EXHIBIT 1.1
CONFORMED COPY
429,712 Shares
Hospitality Properties Trust
Common Shares of Beneficial Interest
UNDERWRITING AGREEMENT
February 12, 1998
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
Hospitality Properties Trust, a Maryland real estate investment trust
(the "Company"), proposes to issue and sell 429,712 of its common shares of
beneficial interest, par value $0.01 per share (the "Shares"), to Prudential
Securities Incorporated (the "Underwriter"). The common shares of beneficial
interest, par value $0.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Shares". All references herein to the "Shares" or the "Common
Shares" shall include the Rights (as defined in the Company's Current Report on
Form 8-K, including the exhibits thereto, dated May 20, 1997 (filed on May 30,
1997)) attached thereto. The Underwriter intends to deposit the Shares with the
trustee of the National Equity Trust Equity Portfolio Series 2 (REIT Portfolio)
(the "Trust"), a registered unit investment trust under the Investment Company
Act of 1940, as amended, to which Prudential Securities Incorporated acts as
sponsor and depositor, in exchange for units in the Trust.
The 124 hotels described in the Prospectus referred to below as being
currently owned by the Company as of the date hereof are collectively referred
to herein as the "Current Hotels". The 11 hotels described in the Prospectus
referred to below as being proposed to be acquired by the Company as of the date
hereof are collectively referred to herein as the "Additional Hotels". It is
understood that in connection with the proposed acquisition of the Additional
Hotels, the Company has entered into purchase and sale agreements and agreements
to lease (the "Acquisition Agreements") contemplating consummation of a series
of related transactions (the "Acquisition Transactions") generally described in
the Prospectus Supplement referred to below under the caption "Recent
Developments", pursuant to which the Company shall (i) acquire the Additional
Hotels, (ii) lease the Additional Hotels to hotel operating companies pursuant
to operating leases and (iii) to the extent necessary to finance the pending
acquisitions, borrow funds under the $200 million aggregate principal amount
credit facility that the Company currently maintains with DLJ Mortgage Capital,
Inc. (as more fully described in the Prospectus, the "DLJMC Credit Facility") or
a successor credit facility.
The Current Hotels and the Additional Hotels are collectively referred
to herein as the "Hotels". The Acquisition Agreements and the DLJMC Credit
Facility and any amendments required thereto are hereinafter collectively
referred to as the "Transaction Documents" and each singly as a "Transaction
Document". Each Transaction Document constituting an agreement is hereinafter
referred to as a "Transaction Agreement".
1. Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-3 (File No. 333-43573) including a
preliminary prospectus relating to the registration of the Shares and such other
securities which may be offered from time to time by the Company, in accordance
with Rule 415 under the Act. Such registration statement (as amended, if
applicable) was declared effective by the Commission on January 15, 1998. Such
registration statement (as amended as of the date hereof) on the one hand, and
the prospectus constituting a part thereof and the prospectus supplement
relating to the offering of the Shares provided to the Underwriter by the
Company in the form first used to confirm sales of Shares (the "Prospectus
Supplement"), on the other hand, including, in each case, all documents
incorporated therein by reference pursuant to Item 12 of Form S-3 under the Act,
as from time to time amended or supplemented pursuant to the Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively called the "Exchange Act"), are referred
to herein as the "Registration Statement" and the "Prospectus," respectively.
Any registration statement (including any amendment or supplement thereto or
information which is deemed a part thereof) filed by the Company under Rule
462(b) of the Act (a "Rule 462(b) Registration Statement") shall be deemed to be
part of the "Registration Statement" as defined herein and any prospectus
delivered in connection therewith (including any amendment or supplement thereto
or information which is deemed part thereof) included in such registration
statement shall be deemed to be part of the "Prospectus," as defined herein. All
references
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in this Agreement to financial statements and schedules and other information
which is "contained," "included," "described" or "stated" in the Registration
Statement or the Prospectus (and all other similar references) shall be deemed
to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement or
the Prospectus shall be deemed to mean and include, without limitation, even
though not specifically stated, any document filed under the Exchange Act which
is or is deemed to be incorporated by reference in the Registration Statement or
the Prospectus, as the case may be. Capitalized terms used but not otherwise
defined herein shall have the meanings given to those terms in the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell and the Underwriter
agrees to purchase from the Company at a price per share of $32.78 (the
"Purchase Price") 429,712 Shares.
3. Terms of Public Offering. The Company is advised by you that the
Underwriter proposes to deposit the Shares with the trustee of the Trust, a
registered unit investment trust under the Investment Company Act of 1940, as
amended, to which Prudential Securities Incorporated acts as sponsor and
depositor, in exchange for units in the Trust (the "Offering") as soon after the
execution and delivery hereof as in the judgment of the Underwriter is advisable
(and, if necessary, any post-effective amendment to the Registration Statement).
4. Delivery and Payment. Delivery to the Underwriter of and payment
for the Shares shall be made at 10:00 A.M., New York City time, on February 18,
1998 (the "Closing Date"), at such place as the Underwriter shall designate. The
Closing Date and the location of delivery of and the form of payment for the
Shares may be varied by agreement between the Underwriter and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as the Underwriter shall request in writing not
later than two full business days prior to the Closing Date. Such certificates
shall be made available to the Underwriter for inspection not later than 9:30
A.M., New York City time, on the business day prior to the Closing Date.
Certificates in definitive form evidencing the Shares shall be delivered to the
Underwriter on the Closing Date, with any transfer taxes thereon duly paid by
the Company, for the account of the Underwriter, against payment to the Company
of the Purchase Price therefor by wire transfer of Federal or other funds
immediately available in New York City.
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5. Agreements of the Company. The Company agrees with the
Underwriter:
(a) In respect of the offering of the Shares contemplated
hereby, to (i) prepare a Prospectus Supplement setting forth the number
of Shares covered thereby, the name of the Underwriter participating in
the offering of the Shares and the number of Shares which the
Underwriter has agreed to purchase, the price at which the Shares are
to be purchased by the Underwriter from the Company, the public
offering price, the selling concession and reallowance if any, and such
other information as the Underwriter and the Company deem appropriate
in connection with the offering of the Shares, (ii) file the Prospectus
(as defined herein to include such Prospectus Supplement) in a form
approved by the Underwriter pursuant to Rule 424 under the Act no later
than the Commission's close of business on the second business day
following the date hereof and (iii) furnish copies of the Prospectus to
the Underwriter and to such dealers as the Underwriter shall specify as
soon as practicable after the date of this Agreement in such quantities
as the Underwriter may reasonably request.
(b) At any time when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
Shares, to advise the Underwriter promptly and, if requested by the
Underwriter, to confirm such advice in writing, of (i) the
effectiveness of any amendment to the Registration Statement, (ii) the
transmittal to the Commission for filing of the Prospectus or any other
supplement or amendment to the Prospectus required to be filed pursuant
to the Act, (iii) the receipt of any comments from the Commission
relating to the Registration Statement, the Prospectus, any preliminary
prospectus supplement relating to the Shares, the Prospectus Supplement
or any of the transactions contemplated by this Agreement, (iv) any
request by the Commission for post-effective amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (v) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purposes, and (vi) the happening of any event
during the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading. The Company will make every
reasonable effort to prevent the issuance of any stop order and if at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal or lifting of such
order at the earliest possible time.
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(c) To furnish to the Underwriter, without charge, one signed
copy of the Registration Statement as first filed with the Commission
and of each amendment to it, including all exhibits and documents
incorporated therein by reference, and to furnish to the Underwriter
such number of conformed copies of the Registration Statement as so
filed and of each amendment to it, without exhibits but including
documents incorporated therein by reference, as the Underwriter may
reasonably request. If applicable, the copies of the Registration
Statement and each amendment thereto furnished to the Underwriter will
be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T, as promulgated by the Commission.
(d) At any time when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
Shares, not to file any amendment to the Registration Statement or any
Rule 462(b) Registration Statement or to make any amendment or
supplement to the Prospectus of which the Underwriter shall not
previously have been advised or to which the Underwriter or ▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇ shall reasonably object; and to prepare and file with the
Commission, promptly upon the Underwriter's reasonable request, any
amendment to the Registration Statement, any Rule 462(b) Registration
Statement or any amendment or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the
Shares by the Underwriter, and to use its best efforts to cause the
same to become promptly effective. If applicable, the Prospectus and
any amendments or supplements thereto furnished to the Underwriter will
be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T, as promulgated by the Commission.
(e) Prior to 10:00 A.M., New York City time, on the first
business day after the date hereof and from time to time thereafter for
such period as in the opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ a prospectus is
required by law to be delivered in connection with sales by the
Underwriter or a dealer, to furnish to the Underwriter and dealer as
many copies of the Prospectus (and of any amendment or supplement to
the Prospectus) and any documents incorporated therein by reference as
the Underwriter or such dealer may reasonably request.
(f) If, during the period specified in paragraph (e), any
event shall occur as a result of which, in the opinion of ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
existing
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when the Prospectus is delivered to a purchaser, not misleading, or if
it is necessary to amend or supplement the Prospectus to comply with
any law, forthwith to prepare and file with the Commission an
appropriate amendment or supplement to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will not
in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with applicable law,
and to furnish to the Underwriter and to such dealers as the
Underwriter shall specify, such number of copies thereof as the
Underwriter or such dealers may reasonably request.
(g) Prior to any public offering of the Shares, (i) to
cooperate with the Underwriter and ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ (or such other
local counsel as may be designated by the Underwriter) in connection
with the registration or qualification of the Shares for offer and sale
by the Underwriter and by dealers under the state securities, Blue Sky
or real estate syndication laws of such jurisdictions as the
Underwriter may request, (ii) to continue such qualification in effect
so long as required for distribution of the Shares, (iii) to file such
consents to service of process or other documents as may be necessary
in order to effect such registration or qualification and (iv) to
cooperate with the Underwriter and ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ in connection
with the review of the offering of the Shares contemplated hereby by
the National Association of Securities Dealers, Inc. ("NASD").
(h) To make generally available to the Company's shareholders
as soon as reasonably practicable but not later than sixty (60) days
after the close of the period covered thereby (or ninety (90) days in
the event the close of such period is the close of the Company's fiscal
year), an earnings statement (in form complying with the provisions of
Rule 158 under the Act) covering a period of at least twelve (12)
months after the effective date of the Registration Statement (but in
no event commencing later than ninety (90) days after such date) which
shall satisfy the provisions of Section 11(a) of the Act, and, if
required by Rule 158 of the Act, to file such statement as an exhibit
to the next periodic report required to be filed by the Company under
the Exchange Act covering the period when such earnings statement is
released.
(i) During the period of five years after the date of this
Agreement, (i) to mail as soon as reasonably practicable after the end
of each fiscal year to the record holders of its Common Shares a
financial report of the Company and its subsidiaries, if any, on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to
include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash
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flows and a consolidated statement of shareholders' equity as of the
end of and for such fiscal year, together with comparable information
as of the end of and for the preceding year, certified by independent
certified public accountants, and (ii) to make generally available as
soon as practicable after the end of each quarterly period (except for
the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and
a consolidated statement of cash flows (and similar financial reports
of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the
close of such quarterly period, together with comparable information
for the corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish
to the Underwriter as soon as available a copy of each report or other
publicly available information of the Company mailed to the holders of
Common Shares or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries, if
any, as the Underwriter may reasonably request.
(k) During the period when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
the Shares, to file all documents required to be filed by it with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act within
the time periods required by the Exchange Act.
(l) To pay (i) all costs, expenses, fees and taxes incident to
the preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits),
the Prospectus, all documents incorporated or to be incorporated by
reference therein, and all amendments and supplements to any of them
prior to or during the period specified in paragraph (e), (ii) all
costs and expenses in connection with the printing and delivery of the
Prospectus and all amendments or supplements thereto during the period
specified in paragraph (e), (iii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriter, including any
transfer or other taxes payable thereon, (iv) all expenses in
connection with the registration or qualification of the Shares for
offer and sale under the securities, Blue Sky or real estate
syndication laws of the several states (including in each case the fees
and disbursements of counsel for the Company or counsel for the
Underwriter relating to such registration or qualification and
memoranda relating thereto), (v) all filing fees paid to the NASD in
connection with the review and clearance of the offering of the Shares
contemplated hereby, (vi) all costs and expenses incidental to the
listing of the Shares on the NYSE, (vii) the cost of furnishing such
copies of the
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Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with the
offering or sale of the Shares by the Underwriter or by dealers to whom
Shares may be sold and (viii) the cost of the preparation, issuance and
delivery of certificates representing the Shares, including the charges
of any transfer agent or registrar.
(m) To use its best efforts to list the Shares on the NYSE and
to maintain the listing of the Common Shares on the NYSE for a period
of five years after the Closing Date hereunder.
(n) To use its best efforts to qualify for the year ended
December 31, 1998 and to continue to meet the requirements to qualify
as a real estate investment trust ("REIT") under the Internal Revenue
Code of 1986, as amended (the "Code").
(o) To apply the net proceeds of the offering of Shares
contemplated hereby substantially in accordance with the description
set forth under the caption "Use of Proceeds" in the Prospectus.
(p) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date, and to satisfy all conditions
precedent to the delivery of the Shares.
6. Representations and Warranties. The Company represents and
warrants to the Underwriter that:
(a) The Company meets the requirement for use of Form S-3 and
the Registration Statement has been prepared by the Company under the
provisions of the Act and has been filed with and declared effective by
the Commission.
(b) The Registration Statement has become effective (other
than any Rule 462(b) Registration Statement to be filed by the Company
after the effectiveness of this Agreement); any Rule 462(b)
Registration Statement filed after the effectiveness of this Agreement
will become effective no later than 10:00 P.M., New York City time, on
the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the
Commission.
(c) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus,
complied or will comply when so filed in all material respects with the
Exchange
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Act, (ii) the Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the
effectiveness of this Agreement), when it initially became effective
and as of the date hereof, respectively, 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 statement therein not
misleading, (iii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Act, (iv) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this
Agreement, such Rule 462(b) Registration Statement and any amendments
thereto, when they become effective (A) will 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 not
misleading and (B) will comply in all material respects with the Act
and (v) the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this paragraph (c) do not apply to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to the Underwriter furnished to the Company in
writing by the Underwriter expressly for use therein.
(d) The Company has been duly organized and is validly
existing as a real estate investment trust in good standing under the
laws of the State of Maryland and has the power and authority to own
the Current Hotels owned by it and to lease such Current Hotels to
others and to conduct its business, all as described in the Prospectus,
and is duly qualified and in good standing as a foreign trust
authorized to do business in each jurisdiction in which such Current
Hotels are located and such qualification and authorization is
required.
(e) Each of the Company's subsidiaries has been duly
incorporated, is validly existing as a corporation or a real estate
investment trust, as the case may be, in good standing under the laws
of its jurisdiction of incorporation or formation, as the case may be,
and has the power and authority to own the Current Hotels owned by it
and to lease such Current Hotels to others and to conduct its business
as it is currently being conducted, and each is duly qualified and is
in good standing as a foreign corporation or a real estate investment
trust, as the case may be, authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except to the extent
the failure to be so qualified would not
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have a material adverse effect on the Company and its subsidiaries,
taken as a whole. All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable, and, except for the pledge to DLJMC to secure the
Company's obligations under the DLJMC Credit Facility, are owned by the
Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(f) All the outstanding Common Shares of the Company have been
duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights; and the Shares
have been duly authorized and, when issued and delivered to the
Underwriter against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and the issuance
of such Shares will not be subject to any preemptive or similar rights.
The Company has no outstanding Preferred Shares of Beneficial Interest.
There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to
or entitling any person to purchase or otherwise to acquire any Common
Shares of, or other ownership interest in, the Company except as
otherwise disclosed in the Registration Statement.
(g) The authorized capital of the Company, including the
Common Shares, conforms as to legal matters to the description thereof
contained in the Prospectus (or the documents incorporated therein by
reference).
(h) The Company and each of its subsidiaries is not in
violation of its Declaration of Trust, Certificate of Incorporation or
Bylaws, as the case may be, or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the Company or
any of its subsidiaries is a party or by which any of them or their
respective property is bound.
(i) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws affecting the enforceability of creditor's
rights and general principles of equity.
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(j) The execution by the Company or any of its subsidiaries of
each Transaction Document to which it is a party and the delivery by
the Company or any of its subsidiaries of, and the performance by the
Company or any of its subsidiaries of its obligations under, each
Transaction Document to which it is a party, as the case may be, and
the consummation of the transactions contemplated hereby and thereby
will not contravene any provision of applicable law or (i) the
Declaration of Trust, Certificate of Incorporation or Bylaws of the
Company or any of its subsidiaries, (ii) any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or
(iii) any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any of its subsidiaries,
except such as would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(k) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency and no consent,
approval or authorization of any person other than the Company or any
of its subsidiaries is required for the execution, delivery or
performance by the Company or any of its subsidiaries of its
obligations under each Transaction Document to which it is a party or
the consummation of the transactions contemplated hereby and thereby,
except such as may be required and will be obtained on or prior to the
Closing Date and such as may be required by the securities or Blue Sky
laws or real estate syndication laws of the various states in
connection with the offer and sale of the Shares and, in the case of
the performance thereof, except as are contemplated by the express
terms of such Transaction Document to occur after the Closing Date and
except (x) such as are otherwise described in the Prospectus and (y)
such that the failure to obtain would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or
business prospects of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus.
(m) There are no legal or governmental proceedings pending or,
to the knowledge of the Company after due inquiry, threatened to which
the Company or any of its subsidiaries is a party or to which any of
the Hotels is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes,
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regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required.
(n) The Company and each of its subsidiaries has, and as of
the Closing Date will have, all necessary consents, authorizations,
approvals, orders, certificates, licenses, franchises and permits of
and from, and has made, or as of the Closing Date will have made, all
declarations and filings with all federal, state, local and other
governmental authorities, all self-regulatory organizations and all
courts and other tribunals having jurisdiction over the Company or its
properties, necessary to own, lease, license and use its properties and
assets, and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain or file
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) To the best knowledge of the Company, each lessee of the
Current Hotels has, and as of the Closing Date will have, all permits,
licenses, approvals, certificates, franchises and authorizations of
governmental or regulatory authorities ("Approvals") as may be
necessary to lease, operate or manage the Current Hotels in the manner
described in or contemplated by the Prospectus, except for those
Approvals the absence of which would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(p) The Company has received and reviewed certain
environmental reports on each Current Hotel's property, has obtained
certain representations and warranties relating to environmental
matters from the sellers of the Current Hotels set forth in purchase
agreements therefor and has conducted physical inspections of each
Current Hotel's property. Except as described in the Prospectus, (i)
the Company, and, to its knowledge, each Current Hotel's property, is,
and as of the Closing Date will be, in compliance with all applicable
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment, hazardous toxic
substances and wastes, pollutants and contaminants ("Environmental
Laws"), (ii) the Company, or, to its knowledge, its lessees have
received, or as of the Closing Date will receive, all permits, licenses
or other approvals required under applicable Environmental Laws to
conduct the respective hotel businesses presently conducted at each
Current Hotel's property and (iii) the Company or, to its knowledge,
its lessees are, or as of the Closing Date will be, in compliance with
all terms and conditions of any such permit, license or approval,
except, in respect of clauses (i), (ii) and (iii), as otherwise
disclosed in the Prospectus or as would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
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(q) To the best knowledge of the Company, except as described
in the Prospectus, there are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, remediation or closure of
properties or compliance with Environmental Laws and any potential
liabilities to third parties) that, as of the date hereof, would, or as
of the Closing Date will, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(r) The Company has received and reviewed engineering reports
on each Current Hotel's property, has obtained certain representations
and warranties from the sellers of the Current Hotels set forth in
purchase agreements therefor and has conducted physical inspections of
each Current Hotel's property. In respect of each Current Hotel, (i)
each Current Hotel is not in violation of any applicable building code,
zoning ordinance or other law or regulation, except where such
violation of any applicable building code, zoning ordinance or other
law or regulation would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; (ii) the Company has not received notice of any proposed
material special assessment or any proposed change in any property tax,
zoning or land use laws or availability of water affecting any Current
Hotel that would have, singly or in the aggregate, a material adverse
effect on the Company and its subsidiaries, taken as a whole; (iii)
except as disclosed in the Prospectus, there does not exist any
material violation of any declaration of covenants, conditions and
restrictions with respect to any Current Hotel that would have, singly
or in the aggregate, a material adverse effect on the Company and its
subsidiaries, taken as a whole, or any state of facts or circumstances
or condition or event which could, with the giving of notice or passage
of time, or both, constitute such a violation; and (iv) the
improvements comprising any portion of each Current Hotel (the
"Improvements") are free of any and all material physical, mechanical,
structural, design and construction defects that would have, singly or
in the aggregate, a material adverse effect on the Company and its
subsidiaries, taken as a whole and the mechanical, electrical and
utility systems servicing the Improvements (including, without
limitation, all water, electric, sewer, plumbing, heating, ventilation,
gas and air conditioning) are in good condition and proper working
order and are free of defects that would have, singly or in the
aggregate, a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(s) Subsequent to the respective dates as of which financial
information is given in the Registration Statement and the Prospectus,
(i) the Company and each subsidiary of the Company has not incurred any
13
material liability or obligation, direct or contingent, nor entered
into any material transaction not in the ordinary course of business;
(ii) the Company has not purchased any of its outstanding Common
Shares, nor has it declared, paid or otherwise made any dividend or
distribution of any kind on its Common Shares; and (iii) there has not
been any material change in the capital, short-term debt or long-term
debt of the Company, except, in respect of clauses (i), (ii) or (iii)
above, as described in or contemplated by the Prospectus.
(t) (i) As of the Closing Date, the Company and each of its
subsidiaries will have good and marketable title in fee simple to all
real property (or good and marketable leasehold interests with respect
to the real property ground leased by the Company or its subsidiaries)
and good and marketable title to all personal property then owned by
them, in each case free and clear of all liens, encumbrances and
defects, except (w) liens or other security interests arising under the
DLJMC Credit Facility or the first mortgages on hotels owned by certain
subsidiaries of the Company pursuant to the $125,000,000 aggregate
principal amount of Hospitality Properties Mortgage Acceptance Corp.,
Series 1996-C1, Notes due December 1, 2001 (the "Mortgage Notes"), (x)
leases providing for the lease by the Company of the Current Hotels to
various tenants as described in the Prospectus, (y) such as would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole or (z) in the case of personal property located at
certain Hotels, such as are subject to equipment lease financing
arrangements which have been entered into in the ordinary course of
business and have an aggregate outstanding balance not in excess of $1
million; and (ii) real property held under ground lease by the Company
or any subsidiary is, and as of the Closing Date will be, held by it
under valid, subsisting and enforceable ground leases with such
exceptions as would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(u) The Company and its Current Hotels are, and as of the
Closing Date will be, insured in the manner described in the Prospectus
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are customary in the businesses in
which the Company is engaged and proposes to engage and the Company has
no reason to believe that it will not be able to renew such insurance
coverage as and when such coverage expires or to obtain similar
coverage as may be necessary to continue its business at economically
viable rates.
(v) The assets of the Company do not constitute, and as of the
Closing Date will not constitute, "plan assets" under the Employee
Retirement Income Security Act of 1974, as amended.
14
(w) The Company is, and as of the Closing Date will be,
organized to operate in a manner so as to qualify as a REIT under
Sections 856 through 860 of the Code, and the Company will elect to be
taxed as a REIT under the Code effective for the year ending December
31, 1998.
(x) Except as provided by this Agreement, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or the
Underwriter for a brokerage commission, finders fee or other like
payment with respect to the consummation of the transactions
contemplated by this Agreement.
(y) The financial statements of the Company and, to the
Company's knowledge, the financial statements and schedules of
portfolios of certain Hotels and lessees (consisting of separate
financial statements for HMH HPT Courtyard, Inc., HMH HPT Residence
Inn, Inc., Limited Service I Hotels, Limited Service II Hotels and
Renthotel Utah, L.C.), included in the Registration Statement and the
Prospectus fairly present the financial position of the Company and the
applicable Hotels or lessees (as set forth in such separate financial
statements), respectively, and their results of operations and changes
in financial condition, respectively, as of the dates and periods
therein specified. Such financial statements of the Company and, to the
Company's knowledge, such financial statements and schedules of such
Hotels and lessees, have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein). The selected
financial and other data set forth under the caption "Unaudited Pro
Forma Financial Statements and Other Data" in the Company's Current
Report on Form 8-K (the "Form 8-K") dated December 9, 1997 fairly
present, on the basis stated in the Form 8-K, the information included
therein. The unaudited pro forma financial statements included in the
Registration Statement and the Prospectus comply in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X promulgated by the Commission and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of that data.
(z) The Company and/or its subsidiaries, as applicable, has
obtained an ALTA Extended Coverage Owner's Policy of Title Insurance or
its local equivalent (or an irrevocable commitment to issue such a
policy) on all of the Current Hotels owned by the Company or its
subsidiaries and such title insurance is in full force and effect.
(aa) On the Closing Date, the Company will have no
indebtedness for money borrowed except (i) the Mortgage Notes. (ii)
borrowings under the DLJMC Credit Facility, if any, and (iii) equipment
financing
15
arrangements in respect of personal property located at certain Hotels
which have been entered into in the ordinary course of business and
have an aggregate outstanding balance not in excess of $1 million.
(bb) The Shares have been approved for listing on the NYSE,
subject to official notice of issuance.
(cc) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ are
each independent public accountants with respect to the Company as
required by the Act.
(dd) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ee) No holder of any security of the Company has any right to
require registration of Common Shares or any other security of the
Company.
(ff) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K promulgated by the
Commission.
(gg) The Acquisition Agreements pursuant to which the Company
expects to acquire the Additional Hotels (including any Additional
Hotels which the Company may determine to acquire after the Closing
Date) are in full force and effect. The Company intends and reasonably
expects to consummate the acquisition and lease of all Additional
Hotels not owned or acquired by it as of the Closing Date as
expeditiously as possible after the Closing Date, including as and when
the construction of certain of such properties is completed.
(hh) The Company has not, directly or indirectly, (i) taken
any action designed to cause or to result in, or that has constituted
or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (ii) during the
"restricted period" applicable to this offering of the Shares (as
defined in Rule 100 of Regulation M promulgated by the Commission) (A)
sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Shares or (B) paid or agreed to pay any
person any compensation for soliciting another to purchase any Shares
or "covered securities" or "referenced securities" with respect to the
Shares (each as defined in Rule 100 of Regulation M) (except for the
sale of Shares by the Company under this Agreement).
16
7. Indemnification. (a) The Company agrees to indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Underwriter furnished in writing to the Company by
or on behalf of the Underwriter expressly for use therein; provided that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of the Underwriter (or to the benefit of any person controlling
the Underwriter) from whom the person asserting any such losses, claims,
damages, liabilities or judgments purchased the Shares if such untrue statement
or omission or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the Prospectus and a copy of the
Prospectus shall not have been furnished to such person at or prior to the
written confirmation of the sale of such Shares to such person.
(b) In case any action shall be brought against the Underwriter or any
person controlling the Underwriter, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company, the
Underwriter shall promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses. The
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Underwriter
or such controlling person unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded parties) include both the
Underwriter or such controlling person and the Company and the Underwriter or
such controlling person shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of the
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations
17
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for the Underwriter and all
such controlling persons, which firm shall be designated in writing by the
Underwriter and that all such fees and expenses shall be reimbursed as they are
incurred). The Company shall not be liable for any settlement of any such action
effected without its written consent but if settled with the written consent of
the Company, the Company agrees to indemnify and hold harmless the Underwriter
and any such controlling person from and against any loss or liability by reason
of such settlement. Notwithstanding the immediately preceding sentence, if in
any case where the fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party shall have requested the
indemnifying party to reimburse the indemnified party for such fees and expenses
of counsel as incurred, such indemnifying party agrees that it shall be liable
for any settlement of any action effected without its written consent if (i)
such settlement is entered into more than ten business days after the receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall have failed to reimburse the indemnified party in accordance with
such request for reimbursement prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(c) The Underwriter agrees to indemnify and hold harmless the Company
and its trustees or officers who sign the Registration Statement (or any person
named in the Registration Statement as having agreed to become a trustee of the
Company) and any person controlling the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriter but only with reference
to information relating to the Underwriter furnished in writing by or on behalf
of the Underwriter expressly for use in the Registration Statement, the
Prospectus or any preliminary prospectus. In case any action shall be brought
against the Company, its trustees (or a named proposed trustee) or officers or
persons controlling the Company based on the Registration Statement, the
Prospectus or any preliminary prospectus and in respect of which indemnity may
be sought against the Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, the Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of the Underwriter), and the
Company, its trustees (or a named proposed trustee) or officers and persons
controlling the Company shall have the rights and duties given to the
Underwriter, by Section 7(b) hereof.
18
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriter in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriter shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the
Underwriter, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Underwriter 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 or the Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, the Underwriter shall not 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 the Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
19
8. Conditions of Underwriter's Obligations. The obligation of the
Underwriter to purchase the Shares under this Agreement is subject to the
satisfaction of each of the following conditions:
(a) All the representations and warranties set forth in
Section 6 of this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) At the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission; and the Prospectus
and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rule
424(b) under the Act.
(c) (i) Since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, there shall not have been any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of
business, of the Company; (ii) since the date of the latest balance
sheet included or incorporated by reference in the Registration
Statement and the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), there
shall not have been any change, or any development involving a
prospective material adverse change, in the capital or in the long-term
debt of the Company from that set forth in the Registration Statement
and Prospectus (other than in connection with Acquisition Transactions
described in and contemplated by the Registration Statement and the
Prospectus); (iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to the
Company and its subsidiaries, taken as a whole, other than those
reflected in the Registration Statement and the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement); (iv) since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, none of the Hotels owned by the Company as of the Closing
Date shall have sustained any material loss or casualty due to fire,
flood, earthquake, hurricane, tornado, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree; (v) all Acquisition Agreements
relating to Additional Hotels which have been executed and delivered by
the Company on or before the Closing Date shall be in full force and
effect as of such date and the Company shall not be aware of any event,
20
development or circumstance which it reasonably expects will materially
delay or prevent its acquisition of the Additional Hotels in the manner
contemplated in the Prospectus; and (vi) on the Closing Date the
Underwriter shall have received a certificate dated the Closing Date,
signed by the President and Chief Financial Officer of the Company,
confirming the matters set forth in paragraphs (a), (b) and (c) of this
Section 8 and that the Company has complied with all of the agreements
and satisfied all of the conditions herein contained and required to be
complied with or satisfied by the Company on or prior to the Closing
Date.
(d) The Underwriter shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Underwriter), dated
the Closing Date, of ▇▇▇▇▇▇▇▇ & Worcester LLP, counsel for the Company,
to the effect that:
(i) the Company has been duly organized and is validly
existing as a real estate investment trust in good standing under
the laws of the State of Maryland and has the power and authority
to acquire and own the Hotels owned by it and to lease such
Hotels to others and to conduct its business, all as described in
the Prospectus;
(ii) each of the Company's subsidiaries has been duly
organized and is validly existing (x) as a corporation in good
standing under the laws of the State of Delaware or (y) as a real
estate investment trust in good standing under the laws of the
State of Maryland, as the case may be, and has the power and
authority to own the Hotels owned by it and to lease such Hotels
to others and to conduct its business, all as described in the
Prospectus;
(iii) all of the outstanding shares of capital stock of each
of the Company's subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable,
except for the pledge to DLJMC to secure the Company's
obligations under the DLJMC Credit Facility, are owned by the
Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature;
(iv) all the outstanding Common Shares have been duly
authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights;
(v) the Shares have been duly authorized, and, when issued
and delivered to the Underwriter against payment therefor
21
as provided by this Agreement, will have been validly issued and
will be fully paid and non-assessable, and the issuance of such
Shares is not subject to any preemptive or similar rights;
(vi) the Company has no outstanding Preferred Shares of
Beneficial Interest;
(vii) to the best of such counsel's knowledge, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or liens related to
or entitling any person to purchase or otherwise to acquire any
Common Shares of, or other ownership interest in, the Company
except as otherwise disclosed in the Registration Statement;
(viii) the authorized capital of the Company, including the
Common Shares, conforms as to legal matters to the description
thereof contained in the Prospectus;
(ix) the statements under the captions (i) "Recent
Developments" and "Underwriting" in the Prospectus Supplement and
(ii) "Limitation of Liability; Shareholder Liability",
"Redemption; Trustees; Business Combinations and Control Share
Acquisitions" in the Prospectus, as of the date of the
Prospectus; and "Item 5. Other Events" in the Company's Current
Report on Form 8-K dated November 21, 1997; "Part I. Item 2.
Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Overview" and "-- Liquidity and Capital
Resources" in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997; "Part II. Item 2. Changes in
Securities" in the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997; "Item 5. Other Events" in the
Company's Current Report on Form 8-K dated May 20, 1997; "Other
Information--Incentive Share Award Plan" and "Certain
Relationships and Related Transactions" in the Company's Proxy
Statement relating to the May 20, 1997 Annual Meeting of
Shareholders (incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 (the
"Form 10-K")); and "Item 1. Business", "Item 2. Properties",
"Item 5. Market For Registrant's Common Equity and Related
Stockholder Matters", "Item 7. Management's Discussion and
Analysis of Results of Operations and Financial Condition --
Overview" and " -- Liquidity and Capital Resources" in the Form
10-K, in each case as of the date of filing of such document,
insofar as such statements constitute a summary of legal matters,
documents or proceedings referred to therein,
22
fairly present the information called for with respect to such
legal matters, documents and proceedings;
(x) the statements under the captions "Federal Income Tax
Consequences" in the Prospectus Supplement and "Item 1.
Business--Taxation of the Company", "--Taxation of Shareholders",
"--Other Tax Considerations", "--Certain United States Tax
Considerations Non-U.S. Shareholders", "--Federal Estate Tax",
"--Backup Withholding and Information Reporting Requirements",
"--Other Tax Consequences" and "--ERISA Plans, ▇▇▇▇▇ Plans and
Individual Retirement Accounts" in the Form 10-K, insofar as such
statements constitute a summary of legal matters or documents
referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings;
(xi) the Registration Statement has become effective under
the Act, the Prospectus was filed with the Commission pursuant to
Rule 424 within the applicable time period prescribed by Rule 424
and, to the best of such counsel's knowledge, no stop order
suspending its effectiveness has been issued and no proceedings
for that purpose are, to the knowledge of such counsel, pending
before or contemplated by the Commission;
(xii) the Company and each of its subsidiaries is not in
violation of its Declaration of Trust, Certificate of
Incorporation or Bylaws and, to such counsel's knowledge, the
Company and each of its subsidiaries is not in default in the
performance of any obligation, agreement or condition contained
in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument
material to the conduct of the business of the Company and its
subsidiaries, taken as a whole, to which the Company or any of
its subsidiaries is a party or by which any of them or their
respective property is bound;
(xiii) this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of
the Company, enforceable against it in accordance with its terms,
except as enforceability of any indemnification or contribution
provisions contained therein may be limited under federal or
state securities laws or public policy;
(xiv) each Transaction Document executed by the Company or
any of its subsidiaries as of the date of such opinion has been
duly authorized, executed and delivered by it;
23
(xv) no consent, approval, authorization or order of, or
qualification with, any United States federal, Massachusetts,
Delaware or Maryland governmental body or agency (other than any
Massachusetts, Delaware or Maryland body or agency dealing with
securities laws, as to which such counsel need not express an
opinion) is required for the execution, delivery or performance
by the Company or any of its subsidiaries of its obligations
under each Transaction Document to which it is a party or the
consummation of the transactions contemplated thereby;
(xvi) to the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened to which
the Company or any of its subsidiaries is a party or to which any
of the Hotels is subject that are required to be described in the
Registration Statement or the Prospectus and are not so
described, nor any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as
required;
(xvii) to such counsel's knowledge, the Company or its
subsidiaries, as owners of the Current Hotels, have all Approvals
as may be necessary to own the Current Hotels in the manner
described in or contemplated by the Prospectus, except for any
such Approvals the absence of which would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(xviii) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xix) such counsel confirms as of the Closing Date its
opinions filed as Exhibits 5.1 and 8 to the Registration
Statement; and
(xx) (1) each document, if any, filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus
(except for financial statements and other financial and
statistical data and schedules as to which no opinion need be
expressed) complied as to form in all material respects with the
Exchange Act when so filed with the Commission, (2) the
Registration Statement and the Prospectus and any supplement or
amendment thereto (except for financial statements and other
financial and statistical
24
data and schedules as to which no opinion need be expressed)
comply as to form in all material respects with the Act, and (3)
no facts have come to such counsel's attention that would lead
such counsel to believe (i) that (except for financial statements
and other financial and statistical data and schedules, as
aforesaid) the Registration Statement and the prospectus included
therein (x) at the time the Registration Statement became
effective and (y) on the date hereof, respectively, 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 (ii) that the
Prospectus, as amended or supplemented, if applicable (except for
financial statements and other financial and statistical data and
schedules, as aforesaid) at the time it was first provided to the
Underwriter for use in connection with the offering of the Shares
and as of the Closing Date contained or contains any untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
In giving such opinion with respect to the matters covered by clause
(xx), such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and documents incorporated therein by
reference, and review and discussion of the contents thereof, but are without
independent check or verification except as specified.
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP as to matters
governed by the laws of the State of Maryland. In addition, in rendering their
opinion, such counsel may state that their opinion as to laws of the State of
Delaware is limited to the Delaware General Corporation Law.
The opinions of ▇▇▇▇▇▇▇▇ & Worcester LLP and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, described in paragraph (d) above shall be rendered to you at the
request of the Company and shall so state therein.
(e) You shall have received on the Closing Date an opinion,
dated the Closing Date, of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Underwriter, as to the matters referred to in clauses (v), (ix) (but
only with respect to the statements under the caption "Underwriting" in
the Prospectus Supplement), (xiii) (but only as to due authorization,
execution and delivery) and clause (xx) of the foregoing paragraph (d)
(but only with respect to clauses (2), (3)(i)(y) and (3)(ii) thereof).
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In giving such opinion with respect to the matters covered by clause
(xx), such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto (other than the documents incorporated
therein by reference) and review and discussion of the contents thereof
(including the documents incorporated therein by reference), but are without
independent check or verification except as specified.
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, LLP as to matters
governed by the laws of the State of Maryland.
(f) You shall have received a letter dated on and as of the
Closing Date, in form and substance satisfactory to you, from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, independent public accountants, with respect to certain
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus, in substantially the form and substance of the letter
delivered to you by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP on the date of this Agreement.
(g) The Shares shall have been duly listed, subject to notice
of issuance, on the NYSE.
(h) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company
at or prior to the Closing Date.
The obligation of the Underwriter to purchase any Shares hereunder is
subject to the delivery to the Underwriter on the Closing Date of such documents
as the Underwriter may reasonably request with respect to the good standing and
qualification to do business in applicable jurisdictions of the Company and its
subsidiaries, the due authorization and issuance of the Shares and other matters
related to the issuance of the Shares.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution of this Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the Closing Date
by the Underwriter by written notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company or the earnings, affairs, or business
prospects of the Company, whether or not arising in the ordinary course of
26
business, which would, in the judgment of the Underwriter, make it impracticable
or inadvisable to (x) commence or continue the offering of the units of the
Trust to the public, or (y) enforce contracts for the sale of the units of the
Trust, (ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in the judgment of the
Underwriter, is material and adverse and would, in your judgment, make it
impracticable or inadvisable to (x) commence or continue the offering of the
units of the Trust to the public, or (y) enforce contracts for the sale of the
units of the Trust, (iii) the suspension or material limitation of trading in
securities or other instruments on the NYSE, the American Stock Exchange , The
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities on any such exchange or the Nasdaq National Market, (iv) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (v) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in the opinion of the Underwriter
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company, (vi) the declaration of a banking
moratorium by either federal or New York State authorities or (vii) the taking
of any action by any federal, state or local government or agency in respect of
its monetary or fiscal affairs which in the opinion of the Underwriter has a
material adverse effect on the financial markets in the United States.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Hospitality
Properties Trust, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, and
(b) if to the Underwriter, to you at Prudential Securities Incorporated, ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇-▇▇▇▇▇▇ Canfin, or in any
case to such other address as the person to be notified may have requested in
writing.
The parties hereto agree, for purposes of Section 6(b), Section 7 and
any other provision of this Agreement, that the only information relating to the
Underwriter furnished to the Company in writing by the Underwriter expressly for
use in the Registration Statement, any preliminary prospectus, the Prospectus or
any amendment or supplement thereto is the information furnished by the
Underwriter included in the Prospectus, (i) in the second sentence of the second
paragraph on the cover page of the Prospectus, (ii) naming the Underwriter under
the caption "Underwriting" and (iii) in the third and sixth paragraphs under the
caption "Underwriting" in the Prospectus.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and trustees and of
the Underwriter set forth in or made pursuant to this Agreement shall remain
27
operative and in full force and effect, and will survive delivery of and payment
for the Shares, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Underwriter or by or on behalf of
the Company, or its officers or trustees, (ii) acceptance of the Shares and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriter because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Underwriter for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriter, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from the Underwriter merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriter.
Very truly yours,
HOSPITALITY PROPERTIES TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Treasurer
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ ▇▇▇▇-▇▇▇▇▇▇ Canfin
Name: ▇▇▇▇-▇▇▇▇▇▇ Canfin
Title: Managing Director
29
