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EXHIBIT 1.1
▇▇▇▇▇▇▇ INNS, INC.
9.25% Series A Cumulative Preferred Stock
UNDERWRITING AGREEMENT
March 12, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇▇ Inns, Inc., a Georgia corporation (the "Company"), proposes to
issue and sell to the underwriters named in Schedule A (collectively, the
"Underwriters") an aggregate of 1,200,000 shares of 9.25% Series A Cumulative
Preferred Stock, $.01 par value per share (the "Preferred Stock"), of the
Company (the "Shares"). The Shares are to be sold to each Underwriter, acting
severally and not jointly, in such amounts as are set forth in Schedule A
opposite the name of such Underwriter. For purposes of this Agreement, unless
the context requires to the contrary, the term "Company" shall also include
▇▇▇▇▇▇▇ Alabama, Inc., an Alabama corporation, ▇▇▇▇▇▇▇ Properties of Tennessee,
L.P., a Tennessee limited partnership, and ▇▇▇▇▇▇▇ Properties, LLC, a Georgia
limited liability company.
The Company currently owns 65 hotels as described in the Prospectus
(individually, a "Hotel" and collectively, the "Hotels") and is currently
developing 11 hotels as described in the prospectus (individually, a
"Development Hotel" and, collectively, the "Development Hotels"). The Company
leases the Hotels to ▇▇▇▇▇▇▇ Operating Company, LLC (the "Lessee"), a Georgia
limited liability company wholly owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and his spouse,
pursuant to Master Leases, as amended and substantially similar in form
(collectively referred to herein as the "Lease"). The Company will lease
Development Hotels to the Lessee pursuant to the Lease. Other capitalized terms
used herein and not otherwise defined herein shall have the meaning set forth in
the Registration Statement.
Section 1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-20143)
with respect to the Shares, including a prospectus subject to
completion relating to the Shares, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and the applicable rules and regulations (the
"1933 Act Regulations") of the Securities and Exchange Commission (the
"Commission"), and has been
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filed with the Commission; and such amendments to such registration
statement as may have been required prior to the date hereof have been
filed with the Commission, and such amendments have been similarly
prepared. Copies of such registration statement and amendment or
amendments and of each related prospectus, and the exhibits, financial
statements and schedules, as finally amended and revised, have been
delivered to you. Such registration statement and any post-effective
amendments thereto have become effective under the 1933 Act. The
Company also has filed, or proposes to file, with the Commission
pursuant to Rule 424(b) under the 1933 Act, a prospectus supplement
relating to the offering of the Shares pursuant to Rule 415 of the 1933
Act.
The term "Registration Statement" as used in this Agreement
shall mean such registration statement (including all financial
schedules and exhibits) at the time such registration statement became
effective and shall also mean such registration statement as so
amended; provided, however, that such term shall also include all
documents (or portions thereof) incorporated by reference therein filed
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). If it is contemplated, at the time this Agreement is executed,
that a post-effective amendment to the registration statement will be
filed and must be declared effective before the offering of the Shares
may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said
post-effective amendment. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time it was declared effective (the "Base Prospectus")
together with the prospectus supplement relating to the offering of the
Shares under Rule 415 of the 1933 Act dated the date hereof in the form
first filed with the Commission on or after the date hereof (the
"Prospectus Supplement"). The term "Prepricing Prospectus Supplement"
as used in this Agreement means the Base Prospectus together with any
prospectus supplement subject to completion included in the
registration statement as filed with the Commission pursuant to Rule
424(b) under the 1933 Act and as such prospectus shall have been
amended from time to time prior to the date of the Prospectus. Any
reference in this Agreement to the Registration Statement, the Base
Prospectus, any Prepricing Prospectus Supplement or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act,
as of the date of the Registration Statement, such Prepricing
Prospectus Supplement or the Prospectus, as the case may be, and any
reference to any amendment or supplement to the Registration Statement,
any Prepricing Prospectus Supplement or the Prospectus shall be deemed
to refer to and include any documents filed after such date under the
Exchange Act which, upon filing, are incorporated by reference therein,
as required by paragraph (b) of Item 12 of Form S-3. For purposes of
the preceding sentence, any reference to the "effective date" of an
amendment to a registration statement shall, if such amendment is
effective by means of the filing with the Commission under the Exchange
Act of a document incorporated by reference in such registration
statement, be deemed to refer to the date on which such document was so
filed with the Commission. As used herein, any reference to any
statement or information as being "made," "included," "disclosed," or
"set forth" in any Prepricing Prospectus Supplement, a Prospectus or
any
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amendment or supplement thereto, or the Registration Statement or any
amendment thereto (or other similar references) shall refer both to
information and statements actually appearing in such document as well
as information and statements incorporated by reference therein.
(b) No order preventing or suspending the use of any
Prepricing Prospectus Supplement has been issued by the Commission, and
no proceedings for that purpose have been instituted or threatened by
the Commission or the state securities or blue sky authority of any
jurisdiction, and each Prepricing Prospectus Supplement, at the time of
filing thereof, conformed in all material respects to the requirements
of the 1933 Act and the 1933 Act Regulations, and did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter expressly for use in the Registration Statement.
(c) When any Prepricing Prospectus Supplement was filed with
the Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the 1933 Act and the 1933 Act Regulations and (ii)
did not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. When the Registration Statement or any amendment
thereto was declared effective, and at the Closing Time or Date of
Delivery (as hereinafter defined) it (i) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the 1933 Act and the 1933 Act Regulations and (ii) did not or will
not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading. When the Prospectus or any amendment or supplement thereto
is filed with the Commission pursuant to Rule 424(b) and at the Closing
Time or Date of Delivery (as hereinafter defined), the Prospectus, as
amended or supplemented at any such time, (i) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the 1933 Act and the 1933 Act Regulations and (ii) did not or will
not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The representation and warranty in this paragraph (c) does
not apply to statements in or omissions from the Registration Statement
or the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by an Underwriter
expressly for use in the Registration Statement.
(d) The financial statements of the Company and the Lessee
together with the related schedules and notes thereto, set forth or
included or incorporated by reference in the Registration Statement and
Prospectus fairly present the financial condition of the Company
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and the Lessee as of the dates indicated and the results of operations,
changes in financial position, stockholders' equity and cash flows for
the periods therein specified, in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein). The summary and selected
financial and statistical data included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the
information shown therein and, to the extent based upon or derived from
the financial statements, have been compiled on a basis consistent with
the financial statements presented therein. In addition, the pro forma
financial statements of the Company and the Lessee, and the related
notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus, present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
Furthermore, all financial statements required by Rule 3-14 of
Regulation S-X ("Rule 3-14"), if any, have been included or
incorporated by reference in the Registration Statement and the
Prospectus and any such financial statements are in conformity with the
requirements of Rule 3-14. No other financial statements are required
to be set forth or incorporated by reference in the Registration
Statement or the Prospectus under the 1933 Act Regulations.
(e) Ernst & Young LLP, whose reports are incorporated by
reference in the Registration Statement, are and, during the periods
covered by their reports, were independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Georgia. Other than ▇▇▇▇▇▇▇ Alabama, Inc., an Alabama corporation,
▇▇▇▇▇▇▇ Properties of Tennessee, L.P., a Tennessee limited partnership,
and ▇▇▇▇▇▇▇ Properties, LLC, a Georgia limited liability company, the
Company has no subsidiary or subsidiaries and does not control,
directly or indirectly, any corporation, partnership, joint venture,
association or other business organization. The Company is duly
qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its business
makes such qualification necessary (including every jurisdiction in
which it owns or leases property), except for such jurisdictions where
the failure to so qualify would not have a material adverse effect on
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company. Each of the
Company's subsidiaries is validly existing as a corporation, limited
liability company or partnership, as applicable, in its respective
jurisdiction of formation. Except as disclosed or incorporated by
reference in the Registration Statement and the Prospectus, the Company
does not own, lease or license any asset or property or conduct any
business outside the United States of America. The Lessee, a Georgia
limited liability company which is lessee of each Hotel owned by the
Company, has been duly formed and is validly existing as a limited
liability company in
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good standing under the laws of the State of Georgia. The Lessee is
duly qualified and in good standing as a foreign limited liability
company in each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the nature of its
business makes such qualification necessary (including every
jurisdiction in which it is acting as lessee of a Hotel), except for
such jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the
Lessee or the Company. Each of the Company and the Lessee has all
requisite corporate or limited liability company power and authority,
as applicable, and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits of and from all governmental
orders or regulatory bodies or any other person or entity, to own,
lease, license and operate their respective assets and properties and
conduct their respective businesses as now being conducted and as
described or incorporated by reference in the Registration Statement
and the Prospectus; except for such authorizations, approvals,
consents, orders, licenses, certificates and permits the absence of
which would not have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company or the Lessee; and no such
authorization, approval, consent, order, license, certificate or permit
contains a materially burdensome restriction other than as disclosed or
incorporated by reference in the Registration Statement and the
Prospectus.
(g) The Company owns or possesses adequate and enforceable
rights to use all trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses, know-how
and other similar rights (collectively, the "Intangibles") necessary
for the conduct of its business as now being conducted and as described
or incorporated by reference in the Registration Statement and the
Prospectus. The Lessee owns the trademark "The ▇▇▇▇▇▇▇ Inn," and the
Company has an enforceable option to purchase such trademark for
$25,000 subject to the terms and provisions of such option. Neither the
Company nor the Lessee has infringed, is infringing, or has received
any notice of infringement of, any Intangible of any other person, that
will have a material adverse effect upon the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company and the Lessee and the Company does not know
of any basis therefor.
(h) The Company has good title to each of the items of
personal property which are reflected in the financial statements
referred to in Section 1(d) or are referred to in the Registration
Statement and the Prospectus or any document incorporated by reference
therein as being owned by the Company and valid and enforceable
leasehold interests in each of the items of real and personal property
which are referred to in the Registration Statement and the Prospectus
or any document incorporated by reference therein as being leased by
the Company, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those described in
the Registration Statement and the Prospectus and those which do not
and will not have a material adverse effect upon the assets or
properties,
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business, results of operations, prospects or condition (financial or
otherwise) of the Company.
(i) The Company has good and marketable title to, or leasehold
interests in, all properties and assets (including, without limitation,
mortgaged assets) as described in the Registration Statement and the
Prospectus or any document incorporated by reference therein, owned by
the Company, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Registration
Statement and the Prospectus or any document incorporated by reference
therein, or are not material in relation to the business of the
Company; no lessee under any of the leases pursuant to which the
Company leases its properties has an option or right of first refusal
to purchase the premises demised under such lease; the use and
occupancy of each of the properties owned by the Company complies in
all material respects with all applicable codes and zoning laws and
regulations; neither the Company nor the Lessee has any knowledge of
any pending or threatened condemnation or zoning change that will in
any material manner affect the size of, use of, improvements on,
construction on, or access to any of the properties owned by the
Company, which would have a material adverse effect upon the proposed
use of such property as a limited service inn; and neither the Company
nor the Lessee has any knowledge of any pending or threatened
proceeding or action that will in any material respect affect the size
of, use of, improvement of, construction on, or access to any of the
properties owned by the Company.
(j) Title insurance in favor of the mortgagee and the Company
is maintained with respect to each of the properties owned by the
Company in an amount at least equal to the greater of (i) the cost of
acquisition of such property or (ii) the cost of construction of the
improvements located on such property (measured at the time of such
construction).
(k) The mortgages and deeds of trust encumbering the
properties and assets described or incorporated by reference in the
Registration Statement and the Prospectus are not convertible into
shares of Common Stock or other equity interest in the Company nor does
the Company hold a participating interest therein.
(l) In the event of the purchase by the Company of the parcels
of property to be purchased by it pursuant to any purchase agreements,
contracts and letters of intent referred to in the Registration
Statement and Prospectus relating to sites for additional hotels (the
"Property Purchase Agreements"), the Company will receive good and
marketable title to all such parcels of property (the "Proposed
Acquisitions"), in each case free and clear of all liens, charges,
encumbrances, claims, security interests, restrictions and defects,
other than those that would not be material in relation to the business
of the Company. To the best knowledge of the Company: (i) the intended
use and occupancy of each of the Proposed Acquisitions complies with
all applicable codes and zoning laws and regulations, except for such
failures to comply which would not individually or in the aggregate
have a material adverse effect on the ability of the Company to
develop, construct and own a hotel on such
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parcel of property and lease it to the Lessee; and (ii) there is no
pending or threatened condemnation, zoning change, environmental or
other proceeding or action that will in any material respect affect the
size of, use of, improvements on, construction on, or access to the
Proposed Acquisitions.
(m) There is no litigation or governmental or other proceeding
or investigation before any court or before or by any public body or
board pending or, to the Company's or the Lessee's best knowledge,
threatened (and neither the Company nor the Lessee knows of any basis
therefor) against, or involving the assets, properties or businesses of
the Company or the Lessee which would materially adversely affect the
value or the operation of any such assets or properties or the
business, results of operations, prospects or condition (financial or
otherwise) of the Company or the Lessee.
(n) Except as disclosed in the Registration Statement or the
Prospectus or any document incorporated by reference therein, (i) there
is not present on any of the properties owned by the Company or the
Proposed Acquisitions any hazardous substances, hazardous materials,
toxic substances, asbestos or waste materials (collectively, "Hazardous
Materials"), (ii) there has not occurred or is not presently occurring
from any of such properties any unlawful spills, releases, discharges
or disposal of Hazardous Materials, and (iii) all such properties are
in compliance with all applicable local, state and federal
environmental laws, regulations, ordinances and administrative and
judicial orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous Materials,
which failure would have a material adverse effect on the earnings,
business, results of operations, prospects or condition (financial or
otherwise) of the Company. Except for those properties set forth on
Schedule B, the Company has caused Phase I Environmental Surveys to be
completed with respect to each of the properties owned by the Company
and the Proposed Acquisitions and has delivered copies of all such
Environmental Surveys to the Underwriters.
(o) The Company will obtain and maintain title insurance in
favor of the Company on each of the Proposed Acquisitions, when and if
consummated, not later than the time that financing for the
construction of a hotel thereon is obtained, in an amount at least
equal to the cost of the acquisition of such property.
(p) Each of the Company and the Lessee maintains insurance
(issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate for its businesses
and, to the best of the Company's knowledge, consistent with insurance
coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
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(q) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, (i) there has not been any material adverse change
in the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company, whether or not
arising from transactions in the ordinary course of business; (ii) the
Company has not sustained any material loss or interference with its
assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree; (iii) since the date of the
latest balance sheet, included or incorporated by reference in the
Registration Statement and the Prospectus, except as reflected therein,
the Company has not undertaken any liability or obligation, direct or
contingent, except such liabilities or obligations undertaken in the
ordinary course of business; and (iv) there has not been any
transaction that is material to the Company, except transactions in the
ordinary course of business or as otherwise disclosed in the
Registration Statement and the Prospectus.
(r) There is no document or contract of a character required
to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not
described or filed as required. Each mortgage, line of credit
agreement, loan agreement, guarantee, employee leasing agreement,
property management agreement, franchise agreement, cost reimbursement
agreement, employment contract, stock option agreement, warrant
agreement, registration rights agreement, leasing agreement,
construction contract, purchase agreement and all other agreements of
the Company and the Lessee described in the Registration Statement or
the Prospectus or incorporated by reference therein or listed as
exhibits to the Registration Statement are in full force and effect and
are valid and enforceable by and against the Company or the Lessee, as
the case may be, in accordance with their terms, assuming the due
authorization, execution and delivery thereof by each of the other
parties thereto. Neither the Company or the Lessee, nor to the best of
the Company's and the Lessee's knowledge, any other party is in default
in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has occurred
which with notice or lapse of time or both would constitute such a
default, which default or event would have a material adverse effect on
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company. No default exists,
and no event has occurred which with notice or lapse of time or both
would constitute a default, in the due performance and observance of
any term, covenant or condition, by the Company or the Lessee, as the
case may be, of any other agreement or instrument to which the Company
or the Lessee is a party or by which they or their properties or
businesses may be bound or affected, which default or event would have
a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Company or the Lessee.
(s) Neither the Company nor the Lessee is in violation of any
term or provision of their respective charter, by-laws or operating
agreement, as applicable, or of any franchise,
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license, permit, judgment, decree, order, statute, rule or regulation,
where the consequences of such violation would have a material adverse
effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company or the
Lessee.
(t) Neither the execution, delivery and performance of this
Agreement by the Company or the Lessee nor the consummation of any of
the transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or provision of,
or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or
waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or the Lessee is a
party or by which either is bound, or any other respective properties
or businesses are bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or
the Lessee or violate any provision of the charter, by-laws or
operating agreement of the Company or the Lessee, as applicable, except
for such consents or waivers which have already been obtained and are
in full force and effect.
(u) The Company has authorized, issued and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus
Supplement. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable and none of the them was issued in violation of any
preemptive or other similar right. The Shares, when issued and sold
pursuant to this Agreement, will be duly authorized and validly issued,
fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed
in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into or exercisable or
exchangeable for, such capital stock. The Common Stock and the Shares
conform in all material respects to all statements relating thereto
contained in the Registration Statement and the Prospectus.
(v) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described or referred to therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or
contingent, except such liabilities or obligations incurred in the
ordinary course of business including, without limitation, debt
financing to acquire properties and to construct hotels thereon, (ii)
entered into any transaction not in the ordinary course of business or
(iii) declared or paid any dividend or made any distribution on any
shares of its capital stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares
of its capital stock.
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(w) No holder of any security of the Company has the right
which has not been waived to have any security owned by such holder
included in the Registration Statement or any right to demand
registration of any security owned by such holder during the period
ending 45 days after the date of this Agreement.
(x) All necessary corporate or limited liability company
action has been duly and validly taken by the Company and the Lessee to
authorize the execution, delivery and performance of this Agreement and
the issuance and sale of the Shares by the Company. This Agreement has
been duly and validly authorized, executed and delivered by the Company
and the Lessee and constitutes and will constitute the legal, valid and
binding obligations of the Company and the Lessee enforceable against
the Company and the Lessee in accordance with its terms. Each approval,
consent, order, authorization, designation, declaration or filing by or
with any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the Company
and the Lessee of this Agreement and the consummation of the
transactions contemplated hereby and the issuance and sale of the
Shares by the Company (except such as may be required under the 1933
Act or such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or by the Nasdaq
National Market, if any) has been obtained or made and is in full force
and effect.
(y) The amendment to the Company's Articles of Incorporation
creating the Preferred Stock and designating the rights, preferences
and restrictions thereof (the "Designating Amendment") has been duly
and validly authorized by all necessary corporate action on behalf of
the Company.
(z) The Preferred Stock is registered pursuant to Section
12(g) of the Exchange Act and the Shares have been approved for trading
on the Nasdaq National Market.
(aa) The Company has not incurred any liability for a fee,
commission or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement other than as contemplated hereby or as described in the
Registration Statement.
(bb) Neither the Company nor the Lessee is involved in any
labor dispute nor, to the knowledge of the Company or the Lessee, is
any such dispute threatened, which dispute would have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company or the Lessee.
(cc) The Company and the Lessee are conducting their
respective businesses in compliance with all applicable laws, rules and
regulations of the jurisdictions in which they are conducting business,
including, without limitation, the Americans with Disabilities Act of
1990 and all applicable local, state and federal employment,
truth-in-advertising,
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franchising and immigration laws and regulations, except where the
failure to be so in compliance would not have a material adverse effect
on the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company.
(dd) No transaction has occurred between or among the Company
and any of its officers or directors or any affiliate or affiliates of
any such officer or director that is required to be described in and is
not described in the Registration Statement and the Prospectus.
(ee) Neither the Company nor the Lessee has taken, nor will
either take, directly or indirectly, any action designed to or which
might reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Preferred Stock to
facilitate the sale or resale of any of the Shares.
(ff) The Company and the Lessee have filed all federal, state,
local and foreign tax returns which are required to be filed through
the date hereof (and will file all such tax returns when and as
required to be filed after the date hereof), or have received
extensions thereof, and have paid all taxes shown on such returns to be
due on or prior to the date hereof (and will pay all taxes shown on
such returns to be due after the date hereof) and all assessments
received by it to the extent that the same are material and have become
due.
(gg) The Lease has been duly authorized, executed and
delivered by the Company and the Lessee and constitutes a valid and
binding agreement, enforceable in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or
affecting creditors' rights or by general equity principles.
(hh) The execution, delivery and performance of each of the
Property Purchase Agreements (other than any letters of intent) and the
consummation of the transactions contemplated therein have been duly
authorized by all necessary action, and will not conflict with or
constitute a breach of, or a default under, or result in the creation
or imposition of any lien, charge or encumbrance under any property or
assets of the Company, nor will such action result in a violation of
the Company's charter, by-laws, or any applicable law, administrative
regulation or administrative or court decree.
(ii) The Company has met the qualification requirements for a
"real estate investment trust" during its taxable years ending on or
after December 31, 1994 and its proposed method of operations will
enable it to continue to meet the requirements for qualification and
taxation as a "real estate investment trust" under the Internal Revenue
Code of 1986, as amended (the "Code"), assuming no change in the
applicable underlying law. The Company does not know of any event which
would cause or is likely to cause the Company to fail to qualify as a
"real estate investment trust" at any time.
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(jj) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(kk) To the best of the Company's knowledge, the Company's and
the Lessee's systems of internal accounting controls taken as a whole
are sufficient to meet the broad objectives of internal accounting
control insofar as those objectives pertain to the prevention or
detection of errors or irregularities in amounts that would be material
in relation to the Company's financial statements; and, to the best of
the Company's knowledge, neither the Company nor any employee or agent
thereof has made any payment of funds of the Company or received or
retained any funds, and no funds of the Company have been set aside to
be used for any payment, in each case in violation of any law, rule or
regulation.
(ll) The Company has complied with all of the requirements and
filed the required forms as specified in Florida Statutes Section
517.075.
(mm) The conditions for use of a Registration Statement on
Form S-3 set forth in the General Instructions to Form S-3 have been
satisfied with respect to the Company and the transactions contemplated
by this Agreement and the Registration Statement.
Any certificate signed by any officer of the Company on behalf
of the Company and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by such entity to each
Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery of the Shares to the Underwriters;
Closing.
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the
Company the number of Shares set forth opposite the name of such
Underwriter in Schedule A (the proportion which each Underwriter's
share of the total number of the Shares bears to the total number of
Shares is hereinafter referred to as such Underwriter's "underwriting
obligation proportion"), at a purchase price of $24.03125 per share.
(b) Payment of the purchase price for and delivery of
certificates in definitive form representing the Shares shall be made
at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be agreed upon
by the Company and you, at 10:00 a.m., either (i) on the third business
day after the execution of this Agreement, or (ii) at such other time
not more than ten full business days thereafter as you and the Company
shall determine (unless, in either case, postponed pursuant to the term
hereof), (such date and time of payment and delivery being herein
called the "Closing Time"). Payment for the Shares shall be made to the
Company by wire transfer in same-day funds against delivery to you for
the respective accounts of the Underwriters of the Shares to be
purchased by them.
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(c) The certificates representing the Shares to be purchased
by the Underwriters shall be in such denominations and registered in
such names as you may request in writing at least two full business
days before the Closing Time or the Date of Delivery, as the case may
be. The certificates representing the Shares will be made available at
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. or at such other place as
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. may designate for examination and
packaging not later than 10:00 a.m. at least one full business day
prior to the Closing Time or the Date of Delivery as the case may be.
(d) After the Registration Statement becomes effective, you
intend to offer the Shares to the public as set forth in the
Prospectus, but after the initial public offering of such Shares you
may in your discretion vary the public offering price.
Section 3. Certain Covenants of the Company. The Company covenants
and agrees with each Underwriter as follows:
(a) To file with the Secretary of State of Georgia and cause
to become effective prior to the Closing Time the Designating Amendment
in such form as has been approved by the Underwriters and their
counsel.
(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 you
promptly and, if requested by you, will confirm such advice in writing,
when such post-effective amendment has become effective. The Company
will file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering,
sale and distribution of the Shares. The Company will notify you
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall have
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission to amend
the Registration Statement or amend or supplement the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
Prospectus or the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the institution or
threatening of any proceeding for any such purposes. The Company will
use every reasonable effort to prevent the issuance of any such stop
order or of any order preventing or suspending such use and, if any
such order is issued, to obtain the withdrawal thereof at the earliest
possible moment.
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(c) The Company will not at any time file or make any
amendment to the Registration Statement, or any amendment or supplement
to the Prospectus if you shall not have previously been advised and
furnished a copy thereof a reasonable time prior to the proposed
filing, or if you or counsel for the Underwriters shall object to such
amendment or supplement.
(d) The Company has furnished or will furnish to you, at its
expense, as soon as available, as many signed copies of the
Registration Statement as originally filed and of all amendments
thereto, whether filed before or after the Registration Statement
became effective, including all documents or information incorporated
by reference therein, copies of all exhibits and documents filed
therewith and signed copies of all consents and certificates of
experts, as you may reasonably request, and has furnished or will
furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits but including all documents or information incorporated by
reference therein).
(e) The Company will deliver to each Underwriter, at the
Company's expense, from time to time, as many copies of the Prospectus
as such Underwriter may reasonably request, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933
Act. The Company will deliver to each Underwriter, at the Company's
expense, as soon as the Registration Statement shall have become
effective and thereafter from time to time as requested during the
period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as supplemented or
amended) as each Underwriter may reasonably request. The Company will
comply to the best of its ability with the 1933 Act and the 1933 Act
Regulations so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and in the Prospectus. If the
delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made when such Prospectus is delivered not misleading, or, if
for any reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the 1933 Act or the Exchange Act or the respective rules and
regulations thereunder, the Company will notify you and upon your
request prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus or an amendment or supplement to any such incorporated
document which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, the Company will
-14-
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prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the 1933 Act.
(f) The Company will use its best efforts to qualify the
Shares for offering and sale under the applicable securities laws and
real estate syndication laws of such states and other jurisdictions as
you may designate and to maintain such qualifications in effect for as
long as may be necessary to complete the distribution of the Shares;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to
make any undertakings in respect of doing business in any jurisdiction
in which it is not otherwise so subject. The Company will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Shares have been qualified as above provided.
(g) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than the end
of the fiscal quarter first occurring after the first anniversary of
the "effective date of the Registration Statement" (as defined in Rule
158(c) of the 1933 Act Regulations), an earnings statement (in
reasonable detail but which need not be audited) complying with the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder and
covering a period of at least 12 months beginning after the effective
date of the Registration Statement.
(h) The Company will use the net proceeds received by it from
the sale of the Shares in the manner specified in the Prospectus under
the caption "Use of Proceeds."
(i) The Company will make available to its security holders,
as soon as practicable after the end of each respective period, annual
reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of operations for each of
the first three quarters of the fiscal year. During a period of five
years after the date hereof, the Company will furnish to you (i)
concurrently with furnishing such reports to its security holders,
statements of operations of the Company for each of the first three
quarters in the form furnished to the Company's security holders; (ii)
concurrently with furnishing to its security holders, a balance sheet
of the Company as of the end of such fiscal year, together with
statements of operations, of cash flows and of security holders' equity
of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent public accountants; (iii)
as soon as they are available, copies of all reports (financial or
otherwise) mailed to security holders; (iv) as soon as they are
available, copies of all reports and financial statements furnished to
or filed with the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD"); (v) every
material press release in respect of the Company or its affairs which
is released by the Company; and (vi) any additional information of a
public nature concerning the Company or its business that you may
reasonably request. During such five-year period, the foregoing
financial statements shall be on a consolidated basis to the extent
that the accounts
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of the Company are consolidated with any subsidiaries, and shall be
accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
(j) For a period of 90 days from the date hereof, the Company
will not, without your prior written consent, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any shares of Preferred Stock or securities convertible
into Preferred Stock, other than to the Underwriters pursuant to this
Agreement.
(k) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for the
Preferred Stock.
(l) The Company will have the Shares approved for trading on
the Nasdaq National Market and will use its best efforts to maintain
the listing of the Preferred Stock on the Nasdaq National Market.
(m) The Company is familiar with the Investment Company Act of
1940, as amended, and the rules and regulations thereunder, and has in
the past conducted its affairs, and will in the future conduct its
affairs, in such a manner so as to ensure that the Company was not and
will not be an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(n) The Company will not, and will use its best efforts to
cause its officers, directors and affiliates not to, (i) take, directly
or indirectly prior to 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.
(o) If at any time during the 30-day period after the date of
the Prospectus, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your
reasonable opinion the market price of the Preferred Stock has been or
is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus) and after written notice from you advising the Company to
the effect set forth above, the Company agrees to forthwith prepare,
consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
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(p) The Company will use its best efforts to continue to meet
the requirements for qualification as a real estate investment trust
under the Code.
Section 4. Payment of Expenses. The Company will pay and bear all
costs, fees and expenses incident to the performance of its obligations under
this Agreement (excluding fees and expenses of counsel for the Underwriters,
except as specifically set forth below), including (a) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, any Prepricing Prospectus
Supplement and the Prospectus and any amendments or supplements thereto, and the
cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, the certificates representing the
Shares, the Blue Sky Memoranda and any instruments relating to any of the
foregoing, (c) the issuance and delivery of the Shares to the Underwriters,
including any transfer taxes payable upon the sale of the Shares to the
Underwriters (other than transfer taxes on resales by the Underwriters), (d) the
fees and disbursements of the Company's counsel and accountants, (e) the
qualification of the Shares under the applicable securities and real estate
syndication laws in accordance with Section 3(f) of this Agreement, including
filing fees and fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the Blue Sky Memoranda, (f) all
costs, fees and expenses in connection with the approval of the Shares for
trading on the Nasdaq National Market, (g) filing fees relating to the review of
the offering by the NASD, (h) the transfer agent's and registrar's fees and all
miscellaneous expenses referred to in Item 14 of the Registration Statement, (i)
costs related to travel and lodging incurred by the Company and its
representatives relating to meetings with and presentations to prospective
purchasers of the Shares reasonably determined by the Underwriters to be
necessary or desirable to effect the sale of the Shares to the public, and (j)
all other costs and expenses incident to the performance of the Company's
obligations hereunder that are not otherwise specifically provided for in this
section. The Company, upon your request, will provide funds in advance for
filing fees in connection with "blue sky" qualifications.
If the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 5 hereof is not satisfied, because of any termination pursuant to
Section 8 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of default by any of the Underwriters, the Company will
reimburse the Underwriters severally on demand for all reasonable out-of-pocket
expenses, including fees and disbursements of Underwriters' counsel, reasonably
incurred by the Underwriters in reviewing the Registration Statement and the
Prospectus, and in investigating and making preparations for the marketing of
the Shares; provided, however, the Company's reimbursements obligation pursuant
hereto shall be limited to $100,000 in the event the sale of the Shares provided
for herein is not consummated because of a termination pursuant to Section
8(b)(iii), (iv), (v), (vi), or (vii).
Section 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters to purchase and pay for the Shares that they have
respectively agreed to purchase pursuant to this Agreement are subject to the
accuracy of the representations and warranties of the Company
-17-
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contained herein or in certificates of any officer of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following further conditions:
(a) 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, such post-effective amendment shall have become effective
not later than 5:30 p.m., on the first business day following the date
hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rule 424 under the
1933 Act shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceeding for that purpose shall have been instituted or, to the
knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) The Designating Amendment shall have been filed with the
Secretary of State of Georgia and become effective.
(c) At the Closing Time, you shall have received a favorable
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A Professional Corporation, counsel for
the Company, dated as of the Closing Time, together with signed or
reproduced copies of such opinion for each of the other Underwriters,
in form and substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Georgia; the Company is duly qualified
and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets
or properties (owned, leased or licensed) or by the nature of
its business makes such qualification necessary (including
every jurisdiction in which it owns or leases property),
except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company; to the best
of such counsel's knowledge, the Company has no subsidiary or
subsidiaries (other than ▇▇▇▇▇▇▇ Alabama, Inc., ▇▇▇▇▇▇▇
Properties, LLC and ▇▇▇▇▇▇▇ Properties of Tennessee, L.P.) and
does not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business
organization; and the Company has all requisite corporate
power and authority to own, lease, license and operate its
assets and properties and conduct its business as now being
conducted and as described in the Registration Statement and
the Prospectus or any document incorporated by reference
therein.
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(ii) The Lessee has been duly formed and is validly
existing as a limited liability company in good standing under
the laws of the State of Georgia; the Lessee is duly qualified
and in good standing as a foreign limited liability company in
each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or by the
nature of its businesses makes such qualification necessary
(including every jurisdiction in which it is acting as lessee
of a Hotel), except for such jurisdictions where the failure
to so qualify would not have a material adverse effect on the
assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Lessee;
and the Lessee has all requisite power and authority to own,
lease, license and operate its assets and properties and
conduct its business as now being conducted and as described
in the Registration Statement and the Prospectus or any
document incorporated by reference therein.
(iii) The Company has authorized, issued and
outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus Supplement; the
certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the
Company; all of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued; and all
of the outstanding shares of capital stock of the Company are
fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The
Shares, when issued and sold pursuant to this Agreement, will
be duly and validly issued, fully paid and nonassessable and
none of them will have been issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the
issuance of, and, to the knowledge of such counsel, there is
no commitment, plan or arrangement to issue, any share of
capital stock, of the Company or any security convertible into
or exercisable or exchangeable for, capital stock of the
Company. The Shares conform in all material respects to all
statements relating thereto contained in the Registration
Statement and the Prospectus.
(iv) The information set forth under the captions
"Articles of Incorporation and Bylaw Provisions,"
"Restrictions on Transfer" and "Description of Series A
Preferred Stock" in the Prospectus, to the extent that it
constitutes matters of law, summaries of legal matters,
documents, or legal conclusions, has been reviewed by such
counsel and is correct in all material respects and presents
the information called for by the 1933 Act and the 1933 Act
Regulations.
(v) The descriptions contained or incorporated by
reference in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings, contracts and
other documents are accurate, and insofar as such statements
constitute a summary of documents referred to therein, matters
of law or legal conclusions, are fair summaries of the
material provisions thereof and accurately present the
information required with respect to such documents and
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matters. All statutes, legal or governmental proceedings, and
all agreements and other documents required to be described in
the Registration Statement (or incorporated by reference
therein) have been so described. All agreements and other
documents known to such counsel to be required to be filed as
exhibits to the Registration Statement have been so filed or
incorporated by reference therein.
(vi) All necessary corporate or limited liability
company action has been duly and validly taken by the Company
and the Lessee, as applicable, to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares by the Company. This Agreement has been
duly and validly executed and delivered by the Company and the
Lessee and constitutes the legal, valid and binding obligation
of the Company and the Lessee enforceable in accordance with
its terms.
(vii) The Designating Amendment has been approved by
all necessary corporate action on behalf of the Company, has
been duly executed on behalf of the Company and has been duly
filed with the Secretary of State of the State of Georgia. No
other filing, consent, approval, authorization, order,
license, certificate, permit, registration, designation or
filing with any such court or governmental agency or body is
required for the valid authorization, issue, delivery and sale
of the Shares or the consummation by the Company or the Lessee
of the transactions contemplated by this Agreement, except the
registration under the 1933 Act of the Shares, and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution
of the Shares by the Underwriters.
(viii) Neither the execution, delivery and
performance of this Agreement by the Company and the Lessee
nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default)
under, or require consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company or the Lessee
pursuant to the terms of, any indenture, mortgage, deed of
trust, note, franchise, license, permit or other agreement or
instrument known to such counsel and to which the Company or
the Lessee is a party or by which they or any of their
respective properties or businesses are bound, or any
judgment, decree, order, statute, rule or regulation or
violate any provision of the charter, by-laws or operating
agreement of the Company or the Lessee, as applicable.
(ix) To the best of such counsel's knowledge, no
default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a
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default, in the due performance and observance by the Company
of any term, covenant or condition of any agreement,
instrument or other document to which the Company is a party
or by which its assets or properties or businesses are bound
or affected.
(x) To the best of such counsel's knowledge,
neither the Company nor the Lessee is in violation of any term
or provision of its charter, by-laws or operating agreement,
as applicable, and neither the Company nor the Lessee is in
violation of any term or provision of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation.
(xi) To the best of such counsel's knowledge, there
is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body
or board pending or threatened against, or involving the
assets, properties or businesses of, the Company which is
reasonably likely to have a material adverse effect upon the
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company.
(xii) The Registration Statement, the Prospectus,
the Prepricing Prospectus Supplement, each of the documents
incorporated by reference in the Registration Statement and
the Prospectus and each amendment or supplement thereto
(except for the financial statements and notes and schedules
and other financial and statistical information included
therein, as to which such counsel expresses no opinion) comply
as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and the Exchange Act
and the rules and regulations promulgated thereunder, as the
case may be.
(xiii) The Registration Statement has become
effective under the 1933 Act, and, to the best of such
counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are threatened or pending. The Preferred Stock has been
registered pursuant to Section 12(g) of the Exchange Act, and
the Shares have been approved for quotation on the Nasdaq
National Market.
(xiv) The Company has met the qualification
requirements for a "real estate investment trust" during its
taxable years ending on or after December 31, 1994 and its
proposed method of operation will enable it to continue to
meet the requirements for qualification and taxation as a
"real estate investment trust" under the Code, assuming no
change in the applicable underlying law. The discussion in the
Prospectus under the caption "Federal Income Tax
Considerations" is accurate and complete.
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(xv) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(xvi) The Proposed Acquisitions have been duly
authorized by the Company and to the knowledge of such
counsel, the Proposed Acquisitions will not violate, conflict
with or constitute a breach of, or result in a default under,
any provisions of the Company's charter, by-laws, or other
material contracts, leases or other instruments or any
applicable law, administrative regulation or administrative or
court order or decree.
(xvii) To such counsel's knowledge, the conditions
for use of a Registration Statement on Form S-3 set forth in
the General Instructions to Form S-3 have been satisfied with
respect to the Company and the transactions contemplated by
this Agreement and the Registration Statement.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials, and with respect to matters of Georgia Law, they may rely upon
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P. Copies of such
certificates shall be furnished to you and your counsel.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Underwriters and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for any accuracy, completeness or fairness of the
statements contained or incorporated by reference in the Registration Statement
and the Prospectus (except as specified in the foregoing opinion), on the basis
of the foregoing no facts have come to the attention of such counsel which have
caused such counsel to believe that the Registration Statement at the time it
became effective and at the Closing Date 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 the
Prospectus as of its date and at the Closing Date contained any untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need not
express any belief with respect to matters of title to properties owned by the
Company or as to the financial statements and schedules and other financial
information included or incorporated by reference in the Registration Statement
or the Prospectus).
(d) At the Closing Time, you shall have received a favorable
opinion from King & Spalding, counsel for the Underwriters, dated as of
the Closing Time, with respect to the incorporation of the Company, the
issuance and sale of the Shares, the Registration Statement, the
Prospectus and other related matters as the Underwriters may reasonably
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require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass on such matters.
(e) At the Closing Time, (i) the Registration Statement and
the Prospectus, as they may then be amended or supplemented, shall
contain all statements that are required to be stated therein under the
1933 Act and the 1933 Act Regulations and in all material respects
shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations, and neither the Registration Statement nor the Prospectus,
as they may then be amended or supplemented, shall contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) there shall not have been, since the respective dates
as of which information is given in the Registration Statement, any
material adverse change in the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of the
Company whether or not arising in the ordinary course of business,
(iii) no action, suit or proceeding at law or in equity shall be
pending or, to the best of Company's knowledge, threatened against the
Company that would be required to be set forth in the Prospectus other
than as set forth therein and no proceedings shall be pending or, to
the best knowledge of the Company, threatened against the Company
before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or
finding could materially adversely affect the business, prospects,
assets, results of operations or condition (financial or otherwise) of
the Company, other than as set forth in the Prospectus, (iv) the
Company shall have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Time, and (v) the representations and warranties of the Company
set forth in Section 1 shall be accurate as though expressly made at
and as of the Closing Time. At the Closing Time, you shall have
received a certificate executed by the President and Chief Financial
Officer of the Company, dated as of the Closing Time, to such effect
and with respect to the following additional matters: (A) the
Registration Statement has become effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration Statement
or preventing or suspending the use of the Prospectus has been issued,
and no proceedings for that purpose have been instituted or are pending
or, to the best of their knowledge, threatened under the 1933 Act, and
(B) they have reviewed the Registration Statement and the Prospectus
and, when the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required
to be included therein or necessary to make the statements therein not
misleading and neither the Registration Statement nor the Prospectus
nor any amendment or supplement thereto included any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus that has not been so set forth.
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(f) At the time that this Agreement is executed by the
Company, you shall have received from Ernst & Young LLP a letter, dated
the date hereof in form and substance satisfactory to you, together
with signed or reproduced copies of such letter for each of the other
Underwriters, confirming that they are independent public accountants
with respect to the Company and the other entities for which audited
financial statements are included in the Registration Statement, within
the meaning of the 1933 Act, the Exchange Act and the rules and
regulations thereunder, and stating in effect that:
(i) in their opinion, the financial statements and
any supplementary financial information and schedules included
in the Registration Statement and covered by their opinions
therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the
Exchange Act and the rules and regulations thereunder;
(ii) on the basis of limited procedures (set forth in
detail in such letter and made in accordance with such
procedures as may be specified by you) not constituting an
audit in accordance with generally accepted auditing
standards, consisting of (but not limited to) a reading of the
latest available internal unaudited financial statements of
the Company, a reading of the minute books of the Company,
inquiries of officials of the Company, responsible for
financial and accounting matters, a reading of the unaudited
pro forma financial statements included in the Registration
Statements and the Prospectus and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) any unaudited pro forma financial
information included in the Prospectus does not
comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or the pro forma
adjustments have not been properly applied to
historical amounts in the compilation of that
information;
(B) at a specified date not more than five
days prior to the date of delivery of such letter,
there was any change in the capital stock, any
increase in debt and any decrease in shareholders'
equity or net investment in hotel properties from
that set forth in the Company's balance sheet at
December 31, 1997, except as described in such
letter; and
(C) for the period from December 31, 1997 to
a specified date not more than five days prior to the
date of delivery of such letter, there were any
decreases in room revenues or total revenues for the
Hotels, in each case as compared with the
corresponding period of the preceding year, except in
each case for decreases which the Prospectus
discloses have occurred or may occur or which are
described in such letter; and
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(iii) in addition to the procedures referred to in
clause (ii) above and the examination referred to in their
reports included in the Registration Statement, they have
carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and
financial information specified by you which are derived from
the general accounting records of the Company, which appear in
the Registration Statement or the exhibits or schedules
thereto and are specified by you, and have compared such
amounts, percentages and financial information with the
accounting records of the Company and with material derived
from such records and have found them to be in agreement.
(g) At the Closing Time, you shall have received from Ernst &
Young a letter, in form and substance satisfactory to you and dated as
of the Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (e) above, except
that the specified date referred to shall be a date not more than five
days prior to the Closing Time.
(h) In the event that either of the letters to be delivered
pursuant to subsections (f) and (g) above sets forth any such changes,
decreases or increases, it shall be a further condition to your
obligations that you shall have reasonably determined, after
discussions with officers of the Company responsible for financial and
accounting matters and with Ernst & Young LLP, that such changes,
decreases or increases as are set forth in such letters do not reflect
a material adverse change in the capital stock, long-term debt,
shareholders' equity or net investments in hotel properties of the
Company as compared with the amounts shown in the latest consolidated
audited balance sheet of the Company, or a material adverse change in
revenues for the Hotels, as compared with the corresponding period of
the prior year.
(i) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions
as they may request for the purpose of enabling them to pass upon the
issuance and sale of the Shares as contemplated in this Agreement and
the matters referred to in Section 5(d) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company, the performance of any of the covenants of
the Company, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company at or prior to the
Closing Time in connection with the authorization, issuance and sale of
the Shares as contemplated in this Agreement shall be reasonably
satisfactory in form and substance to you and to counsel for the
Underwriters. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents
as you shall reasonably request.
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(j) The NASD, upon review of the terms of the public offering
of the Shares, shall not have objected to such offering, such terms or
the Underwriters' participation in the same.
(k) Subsequent to the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally or in the Preferred Stock on the New
York Stock Exchange or American Stock Exchange or the Nasdaq National
Market, (ii) a general moratorium on commercial banking activities in
Tennessee or New York declared by either Federal or state authorities,
as the case may be, or (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war if the effect of any such event specified
in this clause (iii) in your reasonable judgment makes it impracticable
or inadvisable to proceed with the public offering or the delivery of
the Shares on the terms and in the manner contemplated in the
Prospectus.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4. Notwithstanding
any such termination, the provisions of Section 6 shall remain in effect.
Section 6. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter may become subject under the 1933
Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (i) arise out of
or are based upon any breach of any warranty or covenant of the Company
herein contained, (ii) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
(A) any Prepricing Prospectus Supplement, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or (B) any
application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or
filed with the Commission or any securities association or securities
exchange (each an "Application"), or (iii) arise out of or are based
upon the omission or alleged omission to state in any Prepricing
Prospectus Supplement, the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
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or alleged untrue statement or omission or alleged omission made in any
Prepricing Prospectus Supplement, the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter expressly for use therein; provided, further, however, that
the Company shall not be liable to any Underwriter in respect of any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Prepricing Prospectus Supplement (other than in
documents, information or statements incorporated by reference therein)
to the extent (i) the Prospectus (other than any documents, information
or statement incorporated by reference therein) did not contain such
untrue statement or alleged untrue statement or omission or alleged
omission, (ii) the Prospectus was not sent or given to the purchaser of
the Shares in question at or prior to the time at which the written
confirmation of the sale of such Shares was sent or given to such
person, and (iii) the failure to deliver such Prospectus was not the
result of the Company's noncompliance with its obligations under
Section 3(b), (c) and (e) hereof. In addition to their other
obligations under this Section 6(a), the Company agrees that, as an
interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission,
described in this Section 6(a), it will reimburse the Underwriters on a
monthly basis for all reasonable legal and other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of
the Company's obligation to reimburse the Underwriters for such
expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. Any such
interim reimbursement payments that are not made to an Underwriter
within 30 days of a request for reimbursement shall bear interest at
the prime rate (or reference rate or other commercial lending rate for
borrowers of the highest credit standing) published from time to time
by The Wall Street Journal (the "Prime Rate") from the date of such
request. This indemnity agreement shall be in addition to any
liabilities that the Company may otherwise have. The Company will not,
without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened action or claim or related cause of action or portion of
such cause of action in respect of which indemnification may be sought
hereunder (whether or not such Underwriter is a party to such action or
claim), unless such settlement, compromise or consent includes an
unconditional release of such Underwriter from all liability arising
out of such action or claim (or related cause of action or portion
thereof).
The indemnity agreement in this Section 6(a) shall extend upon
the same terms and conditions to, and shall inure to the benefit of,
each person, if any, who controls any Underwriter within the meaning of
the 1933 Act or the Exchange Act to the same extent as such agreement
applies to the Underwriters.
(b) Each Underwriter, severally but not jointly, will
indemnify and hold harmless the Company against any losses, claims,
damages or liabilities to which the Company may
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become subject, under the 1933 Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any breach of any
warranty or covenant by such Underwriter herein contained or any untrue
statement or alleged untrue statement of a material fact contained in
any Prepricing Prospectus Supplement, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any Prepricing Prospectus
Supplement, the Registration Statement or the Prospectus or any such
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by such Underwriter
expressly for use therein; and will reimburse the Company for any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action. In addition to its other obligations under this Section 6(b),
the Underwriters agree that, as an interim measure during the pendency
of any such claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 6(b), they will
reimburse the Company on a monthly basis for all reasonable legal and
other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of their obligation to reimburse the
Company for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made
to the Company within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This
indemnity agreement shall be in addition to any liabilities that the
Underwriters may otherwise have. No Underwriter will, without the prior
written consent of the Company, settle or compromise or consent to the
entry of judgment in any pending or threatened action or claim or
related cause of action or portion of such cause of action in respect
of which indemnification may be sought hereunder (whether or not the
Company is a party to such action or claim), unless such settlement,
compromise or consent includes an unconditional release of the Company
from all liability arising out of such action or claim (or related
cause of action or portion thereof).
The indemnity agreement in this Section 6(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of ,
each officer and director of the Company and each person, if any, who
controls the Company within the meaning of the 1933 Act or the Exchange
Act to the same extent as such agreement applies to the Company.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnified party under such subsection, notify
the indemnifying party in writing of the commencement thereof; no
indemnification
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provided for in Section 6(a) or 6(b) shall be available to any party
who shall fail to give notice as provided in this Section 6(c) if the
party to whom notice was not given was unaware of the proceeding to
which such notice would have been related and was prejudiced by the
failure to give such notice, but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any
liability that it may have to any indemnified party otherwise than
under Section 6. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, except
that if the indemnified party has been advised by counsel in writing
that there are one or more defenses available to the indemnified party
which are different from or additional to those available to the
indemnifying party, then the indemnified party shall have the right to
employ separate counsel and in that event the reasonable fees and
expenses of such separate counsel for the indemnified party shall be
paid by the indemnifying party; provided, however, that if the
indemnifying party is the Company, the Company shall only be obligated
to pay the reasonable fees and expenses of a single law firm (and any
reasonably necessary local counsel) employed by all of the indemnified
parties and the person referred to in Section 6(a) hereof. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
(d) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in
Section 6(a) and 6(b) hereof, including the amounts of any requested
reimbursement payments, the method of determining such amounts and the
basis on which such amounts shall be apportioned among the indemnifying
parties, shall be settled by arbitration conducted pursuant to the Code
of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized to do
so. Any such arbitration will be limited to the operation of the
interim reimbursement provisions contained in Sections 6(a) and 6(b)
hereof and will not resolve the ultimate propriety or enforceability of
the obligation to indemnify for expenses that is created by the
provisions of Sections 6(a) and 6(b).
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(e) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 6
is for any reason judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the right of appeal) to
be unenforceable by the indemnified parties although applicable in
accordance with its terms, the Company, on the one hand, and the
Underwriters on the other shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by
such indemnity incurred by the Company and one or more of the
Underwriters, as incurred, in such proportions that (a) the
Underwriters are responsible pro rata for that portion represented by
the percentage that the underwriting discount appearing on the cover
page of the Prospectus bears to the public offering price (before
deducting expenses) appearing thereon, and (b) the Company is
responsible for the balance, provided, however, that no person guilty
of fraudulent misrepresentations (within the meaning of Section 11(f)
of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation; provided, further,
that if the allocation provided above is not permitted by applicable
law, the Company on the one hand and the Underwriters on the other
shall contribute to the aggregate losses in such proportion as is
appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied
by the Company on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 6(e) were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this Section 6(e). The amount paid or payable by a
party as a result of the losses, claims, damages or 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 such action or claim. Notwithstanding the
provisions of this Section 6(e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. The
Underwriters' obligations in this Section 6(e) to contribute are
several in proportion to their respective underwriting obligations and
not joint. For purposes of this Section 6(e), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933
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
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controls the Company within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as the Company.
Section 7. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities,
agreements and other statements of the Company or its officers set
forth in or made pursuant to this Agreement will remain operative and
in full force and effect regardless of any investigation made by or on
behalf of the Company or any Underwriter or controlling person, and
with respect to an Underwriter or the Company, and will survive
delivery of and payment for the Shares or termination of this
Agreement.
Section 8. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective immediately as to
Sections 4 and 6 and, as to all other provisions, (i) if at the time of
execution of this Agreement the Registration Statement has not become
effective, at 10:00 a.m., on the first full business day following the
effectiveness of the Registration Statement, or (ii) if at the time of
execution of this Agreement the Registration Statement has been
declared effective, at 10:00 a.m. on the first full business day
following the date of execution of this Agreement; but this Agreement
shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by
notice to the Company or by release of any of the Shares for sale to
the public. For the purposes of this Section 8, the Shares shall be
deemed to have been so released upon the release of publication of any
newspaper advertisement relating to the Shares or upon the release by
you of telegrams (i) advising the Underwriters that the Shares are
released for public offering, or (ii) offering the Shares for sale to
securities dealers, whichever may occur first. By giving notice before
the time this Agreement becomes effective, you, or the Company, may
prevent this Agreement from becoming effective, without liability of
any party to any other party, except that the Company shall remain
obligated to pay costs and expenses to the extent provided in Section 4
hereof.
(b) You may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Time (i) in accordance
with the last paragraph of Section 5 of this Agreement, or (ii) if
there has been since the respective dates as to which information is
given to the Registration Statement, any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the business, prospects, management, properties, assets,
results of operations or condition (financial or otherwise) of the
Company, whether or not arising in the ordinary course of business, or
(iii) if there has occurred or accelerated any outbreak of hostilities
or other national or international calamity or crisis or change in
economic or political conditions the effect of which on the financial
markets of the United States is such as to make it, in your judgment,
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 NASD, or if trading
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generally on the New York Stock Exchange or in the over-the-counter
market has been suspended, 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 by order of the Commission or any other
governmental authority, or (v) if a banking moratorium has been
declared by federal or New York or Tennessee authorities, or (vi) any
federal or state statute, regulation, rule or order of any court or
other governmental authority has been enacted, published, decreed or
otherwise promulgated which in your reasonable opinion materially
adversely affects or will materially adversely affect the business or
operations of the Company, or (vii) any action has been taken by any
federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States.
(c) If this Agreement is terminated pursuant to this Section
8, such termination shall be without liability of any party to any
other party, except to the extent provided in Section 4.
Notwithstanding any such termination, the provisions of Section 6 shall
remain in effect.
Section 9. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Shares that
it or they have obligated to purchase pursuant to this Agreement (the "Defaulted
Securities"), you shall have the right, within 36 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms set forth in
this Agreement; if, however, you have not completed such arrangements within
such 36 hour period, then:
(a) If the aggregate number of Shares which are Defaulted
Securities does not exceed 10% of the aggregate number of Shares to be
purchased pursuant to this Agreement, the non-defaulting Underwriters
shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligation proportions
bear to the underwriting obligations of all non-defaulting
Underwriters, and
(b) If the aggregate number of Shares which are Defaulted
Securities exceeds 10% of the aggregate number of Shares to be
purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 9 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements, and the Company agrees to promptly to file
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any amendments to the Registration Statement or supplements to the Prospectus
that may thereby be made necessary. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9.
Section 10. Default by the Company. If the Company shall fail at the
Closing Time to sell and deliver the aggregate number of Shares that it is
obligated to sell, then this Agreement shall terminate without any liability on
the part of any non-defaulting party, except to the extent provided in Section 4
and except that the provisions of Section 6 shall remain in effect.
No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect to such default.
Section 11. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(with a copy sent in the same manner to King & Spalding, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇); and notices to the
Company shall be directed to it at ▇▇▇▇▇▇▇ Inns, Inc., ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (with
a copy sent in the same manner to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A Professional Corporation,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇.).
Section 12. Parties. This Agreement is made solely for the benefit of
and is binding upon the Underwriters and the Company and, to the extent provided
in Section 6, any person controlling the Company or any of the Underwriters, the
officers and directors of the Company, and their respective executors,
administrators, successors and assigns and subject to the provisions of Section
6, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Shares.
All of the obligations of the Underwriters hereunder are several and
not joint.
Section 13. Governing Law and Time. This Agreement shall be governed by
the laws of the State of Tennessee. Specified time of the day refers to United
States Eastern Time. Time shall be of the essence of this Agreement.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Lessee and the
several Underwriters in accordance with its terms.
Very truly yours.
▇▇▇▇▇▇▇ INNS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief Financial Officer
▇▇▇▇▇▇▇ OPERATING COMPANY, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief Financial Officer
Confirmed and accepted as of the date first above written:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Managing Director
-----------------------------
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SCHEDULE A
Number of Shares
to be Purchased
----------------
Underwriter
-----------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.................................. 625,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. ....................................... 575,000
TOTAL......................................................... 1,200,000
▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Thomasville, Georgia
Ormond Beach, Florida
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