiction of incorporation of the issuing entity, except as,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, and (ii) to the extent applicable to the issuing
entity, the requirements of the New York Stock Exchange; and the issuance and
sale of the Common Stock and Units to be issued in the Formation Transactions
will be exempt from registration or qualification under the Securities Act and
state securities laws;
(qq) except as otherwise disclosed in the Prospectus, (i) none of the
Operating Partnership, the Company, the Subsidiaries, the Contributing
Partnerships or, to the knowledge of the Operating Partnership and the Company,
any other owners of the property at any time or any other party has at any time,
handled, stored, treated, transported, manufactured, spilled, leaked, or
discharged, dumped, transferred or otherwise disposed of or dealt with,
Hazardous Materials (as hereinafter defined) on, in, under, to or from any real
property leased, owned or controlled or to be leased, owned or controlled upon
consummation of the Formation Transactions, including any real property
underlying any loan held or to be held by the Company or the Subsidiaries
(collectively, the "Real Property"), except in connection with the ordinary use
of residential, retail or commercial properties owned by the Operating
Partnership and other than by any such action taken in compliance with all
applicable Environmental Statutes (hereinafter defined); (ii) the Operating
Partnership and the Company do not intend to use the Real Property or any
subsequently acquired properties for the purpose of using, handling, storing,
treating, transporting, manufacturing, spilling, leaking, discharging, dumping,
transferring or otherwise disposing of or dealing with Hazardous Materials
except in connection with the ordinary use of residential, retail or commercial
properties owned by the Operating Partnership, and other than by any such action
taken in compliance with all applicable Environmental Statues; (iii) none of the
Operating Partnership, the Company, the Contributing Partnerships or the
Subsidiaries knows of any seepage, leak, discharge, release, emission, spill, or
dumping of Hazardous Materials into waters on or adjacent to the Real Property
or any other real property owned or occupied by any such party, or onto lands
from which Hazardous Materials might seep, flow or drain into such waters; (iv)
none of the Operating Partnership, the Company, the Contributing Partnerships or
the Subsidiaries has received any notice of, or has any knowledge of any
occurrence or circumstance that, with notice or passage of time or both, would
give rise to a claim under or pursuant to any federal, state or local
environmental statute, regulation or rule under common law, pertaining to
Hazardous Materials on or originating from any of the Real Property or any
assets described in the Prospectus or any other real property owned or occupied
by any such party or arising out of the conduct of any such party, including
without limitation a claim under or pursuant to any Environmental Statute; (v)
the Real Property is not included or, to the Company's and the Operating
Partnership's knowledge, proposed for inclusion on the National Priorities List
issued pursuant to CERCLA (as hereinafter defined) by the United States
Environmental Protection Agency (the "EPA") or, to the Operating Partnership's
and the Company's knowledge, proposed for inclusion on any similar list or
inventory issued pursuant to any other Environmental Statute or issued by any
other Governmental Authority (as hereinafter defined); (vi) in the operation of
the Company's and the Operating Partnership's businesses, the Company acquires,
before acquisition of any real property, an environmental assessment of the real
property and, to the extent they become
-15-
aware of any condition that could reasonably be expected to result in liability
associated with the presence or release of a Hazardous Material, or any
violation or potential violation of any Environmental Statute, the Company and
the Operating Partnership take all commercially reasonable action necessary or
advisable (including any capital improvements) for clean-up, closure or other
compliance with such Environmental Statute;
as used herein, "Hazardous Material" includes, without
limitation any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, toxic substances, or related materials,
asbestos or any hazardous material as defined by any federal, state or
local environmental law, regulation or rule, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675
("CERCLA"), the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Sections 1801-1819, the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050,
the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671, the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections
136-136y, the Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean
Water Act (Federal Water Pollution Control Act), 33 U.S.C. Sections
1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections
300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C.
Sections 651-678, as any of the above statutes may be amended from time
to time, and in the regulations promulgated pursuant to each of the
foregoing (individually, an "Environmental Statute" and collectively
the "Environmental Statutes") or by any federal, state or local
governmental authority having or claiming jurisdiction over the
properties and assets described in the Prospectus (a "Governmental
Authority");
(rr) there are no costs or liabilities associated with the Real
Property pursuant to any Environmental Statute (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with any Environmental Statute or any permit, license
or approval, any related constraints on operating activities and any potential
liabilities to third parties) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(ss) none of the entities that prepared Phase I or other environmental
assessments with respect to the Real Property was employed for such purpose on a
contingent basis or has any substantial interest in the Company or any of the
Subsidiaries, and none of their directors, officers or employees is connected
with the Company or any of the Subsidiaries as a promoter, selling agent,
trustee, officer, director or employee;
(tt) (i) none of the Operating Partnership, the Company, any Subsidiary
or the Contributing Partnership knows of any violation of any municipal, state
or federal law, rule or regulation (including those pertaining to environmental
matters) concerning the Real Property or any part thereof that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect; (ii) the Real Property complies with all applicable zoning laws,
ordinances, regulations and deed restrictions or other covenants in all material
respects and, if and to the extent there is a failure to comply, such failure
-16-
does not materially impair the value of any of the Real Property and will not
result in a forfeiture or reversion of title; (iii) none of the Company, the
Operating Partnership, the other Subsidiaries or the Contributing Partnerships
has received from any governmental authority any written notice of any
condemnation of or zoning change affecting the Real Property or any part
thereof, and none of the Company, the Operating Partnership, the other
Subsidiaries or the Contributing Partnerships knows of any such condemnation or
zoning change that is threatened and that, individually or in the aggregate, if
consummated could reasonably be expected to have a Material Adverse Effect; (iv)
all liens, charges, encumbrances, claims, or restrictions on or affecting the
properties and assets (including the Real Property and any other assets to be
acquired upon the Formation Transactions) of the Company, the Operating
Partnership or any of the Subsidiaries that are required to be described in the
Prospectus are disclosed therein; (v) no lessee of any portion of any of the
Real Property is in default under any leases and there is no event that, but for
the passage of time or the giving of notice or both would constitute a default
under any of such leases, except such defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
and (vi) no tenant under any lease pursuant to which the Real Property is leased
has an option or right of first refusal to purchase the premises leased
thereunder or the building of which such premises are a part, except as such
options or rights of first refusal that, individually or in the aggregate, if
exercised, could not reasonably be expected to have a Material Adverse Effect;
(uu) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable or redeemable for Common Stock in a manner in
violation of the Securities Act; the Company has not distributed and will not
distribute any Prospectus or other offering material, other than the Preliminary
Prospectus and the Prospectus, in connection with the offer and sale of the
Shares;
(vv) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated;
(ww) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of the Subsidiaries
on the other hand, that is required by the Securities Act and the Securities Act
Regulations to be described in the Registration Statement and the Prospectus and
that is not so described;
(xx) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(yy) there are no existing or, to the knowledge of the Company or the
Operating Partnership, threatened labor disputes with the employees of the
Company or any of the Subsidiaries that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
-17-
(zz) the execution and delivery and performance of the Formation
Agreements and each of the documents, agreements and instruments executed and
delivered in connection therewith, and the consummation of the transactions
contemplated by the foregoing, has been duly authorized by all necessary
corporate or other action by the Company, the Subsidiaries, the Contributing
Partnerships and AFC, including, but not limited to, any vote of the
stockholders or other holders of equity interests that may be required by
applicable organizational document, state law or the requirements of the New
York Stock Exchange; the Formation Agreements are in full force and effect on
the date hereof and are the legal, valid and binding agreements of the parties
thereto enforceable in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable principles, and
neither the Company nor any of the other parties thereto is in breach or default
of its obligations thereunder (nor has any event occurred that with notice,
lapse of time, or both would constitute a breach of, or default thereunder); the
Formation Agreements are sufficient to effect the valid transfer to the
Operating Partnership of all real property and other assets described in the
Prospectus or specified in the Formation Agreements, upon payment of the
consideration therefor;
(aaa) no consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered; the Company has not offered, or caused
the Representatives to offer, Shares to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a customer,
borrower, tenant or supplier of the Company to alter the customer's or
supplier's level or type of business with the Company or (ii) a trade journalist
or publication to write or publish favorable information about the Company or
its business;
(bbb) the statistical and market related data included in the
Prospectus and the Registration Statement are based on or derived from sources
that the Company believes to be reliable and accurate;
(ccc) commencing with the taxable year ending December 31, 2003, the
Company will be organized and operated in conformity with the requirements for
qualification as a real estate investment trust ("REIT") under the Code, and the
current and proposed method of operation of the Company and the Subsidiaries as
described in the Prospectus will enable the Company to meet the requirements for
qualification and taxation as a REIT under the Code, and the Operating
Partnership is treated as a partnership for federal income tax purposes and not
as a corporation or association taxable as a corporation; the Company intends to
continue to qualify as a REIT under the Code for all subsequent years, and the
Company does not know of any event that could reasonably be expected to cause
the Company to fail to qualify as a REIT under the Code at any time; Remington
Lodging is an "eligible independent contractor" within the meaning of the Code;
and
(ddd) the conduct of business by the Company and the Subsidiaries as
presently and proposed to be conducted is not subject to continuing oversight,
supervision, regulation or examination by any governmental official or body of
the United States or any other jurisdiction wherein the Company or the
Subsidiaries conducts or proposes to
-18-
conduct such business, except as described in the Prospectus and except such
regulation as is applicable to commercial enterprises generally.
4. Certain Covenants:
The Company and the Operating Partnership hereby, jointly and
severally, agree with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as requested by the Representatives for the distribution of the Shares;
provided that neither the Company nor the Operating Partnership shall be
required to qualify as a foreign corporation or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation as a foreign
corporation or partnership;
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representatives promptly and, if requested by
the Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) to prepare the Prospectus in a form reasonably approved by the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) under the Securities Act not later than 10:00 a.m. (New York City time),
on the second day following the execution and delivery of this Agreement or on
such other day as the parties may mutually agree and to furnish promptly (and
with respect to the initial delivery of such Prospectus, not later than 10:00
a.m. (New York City time)) on the second day following the execution and
delivery of this Agreement, or on such other day as the parties may mutually
agree, to the Underwriters copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement) in
such quantities and at such locations as the Underwriters may reasonably request
for the purposes contemplated by the Securities Act Regulations, which
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the version created to be transmitted to the
Commission for filing via ▇▇▇▇▇, except to the extent permitted by Regulation
S-T;
(d) to advise the Representatives promptly and, if requested by the
Representatives, to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to advise the Representatives immediately, and, if requested by the
Representatives, confirming such advice in writing, of (i) the receipt of any
comments from, or any request by, the Commission for amendments or supplements
to the
-19-
Registration Statement or Prospectus or for additional information with respect
thereto, or (ii) 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 of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes and, if the Commission or any other government agency or authority
should issue any such order, to make every reasonable effort to obtain the
lifting or removal of such order as soon as possible; and to advise the
Representatives promptly of any proposal to amend or supplement the Registration
Statement or Prospectus and to file no such amendment or supplement to which the
Representatives shall reasonably object in writing;
(f) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of shares of
Common Stock not publicly available, (ii) as soon as practicable after the
filing thereof, copies of all reports filed by the Company with the Commission,
the NASD or any securities exchange not publicly available and (iii) such other
information not publicly available as the Underwriters may reasonably request
regarding the Company, the Operating Partnership and the Subsidiaries;
(g) to advise the Underwriters promptly of the happening of any event
known to the Company or the Operating Partnership within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Securities Act or the Securities Act Regulations that, in the judgment of the
Company or in the reasonable opinion of the Representatives or counsel for the
Underwriters, would require the making of any change in the Prospectus then
being used so that the Prospectus would not include 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, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus to comply with the Securities Act and the
Securities Act Regulations and, during such time, to promptly prepare and
furnish to the Underwriters copies of the proposed amendment or supplement
before filing any such amendment or supplement with the Commission and
thereafter promptly furnish at the Company's own expense to the Underwriters and
to dealers, copies in such quantities and at such locations as the
Representatives may from time to time reasonably request of an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the Securities Act and the Securities Act Regulations;
(h) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish for review a copy
thereof to the Representatives and counsel
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for the Underwriters and not to file any such proposed amendment or supplement
to which the Representatives reasonably object;
(j) to furnish promptly to the Representatives a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(k) to furnish to the Representatives, not less than one business day
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period in which a Prospectus relating to the Shares is
required to be delivered under the Securities Act or the Securities Act
Regulations, a copy of any document proposed to be filed with the Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act and during such period
to file all such documents in the manner and within the time periods required by
the Exchange Act and the Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus;
(m) to make generally available to its security holders and to deliver
to the Representatives as soon as practicable, but in any event not later than
45 days after the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement (or later than
90 days, if such fiscal quarter is the last fiscal quarter of the Company's
fiscal year) an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act (in such form, at the option of the Company, as complies with
Rule 158 under the Securities Act Regulations) covering a period of 12 months
beginning after the effective date of the Registration Statement;
(n) to use its best efforts to maintain the listing of the Shares on
the New York Stock Exchange and to file with the New York Stock Exchange all
documents and notices required by the New York Stock Exchange of companies that
have securities that are traded on the New York Stock Exchange;
(o) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
(p) to refrain during a period of 180 days from the date of the
Prospectus, without the prior written consent of the Representatives, from,
directly or indirectly, (i) offering, pledging, selling, contracting to sell,
selling any option or contract to purchase, purchasing any option or contract to
sell, granting any option for the sale of, or otherwise disposing of or
transferring (or entering into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any time in
the future of), any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (including Units), or filing any
registration statement under the Securities Act with respect to any of the
foregoing, or (ii) entering into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of
-21-
Common Stock or such other securities, in cash or otherwise; provided, however,
that the foregoing shall not apply to (A) grants of stock options or restricted
stock to employees, consultants or directors pursuant to an employee benefit
plan in existence on the date hereof and described in the Prospectus, provided
that the grantees thereof agree not to sell, offer, dispose of or otherwise
transfer any such stock options (or the shares underlying such options) or
Common Stock during such 180-day period without the prior written consent of the
Representatives, or (B) issuances of Common Stock or Units or other securities
convertible into or exchangeable for Common Stock as consideration for the
Company's acquisition of real property or loans with respect to real property;
(q) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly, prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(r) to cause ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇ and each executive officer and
director of the Company to furnish to the Representatives, prior to the first
Date of Delivery, a letter or letters, substantially in the form of Exhibit B
hereto;
(s) that the Company shall (i) obtain or maintain, as appropriate,
Directors and Officers liability insurance in the minimum amount of [$_______]
which shall apply to the offering contemplated herein and (ii) cause the
Representatives to be added to such policy such that up to [$________] of its
expenses pursuant to Section 9(a) shall be paid directly by such insurer and
(iii) shall cause the Representatives to be added as additional insureds to such
policy in respect of the offering contemplated herein;
(t) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement and will file with the Commission
such reports as may be required pursuant to Rule 463 of the Securities Act
Regulations;
(u) that the Company will use its best efforts to meet the requirements
to qualify as a REIT under the Code for each of the taxable years in the period
ending December 31, 2008;
(v) that the Company will not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of its Subsidiaries to register as an investment
company under the Investment Company Act; and
(w) that, in connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted from sale, transfer,
assignment, pledge or hypothecation (i) to the extent required by the NASD or
the NASD rules and (ii) for a minimum period of 180 days following the date of
the effectiveness of the Registration Statement; and that the Company will
direct the transfer agent to place stop transfer
-22-
restrictions upon such securities for such period of time; and that, should the
Company release, or seek to release, from such restrictions any of the Directed
Shares, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with: (i) the
preparation and filing of the Registration Statement, the Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment); (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters; (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment); (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representatives have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including
reasonable legal fees and other disbursements of counsel for the Underwriters,
not to exceed $5,000 related thereto), and the printing and furnishing of copies
of any blue sky surveys or legal investment surveys to the Underwriters and to
dealers; (v) filing for review of the public offering of the Shares by the NASD
(including reasonable legal fees and filing fees and other disbursements of
counsel for the Underwriters, not to exceed $5,000, relating thereto); (vi) the
fees and expenses of any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement; (vii) the fees
and expenses incurred in connection with the inclusion of the Shares in the New
York Stock Exchange; (viii) all costs and expenses incident to the travel and
accommodation of employees of the Company; (ix) preparing and distributing bound
volumes of transaction documents for the Representatives and their legal
counsel; and (x) the performance of the Company's and the Operating
Partnership's other obligations hereunder. Upon the request of the
Representatives, the Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Representatives for their
expenses, up to a maximum amount of $200,000 (or, in the event that this
Agreement is terminated, the lesser of (i) $100,000 and (ii) 25% of the actual
amount of such expenses) in connection with the performance of its activities
under this Agreement, including, but not limited to, costs such as printing,
facsimile, courier service, direct computer expenses, accommodations and travel,
including the fees and expenses of the Underwriters' outside legal counsel and
any other advisors, accountants, appraisers, etc. (other than the fees and
expenses of counsel with respect to state securities or blue sky laws and
obtaining the filing for review of the public offering of the Shares by the
NASD, all of which shall be reimbursed by the Company pursuant to the provisions
of subsection (a) above).
-23-
6. Conditions of the Underwriters' Obligations:
The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company and
the Operating Partnership hereunder on the date hereof and at the Closing Time
and on each Date of Delivery, as applicable, the performance by the Company and
the Operating Partnership of their respective obligations hereunder and the
satisfaction of the following further conditions at the Closing Time or on each
Date of Delivery, as applicable:
(a) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for
the Company and the Subsidiaries, addressed to the Underwriters and dated the
Closing Time and each Date of Delivery and in form and substance satisfactory to
▇▇▇▇▇▇ & Bird LLP, counsel for the Underwriters, stating that:
(i) the outstanding shares of capital stock, partnership
interests, membership interests or other equity interests, as
applicable, of the Subsidiaries have been duly and validly authorized
and issued and are fully paid and, with respect to shares of capital
stock, limited partnership interests and membership interests,
non-assessable (except to the to the extent such non-assessability may
be affected by Section 17-607 of the Delaware Revised Uniform Limited
Partnership Act or Section 18-607 of the Delaware Limited Liability
Company Act), and all of the outstanding shares of capital stock,
partnership interests, membership interests or other equity interests,
as applicable, of the Subsidiaries are directly or indirectly owned of
record and beneficially by the Company, free and clear of any perfected
security interest, except as disclosed in the Prospectus; except as
disclosed in the Prospectus, and to such counsel's knowledge, there are
no outstanding (a) securities or obligations of the Company or any of
the Subsidiaries convertible into or exchangeable for any capital
stock, partnership interests, membership interests or other equity
interests, as applicable, of the Company or any such Subsidiary, (b)
warrants, rights or options to subscribe for or purchase from the
Company or any such Subsidiary any such capital stock, partnership
interests, membership interests or other equity interests, as
applicable, or any such convertible or exchangeable securities or
obligations, or (c) obligations of the Company or any such Subsidiary
to issue any shares of capital stock, partnership interests, membership
interests or other equity interests, as applicable, or any such
convertible or exchangeable securities or obligation, or any such
warrants, rights or options;
(ii) each of the Subsidiaries (all of which are named in an
exhibit to the Registration Statement) has been duly incorporated or
formed and is validly existing as a corporation, limited partnership or
limited liability company, as the case may be, in good standing under
the laws of its respective jurisdiction of incorporation or formation
with full corporate, limited partnership or limited liability company
power and authority to own its respective properties and to conduct its
respective businesses as described in the Prospectus and, as
applicable, to execute and deliver this Agreement and the Formation
Agreements
-24-
and to consummate the transactions described in this Agreement and the
Formation Agreements;
(iii) the Company and each of the Subsidiaries are duly
qualified and are in good standing in each jurisdiction set forth
opposite their respective names on a schedule to counsel's opinion
letter; except as disclosed in the Prospectus, no Subsidiary is
prohibited or restricted, directly or indirectly, from paying dividends
to the Company, or from making any other distribution with respect to
such Subsidiary's capital stock, partnership interests, membership
interests or other equity interests, as applicable, or from repaying to
the Company or any other Subsidiary any amounts which may from time to
time become due under any loans or advances to such Subsidiary from the
Company or such other Subsidiary, or from transferring any such
Subsidiary's property or assets to the Company or to any other
Subsidiary; other than the Subsidiaries or as disclosed in the
Prospectus and to such counsel's knowledge, the Company does not own,
directly or indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any partnership,
joint venture or other association;
(iv) to such counsel's knowledge, neither the Company nor any
of the Subsidiaries is in violation of any term or provision of its
organizational documents, is in breach of, or in default under (nor has
any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), any license, indenture,
mortgage, deed of trust, loan or credit agreement or any other
agreement or instrument identified on a schedule to such counsel's
opinion or under any law, regulation or rule or any decree, judgment or
order applicable to the Company or any of the Subsidiaries, except such
breaches or defaults that would not have a Material Adverse Effect;
(v) the execution, delivery and performance of this Agreement
and the Formation Agreements by the Company and the Subsidiaries (to
the extent a party thereto) and the consummation by the Company and the
Subsidiaries of the transactions contemplated by this Agreement and the
Formation Agreements (to the extent a party thereto) do not and will
not conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of or default under), (i) any provisions
of the charter or bylaws or other organizational documents of the
Company, the Operating Partnership or any other Subsidiary, (ii) any
provision of any license, indenture, mortgage, deed of trust, loan
credit or other agreement or instrument identified on a schedule to
such counsel's opinion, (iii) any law or regulation binding upon or
applicable to the Company, the Operating Partnership or any other
Subsidiary or any of their respective properties or assets, or (iv) any
decree, judgment or order known to such counsel to be applicable to the
Company, the Operating Partnership or any other Subsidiary;
(vi) this Agreement has been duly authorized, executed and
delivered by the Operating Partnership; each of the Formation
Agreements has been duly authorized, executed and delivered by the
Operating Partnership and the Subsidiaries (to the extent a party
thereto); and each of the Formation Agreements is a legal, valid and
binding agreement of the Company, the Operating Partnership
-25-
and the Subsidiaries (to the extent a party thereto) enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general principles of equity;
(vii) no approval, authorization, consent or order of or
filing with any federal or state governmental or regulatory commission,
board, body, authority or agency is required in connection with the
execution, delivery and performance of this Agreement or the Formation
Agreements, the consummation of the transactions contemplated herein or
therein, and the sale and delivery of the Shares by the Company as
contemplated herein, other than such as have been obtained or made
under the Securities Act and the Securities Act Regulations and the
Exchange Act and Exchange Act Regulations, and except as (A) may be
required under the state securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the
Underwriters, or (B) may be required by the NASD;
(viii) the Company is not subject to registration as an
investment company under the Investment Company Act, and the
transactions contemplated by this Agreement will not cause the Company
to become an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act;
(ix) the issuance and sale of the Initial Shares (or the
Option Shares, as applicable) by the Company is not subject to
preemptive or other similar rights arising under any agreement known to
such counsel to which the Company or any of the Subsidiaries is a
party;
(x) all of the issued and outstanding Units have been duly
authorized and validly issued, and are fully paid in accordance with
the Partnership Agreement; none of such Units will have been issued or
sold in violation of preemptive or similar rights arising by operation
of law, under the Partnership Agreement or under any other agreement
known to such counsel to which the Operating Partnership is a party;
and the Units and general partner interest to be issued in connection
with the Formation Transactions have been duly authorized, and upon
payment of any consideration therefor contemplated in the Omnibus
Option Agreement and AFC Option Agreement, will be validly issued and
fully paid in accordance with the Partnership Agreement, and the
issuance and sale of such Units is not subject to preemptive or similar
rights arising by operation of law, under the Partnership Agreement or
under any other agreement known to such counsel to which the Operating
Partnership is a party;
(xi) except as provided for in the Registration Rights
Agreement or disclosed in the Prospectus, to such counsel's knowledge,
there are no persons with registration or other similar rights to have
any equity or debt securities, including securities that are
convertible into or exchangeable for equity securities, registered
pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act, except for those registration or
similar rights
-26-
that have been waived with respect to the offering contemplated by this
Agreement;
(xii) the Units issued in the Formation Transactions conform
in all material respects to the descriptions thereof contained in the
Registration Statement and Prospectus;
(xiii) the Shares have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance;
(xiv) the form of certificate used to evidence the Common
Stock complies in all material respects with the requirements of the
New York Stock Exchange;
(xv) the Registration Statement has been declared effective
under the Securities Act and, to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and, to such counsel's knowledge, no proceedings with
respect thereto have been commenced or threatened; any required filing
of the Prospectus or any supplement thereto pursuant to Rule 424(b)
under the Securities Act has been made in the manner and the time
period required by Rule 424(b);
(xvi) as of the effective date of the Registration Statement,
the Registration Statement and, as of its issue date, the Prospectus
(except as to the financial statements, notes and related schedules and
other related financial and accounting data contained therein, as to
which such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Securities Act, and the
Securities Act Regulations (including Form S-11);
(xvii) the statements under the captions "Risk Factors--Risks
Related to Our Business--Conflicts of interest could result in our
management acting other than in our stockholders' best interest," "Risk
Factors--Risks Related to Our Business--Tax indemnification obligations
that apply in the event that we sell certain properties could limit our
operating flexibility," "Risk Factors--Risks Related to Our
Business--We rely on Remington Lodging to operate our hotels and for
our cash flow," "Risk Factors--Risks Related to the Real Estate
Industry--Mortgage debt obligations expose us to increased risk of
property losses, which could be harm our financial condition, cash flow
and ability to satisfy our other debt obligations and pay dividends,"
"Risk Factors--Risks Related to the Real Estate Industry--The costs of
compliance with or liabilities under environmental laws may harm our
operating results," "Risk Factors--Risks Related to the Real Estate
Industry--Compliance with the Americans with Disabilities Act and fire,
safety and other regulations may require us to make unintended
expenditures that adversely impact our operating results," "Risk
Factors--Risks Related to Our Status as a REIT," "Risk Factors--Risk
Factors Related to This Offering and Our Corporate Structure--Failure
to maintain an exemption from the Investment
-27-
Company Act would adversely affect our results of operations," "Our
Company--Our Operating Partnership," "Business and Properties--Asset
Management and Consulting Agreements," "Business and
Properties--Leases," "Business and Properties--Management Agreement,"
"Business and Properties--Mutual Exclusivity Agreement," "Business and
Properties--Environmental Matters," "Management--Employment
Agreements," "Management--Non-Compete Agreement," "Management--The
Stock Plan," "Certain Relationships and Related Transactions," "Shares
Available for Future Sale," "Partnership Agreement," and "Federal
Income Tax Consequences of our Status as a REIT" in the Prospectus,
insofar as such statements constitute a summary of the legal matters,
proceedings or documents referred to therein, constitute accurate
summaries thereof in all material respects;
(xviii) to such counsel's knowledge, there are no actions,
suits or proceedings, inquiries, or investigations pending or
threatened against the Company or any of the Subsidiaries or any of
their respective officers and directors or to that the properties,
assets or rights of any such entity are subject, at law or in equity,
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or agency
that are required to be disclosed in the Prospectus but are not so
disclosed;
(xix) to such counsel's knowledge, there are no contracts or
documents of a character that are required to be filed as exhibits to
the Registration Statement or required to be described in the
Prospectus that have not been so filed or described, and all such
descriptions, in all material respects, fairly and accurately set forth
the information called for with respect to such contracts and
documents;
(xx) the offer and sale of the 500,000 shares of Common Stock
sold by the Company to ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇ and of the Common
Stock and Units sold in connection with the Formation Transactions were
exempt from the registration requirements of the Securities Act;
(xxi) commencing with its taxable year ending December 31,
2003, the Company will be organized in conformity with the requirements
for qualification and taxation as a REIT under the Code, and its
present and proposed method of operation will enable it to meet the
requirements for qualification and taxation as a REIT under the Code;
and
(xxii) the Operating Partnership is classified as a
partnership for federal income tax purposes and not as an association
taxable as a corporation or a "publicly traded partnership" taxable as
a corporation under the Code.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, and representatives of the Representatives,
at which the contents of the Registration Statement and Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except
-28-
as and to the extent expressly specified above, and based on the foregoing
(relying as to factual matters in respect of the determination of materiality
upon the statements of fact made by officers and other representatives of the
Company), no facts have come to such counsel's attention that have led such
counsel to believe that the Registration Statement, at the time such
Registration Statement became effective, contained any 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 or as of the date of such counsel's opinion, the Prospectus 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, in light of
the circumstances under which they were made, not misleading. Such counsel,
however, need not express a belief with respect to the financial statements and
notes and related schedules and other related financial and accounting data
included in the Registration Statement or in the Prospectus or any further
amendment or supplement thereto.
(b) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special Maryland
counsel of the Company, addressed to the Underwriters and dated the Closing Time
and each Date of Delivery and in form and substance satisfactory to ▇▇▇▇▇▇ &
Bird LLP, counsel for the Underwriters, stating that:
(i) the Company is a corporation duly incorporated and, as of
the date of the certificate delivered at Closing, validly existing and
in good standing under the laws of the State of Maryland;
(ii) the Company has the corporate power to own its properties
and to conduct its businesses as described in the Prospectus and, as
applicable, to execute, deliver and perform this Agreement and the
Formation Agreements;
(iii) the authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus; all
outstanding shares of Common Stock (other than the Shares) are duly
authorized and, assuming the receipt of consideration therefor as
provided in resolutions of the Company's Board of Directors authorizing
issuance thereof, are validly issued, fully paid and non-assessable; to
the knowledge of such counsel, the Company has not issued any
outstanding stock or any outstanding securities convertible into or
exchangeable for, or outstanding options, warrants or other rights to
purchase or to subscribe for, any shares of stock or other securities
of the Company, except as described in the Prospectus;
(iv) the Initial Shares (or Option Shares, as applicable) have
been duly authorized and, when issued in accordance with the provisions
of this Agreement, will be validly issued, fully paid and
non-assessable;
(v) the shares of Common Stock to be issued in the Formation
Transactions have been duly authorized and, when issued in accordance
with the provisions of the Formation Agreements and the Omnibus Option
Agreement and the resolutions of the Company's Board of Directors
authorizing issuance thereof, will be validly issued, fully paid and
non-assessable;
-29-
(vi) no holder of outstanding shares of Common Stock has any
statutory preemptive right under the Maryland General Corporation Law
or any similar right under the charter or bylaws of the Company to
subscribe for any of the Shares;
(vii) this Agreement has been duly authorized, executed and
delivered on behalf of the Company; and each of the Formation
Agreements to which the Company is a party has been duly authorized,
executed and delivered on behalf of the Company;
(viii) the form of certificate evidencing the Shares complies
with the requirements of Section 2-211 of the Maryland General
Corporation Law and the Company's charter and bylaws;
(ix) the Common Stock conforms as to legal matters in all
material respects to the description thereof set forth in the
Prospectus under the caption "Description of Capital Stock--Common
Stock"; the statements under the captions "Summary--Conflicts of
Interest", "Risk Factors--Risk Factors Related to This Offering and Our
Corporate Structure--Our charter does not permit ownership in excess of
9.8% of our capital stock, and attempts to acquire our capital stock in
excess of the 9.8% limit without prior approval from our board of
directors are void," "Risk Factors--Risk Factors Related to This
Offering and Our Corporate Structure--Because provisions contained in
Maryland law and our charter may have an anti-takeover effect,
investors may be prevented from receiving a 'control premium' for their
shares," "Policies and Objectives with Respect to Certain
Activities--Conflict of Interest Policy", "Description of Capital
Stock" and "Material Provisions of Maryland Law and of our Charter and
Bylaws" in the Prospectus and under Item 34 of the Registration
Statement, to the extent that such information constitutes matters or
summaries of law or summaries of the Company's charter or bylaws or
constitutes legal conclusions, has been reviewed by us, and is correct
in all material respects;
(x) the execution, delivery and performance on the date hereof
by the Company of this Agreement and the Formation Agreements to which
it is a party do not (i) violate the Maryland General Corporation Law
or the charter or bylaws of the Company, (ii) violate any provision of
the Maryland General Corporation Law, or (iii) violate any court or
administrative order, judgment, or decree listed on a schedule to be
delivered with the opinion that names the Company and is specifically
directed to it or any of its property; and
(xi) no approval or consent of, or registration or filing
with, any Maryland regulatory agency is required to be obtained or made
by the Company under the Maryland General Corporation Law in connection
with the execution, delivery and performance on the date hereof by the
Company of the Agreement and the Formation Agreements to which it is a
party.
(c) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery a letter permitting the underwriters to rely upon
the opinions rendered by ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. or the General Counsel of the
Company, as the case
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may be, in connection with the Formation Transactions, which opinions and
reliance letters shall be in form and substance satisfactory to ▇▇▇▇▇▇ & Bird
LLP, counsel for the Underwriters.
(d) The Representatives shall have received from Ernst & Young LLP,
letters dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the Representatives,
in form and substance satisfactory to the Representatives, relating to the
combined financial statements, including pro forma financial statements, of the
Company (and its accounting predecessor), and such other matters customarily
covered by comfort letters issued in connection with registered public
offerings.
(e) The Representatives shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of ▇▇▇▇▇▇ & Bird LLP, dated the
Closing Time or such Date of Delivery, addressed to the Representatives and in
form and substance satisfactory to the Representatives.
(f) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have reasonably
objected in writing.
(g) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
threatened, by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or the initiation or
threatening of any proceedings for any of such purposes, has occurred; (ii) all
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representatives; and
(iii) the Registration Statement and the Prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) All filings with the Commission required by Rule 424 and Rule 430A
under the Securities Act to have been filed by the Closing Time shall have been
made within the applicable time period prescribed for such filing by such Rule.
(i) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery there shall not have been any change, or
any development or event that reasonably could reasonably be expected to result
in a change, that has or reasonably could be expected to have a Material Adverse
Effect, whether or not arising in the ordinary course of business, and (ii) no
transaction that is material and unfavorable to the Company shall have been
entered into by the Company or any of the Subsidiaries, in each case, that in
the Representatives' sole judgment, makes it impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Registration Statement.
(j) The Shares shall have been approved for listing on the New York
Stock Exchange, subject only to official notice of issuance.
-31-
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) The Representatives shall have received lock-up agreements from
each executive officer and director of the Company in the form of EXHIBIT B
attached hereto, and such letter agreements shall be in full force and effect.
(m) The Representatives shall have received at or before the applicable
Closing Time and on the applicable Date of Delivery, a certificate of the
Company's Chairman of the Board, Chief Executive Officer, President, Chief
Operating Officer or Vice President and Chief Accounting Officer or Chief
Financial Officer, to the effect that:
(i) the representations and warranties of the Company and the
Operating Partnership in this Agreement are true and correct, as if
made on and as of such date, and the Company and the Operating
Partnership have complied with all the agreements and satisfied all the
conditions on their part to be performed or satisfied at or prior to
the date hereof;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Securities Act; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any change, or any development or event that
reasonably could be expected to result in a change, that has or
reasonably could be expected to have a Material Adverse Effect, whether
or not arising in the ordinary course of business, (b) any transaction
that is material to the Company and the Subsidiaries considered as one
enterprise (other than the Formation Transactions), (c) any obligation,
direct or contingent, that is material to the Company and the
Subsidiaries considered as one enterprise, incurred by the Company or
the Subsidiaries, except pursuant to the Formation Transactions, (d)
any change in the capital stock or outstanding indebtedness of the
Company or any Subsidiary that is material to the Company and the
Subsidiaries considered as one enterprise, (e) any dividend or
distribution of any kind declared, paid or made on the capital stock or
other equity interests of the Company or any Subsidiary, or (f) any
loss or damage (whether or not insured) to the property of the Company
or any Subsidiary (including the properties to be contributed as part
of the Formation Transactions) that has been sustained or will have
been sustained that has or may reasonably be expected to have a
Material Adverse Effect.
(n) The Company and the Operating Partnership shall have furnished to
the Underwriters such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement and the Prospectus,
the representations, warranties and statements of the Company or the Operating
Partnership contained herein, and the performance by the Company and the
Operating Partnership of their covenants contained herein, and the fulfillment
of any conditions contained herein, as of the Closing Time or any Date of
Delivery, as the Underwriters may reasonably request.
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7. Termination:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any time
prior to any Closing Time or Date of Delivery, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if, in the judgment of the
Representatives, there has been since the respective dates as of which
information is given in the Registration Statement, any change, or any
development or event that reasonably could be expected to result in a change,
that has or reasonably could be expected to have a Material Adverse Effect, or
any material change in management of the Company or any Subsidiary, whether or
not arising in the ordinary course of business, or (iii) if there has occurred
any outbreak or escalation of hostilities or other national or international
calamity or crisis (including, without limitation, any terrorist or similar
attack) or change in national or international economic, political or other
conditions, the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if
trading in any securities of the Company has been suspended by the Commission or
by the New York Stock Exchange, or if trading generally on the New York Stock
Exchange, the American Stock Exchange or in the Nasdaq over-the-counter market
has been suspended (including an automatic halt in trading pursuant to
market-decline triggers, other than those in which solely program trading is
temporarily halted), or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or maximum
ranges for prices for securities have been required, by such exchange or the
NASD or the over-the-counter market or by order of the Commission or any other
governmental authority or (v) a general banking moratorium shall have been
declared by any federal, Maryland, New York or Texas authorities, or (vi) if
there has been any downgrade in the rating of any of the Company's debt
securities or preferred stock by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities Act),
or (vii) any federal or state statute, regulation, rule or order of any court or
other governmental authority has been enacted, published, decreed or otherwise
promulgated that, in the reasonable opinion of the Representatives, will have a
Material Adverse Effect.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
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8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representatives shall have the right,
within 48 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 48-hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (ii) if the total number of Defaulted
Shares exceeds 10% of such total, the Representatives may terminate this
Agreement by notice to the Company, without liability of any party to any other
party (other than the defaulting Underwriter), except that the provisions of
Sections 5 and 9 hereof shall at all times be effective and shall survive such
termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company, the Operating Partnership
and the Underwriters:
(a) The Company and the Operating Partnership, jointly and severally,
agree to indemnify, defend and hold harmless each Underwriter and any person who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any loss, expense,
liability, damage or claim (including the reasonable cost of investigation)
that, jointly or severally, any such Underwriter or controlling person may incur
under the Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (A)
-34-
any breach of any representation, warranty or covenant of the Company or the
Operating Partnership contained herein, (B) any failure on the part of the
Company or the Operating Partnership to comply with any applicable law, rule or
regulation relating to the offering of securities being made pursuant to the
Prospectus, (C) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration Statement
as amended by any post-effective amendment thereof by the Company), the
Prospectus (the term Prospectus for the purpose of this Section 9 being deemed
to include the Preliminary Prospectus and any other preliminary prospectus, the
Prospectus and any prospectus wrapper material distributed to residents of
Canada), or (D) any omission or alleged omission to state a material fact
required to be stated in any such Registration Statement or Prospectus or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; except insofar as any such loss,
expense, liability, damage or claim arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in and in conformity with information furnished in
writing by the Underwriters through the Representatives to the Company expressly
for use in such Registration Statement or Prospectus; and except that, with
respect to the Preliminary Prospectus or other preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, expense, liability, damage or claim
purchased Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 1 hereof
and a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, expense, liability, damage
or claim. The indemnity agreement set forth in this Section 9(a) shall be in
addition to any liabilities that the Company and the Operating Partnership may
otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company and the Operating
Partnership shall assume the defense of such action, including the employment of
counsel and payment of expenses; provided, however, that any failure or delay to
so notify the Company will not relieve the Company or the Operating Partnership
of any obligation hereunder, except to the extent that their ability to defend
is actually impaired by such failure or delay. Such Underwriter or controlling
person 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
Underwriter or such controlling person unless the employment of such counsel
shall have been authorized in writing by the Company in connection with the
defense of such action, or the Company and the Operating Partnership shall not
have employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company and the Operating Partnership (in which case neither the Company nor the
Operating Partnership shall have the right to direct the defense of such
-35-
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the Company and the Operating
Partnership and paid as incurred (it being understood, however, that the Company
shall not be liable for the expenses of more than one separate firm of attorneys
for the Underwriters or controlling persons in any one action or series of
related actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to such
action).
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Operating Partnership, the Company's
directors, the Company's officers that signed the Registration Statement, and
any person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
expense, liability, damage or claim (including the reasonable cost of
investigation) that, jointly or severally, the Company, the Operating
Partnership or any such person may incur under the Securities Act, the Exchange
Act or otherwise, but only insofar as such loss, expense, liability, damage or
claim arises out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by such Underwriter through the Representatives to the
Company expressly for use in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company) or
the Prospectus, or (B) any omission or alleged omission to state a material fact
in connection with such information required to be stated either in such
Registration Statement or Prospectus or necessary to make such information, in
the light of the circumstances under which made, not misleading; provided,
however, that the statements set forth in the table in the first paragraph, the
first two sentences of the seventh paragraph, the 10th through 15th paragraphs,
the seventeenth paragraph and the 20th paragraph under the caption
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by or on behalf of any
Underwriter through the Representatives to the Company for purposes of Section
3(m) and this Section 9. The indemnity agreement set forth in this Section 9(b)
shall be in addition to any liabilities that such Underwriter may otherwise
have.
If any action is brought against the Company, the Operating Partnership
or any such person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, the Operating
Partnership or such person shall promptly notify the Representatives in writing
of the institution of such action and the Representatives, on behalf of the
Underwriters, shall assume the defense of such action, including the employment
of counsel and payment of expenses. The Company, the Operating Partnership or
such person shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of the Company,
the Operating Partnership or such person unless the employment of such counsel
shall have been authorized in writing by the Representatives in connection with
the defense of such action or the Representatives shall not have employed
counsel to have charge of the defense of such action within a reasonable time or
such indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them that are
different from or additional to those available to the Underwriters (in which
case the Representatives shall
-36-
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by such Underwriter and paid as incurred (it being understood,
however, that the Underwriters shall not be liable for the expenses of more than
one separate firm of attorneys in any one action or series of related actions in
the same jurisdiction (other than local counsel in any such jurisdiction)
representing the indemnified parties who are parties to such action).
(c) The indemnifying party under this Section 9 shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify (to the extent provided in this Section
9) the indemnified party against any loss, claim, damage, liability or expense
by reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) or (c) of this Section 9 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Operating Partnership and by the Underwriters from the offering
of the Shares or (ii) if (but only if) the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Company and the Operating Partnership and of the
Underwriters in connection with the statements or omissions that resulted in
such losses, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Operating Partnership and by the Underwriters shall be deemed to be in
the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
(which, for purposes of this subsection, account for the relative benefits
received by the Operating Partnership) bear to the underwriting discounts and
commissions received by the Underwriters. The relative fault of the Company and
the Operating Partnership and of the Underwriters shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the Company or the Operating Partnership or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any claim or action.
-37-
(e) The Company, the Operating Partnership and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
9 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 that does
not take account of the equitable considerations referred to in clause (i) and,
if applicable clause (ii), of subsection (d) above. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint. For purposes of this Section 9, each
officer and employee of an Underwriter and each person, if any, who controls an
Underwriter within the meaning of the Section 15 of the Securities Act and
Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act shall have the same rights to contribution as the Company.
(f) The Company and the Operating Partnership, jointly and severally,
agree to indemnify and hold harmless each Underwriter and its affiliates and
each person, if any, who controls any Underwriter or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the consent of the Company for
distribution to participants in connection with the Directed Share Program, 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; (ii) as a result of the failure of any participant to pay for and
accept delivery of Directed Shares that the participant has agreed to purchase;
or (iii) related to, arising out of, or in connection with the Directed Share
Program.
10. Survival:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company and the Operating
Partnership contained in Sections 3, 4 and 5 of this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter, or any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, its directors and officers, the Operating Partnership
or any person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the sale and delivery of the Shares. That
certain letter agreement dated March 11, 2003, between Friedman, Billings,
▇▇▇▇▇▇ & Co. and Remington Hotel Corporation, as it may be subsequently amended,
shall survive
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the execution, delivery, performance and termination of this Agreement (except
as otherwise provided therein), and the Company agrees to the appointment of
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. contained in Section 2 thereof and to
issue the Common Stock contemplated to be issued, assuming the Closing Time
occurs, to Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. in Section 7 thereof (the
"Restricted Shares"). In accordance with the provisions of Rule 2710(c)(7)(A)
of the Rules of Conduct of the National Association of Securities Dealers,
Inc., Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. agrees not to sell, transfer,
assign, pledge or hypothecate the Restricted Shares for a period of one year
from the effective date of the Registration Statement, except as may be
otherwise expressly permitted by such rule. The Company, the Operating
Partnership and each Underwriter agree promptly to notify the others of the
commencement of any litigation or proceeding against it and, in the case of the
Company, against any of the Company's officers and directors, in connection
with the sale and delivery of the Shares, or in connection with the
Registration Statement or Prospectus.
11. Notices:
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Syndicate Department; or if to the Company or the Operating Partnership shall be
sufficient in all respects if delivered to the Company at the offices of the
Company at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company, the Operating Partnership and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
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If the foregoing correctly sets forth the understanding among the
Company, the Operating Partnership and the Underwriters, please so indicate in
the space provided below for the purpose, whereupon this Agreement shall
constitute a binding agreement among the Company, the Operating Partnership and
the Underwriters.
Very truly yours,
ASHFORD HOSPITALITY TRUST, INC.
By:
----------------------------
Name:
Title:
ASHFORD HOSPITALITY LIMITED
PARTNERSHIP
By: Ashford OP General Partner LLC,
its sole general partner
By: Ashford Hospitality Trust, Inc.,
its sole member
By:
----------------------------
Name:
Title:
-40-
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By:
------------------------------
Title:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
By:
------------------------------
Title:
CREDIT LYONNAIS SECURITIES (USA) INC.
By:
------------------------------
Title:
For themselves and as Representatives of the other
Underwriters named on Schedule I hereto.
-41-
Schedule I
Number of Initial
Underwriter Shares to be Purchased
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. [ ]
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated [ ]
Credit Lyonnais Securities (USA) Inc. [ ]
Total................................................. [35,000,000]
EXHIBIT B
FORM OF LOCK-UP LETTER
August ___, 2003
Friedman, Billings, ▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that Friedman, Billings, ▇▇▇▇▇▇ & Company,
Inc. (the "Representative") proposes to enter into an
Underwriting Agreement
(the "
Underwriting Agreement"), as representative of several underwriters (the
"Underwriters"), with Ashford Hospitality Trust, Inc., a Maryland corporation
(the "Company"), providing for the public offering (the "Public Offering") by
(inter alia) the Underwriters of shares (the "Shares") of Common Stock of the
Company (the "Common Stock").
To induce the Underwriters to continue its efforts in connection with
the Public Offering, the undersigned hereby agrees that, without the prior
written consent of the Representative, it will not, during the period commencing
on the date hereof and ending on the 180-day anniversary of the date of the
final prospectus relating to the Public Offering (such period, the "Lock-Up
Period" and such prospectus, the "Prospectus"), (1) offer, pledge, sell, loan,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any of the following
(whether now owned by the undersigned or hereafter acquired): (i) Common Stock,
(ii) any securities convertible into or exercisable or exchangeable for any
shares of Common Stock, including any limited partnership units issued by
Ashford Hospitality Limited Partnership (the "Operating Partnership") or (iii)
any rights to purchase or otherwise acquire Common Stock held by the undersigned
or acquired by the undersigned after the date hereof, or that may be deemed to
be beneficially owned by the Undersigned; (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock or such units, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise; or (3) redeem any
limited partnership units issued by the Operating Partnership. The undersigned
further agrees that it will not publicly disclose the intention to make any such
offer, sale, pledge, redemption or disposition or to enter into any transaction
described in the preceding sentence during the Lock-Up Period without, in each
case, the prior written consent of the Representative. In addition, the
undersigned agrees that, without prior written consent of the Representative, it
will not, during the Lock-Up Period, make any demand for or exercise any right
with respect to, the registration under
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the Securities Act of 1933, as amended (the "Securities Act"), of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock.
Notwithstanding the foregoing, the undersigned shall not be restricted
from distributing any of the Company's securities to the undersigned's equity
holders provided that prior to and as a condition to the effectiveness of any
such distribution such equity holders execute a lock-up agreement substantially
in the form hereof in favor of the Representative.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer that would
constitute a violation or breach of this letter. This letter shall be binding on
the undersigned and the respective successors, heirs, personal representatives
and assigns of the undersigned.
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Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an
Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Representative. The terms of this Lock-Up
letter shall expire in the event the Public Offering is not consummated on or
before December 31, 2003.
Very truly yours,
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(Printed or Typed Name)
By:
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--------------------------- (SEAL)
Title:
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