EXHIBIT 1.3.2
ASHFORD HOSPITALITY TRUST, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January 13, 2005
WACHOVIA CAPITAL MARKETS, LLC
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
as Representatives of the several Underwriters
c/o Wachovia Capital Markets, LLC
7 St. Paul Street, 1st Floor
Baltimore, Maryland 21202
Dear Sirs:
Ashford Hospitality Trust, Inc., a Maryland corporation (the
"Company"), and Ashford Hospitality Limited Partnership, a Delaware limited
partnership (the "Operating Partnership"), each confirms its agreement with each
of the Underwriters listed on Schedule I hereto (collectively, the
"Underwriters"), for whom Wachovia Capital Markets, LLC and Friedman, Billings,
Ramsey & Co., Inc., are acting as Representatives (in such capacity, the
"Representatives"), with respect to (i) the sale by the Company of 9,000,000
shares (the "Initial Shares") of common stock, par value $.01 per share, of the
Company (the "Common Stock"), and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of shares of Common Stock
set forth opposite the names of the Underwriters in Schedule I hereto, and (ii)
the grant of the option described in Section 1(b) hereof to purchase all or any
part of 1,350,000 additional shares of Common Stock to cover over-allotments
(the "Option Shares"), if any, from the Company to the Underwriters, acting
severally and not jointly, in the respective numbers of shares of Common Stock
set forth opposite the names of the Underwriters in Schedule I hereto. The
9,000,000 Initial Shares and all or any part of the 1,350,000 Option Shares are
hereinafter called, collectively, the "Shares."
The Company will contribute the net proceeds from each sale of the
Shares to the Operating Partnership and, in exchange therefor, at the Closing
Time (as defined herein) of each such sale the Operating Partnership will issue
to the Company common units of limited partnership interest in the Operating
Partnership (the "Units").
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-11, as subsequently amended on
Form S-3 (No. 333-114283), and a related preliminary prospectus for the
registration of the Shares under the Securities Act of 1933, as amended (the
"Securities Act"), and the
rules and regulations thereunder (the "Securities Act Regulations"). The Company
has prepared and filed such amendments thereto, if any, and such amended
preliminary prospectuses, if any, as may have been required to the date hereof,
and agrees to file such additional amendments thereto and such amended
prospectuses as may hereafter be required. The registration statement has been
declared effective under the Securities Act by the Commission. The registration
statement as amended at the time it became effective (including all information
deemed (whether by incorporation by reference or otherwise) to be a part of the
registration statement) is hereinafter called the "Registration Statement,"
except that, if the Company files any post-effective amendment to such
registration statement that becomes effective prior to the Closing Time (as
defined below), "Registration Statement" shall refer to such registration
statement as so amended. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. The Company proposes to file
with the Commission pursuant to Rule 424 under the Securities Act, a supplement,
dated the date hereof, to the prospectus dated September 15, 2004, relating to
the Shares and the method of distribution thereof. The term "Base Prospectus"
means the prospectus included in the Registration Statement; the term
"Preliminary Prospectus" means any preliminary form of the Prospectus (as
defined herein) specifically relating to the Shares, in the form first filed
with, or transmitted for filing to, the Commission pursuant to Rule 424 of the
Securities Act Regulations (including all information deemed (whether by
incorporation by reference or otherwise) to be a part thereof); the term
"Prospectus Supplement" means any prospectus supplement specifically relating to
the Shares, in the form first filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 or Rule 497 under the Securities Act; the term
"Prospectus" means the Base Prospectus and the Prospectus Supplement. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
The Company, the Operating Partnership and the Underwriters agree as
follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $9.139, the Company agrees to sell to the Underwriters the
Initial Shares, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Initial Shares set forth in Schedule I
opposite such Underwriter's name, plus any additional number of Initial Shares
that such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case, to such adjustments among
the Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to the Underwriters, acting severally and not jointly, to purchase from the
Company, all or any part of the Option Shares, plus any additional number of
Option Shares that such
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Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than five full business days after the exercise of such
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Shares, the
Company will sell that number of Option Shares then being purchased, and each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Shares then being purchased which the
number of Initial Shares set forth in Schedule I opposite the name of such
Underwriter bears to the total number of Initial Shares, subject in each case to
such adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
2. Payment and Delivery:
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives may request upon at least 48
hours' prior notice to the Company shall be delivered by or on behalf of the
Company to the Representatives, including, at the option of the Representatives,
through the facilities of The Depository Trust Company ("DTC") for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified in writing to the Representatives by the Company upon at least
48 hours' prior notice. The Company will cause the certificates representing the
Initial Shares to be made available for checking and packaging at least 24 hours
prior to the Closing Time (as defined below) with respect thereto at the office
of Wachovia Capital Markets, LLC, 7 St. Paul Street, 1st Floor, Baltimore,
Maryland 21202, or at the office of DTC or its designated custodian, as the case
may be (the "Designated Office"). The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on the third (fourth, if pricing occurs
after 4:30 p.m., New York City time) business day after the date hereof (unless
another time and date shall be agreed to by the Representatives and the
Company). The time at which such payment and delivery are actually made is
hereinafter sometimes called the "Closing Time" and the date of delivery of both
Initial Shares and Option Shares is hereinafter sometimes called the "Date of
Delivery."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representatives may request upon at least 48
hours' prior notice to the Company shall be delivered by or on behalf of the
Company to the Representatives, including, at the option of the Representatives,
through the facilities of DTC for the account of such Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same-day) funds to the account specified in writing to
the Representatives by the Company upon at least 48 hours' prior
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notice. The Company will cause the certificates representing the Option Shares
to be made available for checking and packaging at least 24 hours prior to the
Date of Delivery with respect thereto at the Designated Office. The time and
date of such delivery and payment shall be 9:30 a.m., New York City time, on the
date specified by the Representatives in the notice given by the Representatives
to the Company of the Underwriters' election to purchase such Option Shares or
on such other time and date as the Company and the Representatives may agree
upon in writing.
3. Representations and Warranties of the Company and the Operating
Partnership: The Company and the Operating Partnership, jointly and severally,
represent and warrant to the Underwriters that:
(a) the Company has an authorized capitalization of 200 million shares
of common stock, par value $.01 per share, and 50 million shares of preferred
stock, par value $.01 per share (the "Preferred Stock"); the outstanding shares
of capital stock or, as applicable partnership or membership interests, of the
Company and each subsidiary of the Company, including the Operating Partnership
and its subsidiaries (each, a "Subsidiary" and collectively, the
"Subsidiaries"), have been duly and validly authorized and issued and are fully
paid and, with respect to shares of capital stock, membership interests and
limited partnership interests, non-assessable (except to the extent such
non-assessability may be affected by Section 17-607 of the Delaware Revised
Uniform Limited Partnership Act or Section 18-607 of the Delaware Limited
Liability Company Act), and, except as disclosed in the Prospectus, all of the
outstanding shares of capital stock or partnership or membership interests of
the Subsidiaries are directly or indirectly owned of record and beneficially by
the Company, free and clear of any pledge, lien, encumbrance, security interest
or other claim, and, except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable or redeemable for any capital
stock or other equity interests of the Company or any such Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or other equity interests or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company or any such Subsidiary to issue any shares of capital stock or other
equity interests, any such convertible or exchangeable or redeemable securities
or obligation, or any such warrants, rights or options;
(b) each of the Company and the Subsidiaries (all of which Subsidiaries
are named in Exhibit 21.1 to the Registration Statement) has been duly
incorporated or organized and is validly existing as a corporation, limited
partnership or limited liability company, as applicable, in good standing under
the laws of its respective jurisdiction of incorporation or organization with
full corporate or other power and authority to own its respective properties and
to conduct its respective businesses as described in the Registration Statement
and Prospectus and, in the case of each of the Company and the Operating
Partnership, to execute and deliver this Agreement and to consummate the
transactions contemplated herein;
(c) each of the Company and the Subsidiaries is duly qualified or
licensed and is in good standing in each jurisdiction in which the nature or
conduct of its business requires such qualification or license and in which the
failure, individually or in the
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aggregate, to be so qualified or licensed could reasonably be expected to have a
material adverse effect on the assets, business, operations, earnings,
properties or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"); except as disclosed
in the Prospectus, no Subsidiary is prohibited or restricted, directly or
indirectly, from paying dividends to the Company, or from making any other
distribution with respect to such Subsidiary's capital stock or other equity
interests or from repaying to the Company or any other Subsidiary any amounts
that may from time to time become due under any loans or advances to such
Subsidiary from the Company or such other Subsidiary, or from transferring any
such Subsidiary's property or assets to the Company or to any other Subsidiary;
other than as disclosed in the Prospectus, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint venture or other
association;
(d) the Agreement of Limited Partnership of the Operating Partnership
(the "Partnership Agreement") has been duly and validly authorized, executed and
delivered by or on behalf of the partners of the Operating Partnership and
constitutes a valid and binding agreement of the parties thereto, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity;
(e) (i) Ashford OP Limited Partner, LLC (the "Limited Partner") is a
holder of Units representing an ownership interest in the Operating Partnership
in the amount described in the Prospectus, (ii) Ashford OP General Partner, LLC
(the "General Partner") is the holder of the sole general partner interest in
the Operating Partnership, and (iii) the Company owns a 100% membership interest
in the General Partner and in the Limited Partner, in each case free and clear
of any pledge, lien, encumbrance, security interest or other claim;
(f) the Company and the Subsidiaries are in compliance with all
applicable federal, state, local or foreign laws, regulations, rules, decrees,
judgments and orders, including those relating to transactions with affiliates,
except where any failures to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(g) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under) its respective
organizational documents, or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties is bound, except for such breaches or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect;
(h) the execution, delivery and performance of this Agreement and
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with
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notice, lapse of time, or both would constitute a breach of, or default under),
(i) any provision of the organizational documents of the Company or any
Subsidiary, or (ii) any provision of any license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or their respective
assets or properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any Subsidiary, except in the case of this clause
(ii) for such breaches or defaults that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect; or (B) result in
the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or any Subsidiary;
(i) this Agreement has been duly authorized, executed and delivered by
the Company and the Operating Partnership and is a legal, valid and binding
agreement of the Company and the Operating Partnership enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general equitable principles, and except to the extent that
the indemnification and contribution provisions of Section 9 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof;
(j) no approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency or any other third party is required in connection
with the Company's or the Operating Partnership's execution, delivery and
performance of this Agreement, their consummation of the transactions
contemplated herein or the Company's sale and delivery of the Shares, other than
(i) such as have been obtained, or will have been obtained at the Closing Time
or the relevant Date of Delivery, as the case may be, under the Securities Act
and the Securities Exchange Act of 1934 (the "Exchange Act"), (ii) such
approvals as have been obtained in connection with the approval of the listing
of the Shares on the New York Stock Exchange, (iii) any necessary qualification
under the securities or blue sky laws of the various state jurisdictions in
which the Shares are being offered by the Underwriters, and (iv) such approvals,
authorizations, consents or orders or filings, the absence of which could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate;
(k) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation or
rule, and has obtained all necessary authorizations, consents and approvals from
other persons, required in order to conduct their respective businesses as
described in the Prospectus, except to the extent that any failure to have any
such licenses, authorizations, consents or approvals, to make any such filings
or to obtain any such authorizations, consents or approvals could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; neither the Company nor any of the Subsidiaries is in violation
of, in default under, or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent or approval or
any federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the Subsidiaries, the
effect of which could reasonably be expected to result in a Material Adverse
Effect; and no such license, authorization, consent or approval contains a
materially burdensome restriction that is not adequately disclosed in the
Registration Statement and the Prospectus; neither the Company nor any of the
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Subsidiaries is required by any applicable law to obtain accreditation or
certification from any governmental agency or authority in order to provide the
products and services that it currently provides or that it proposes to provide
as set forth in the Prospectus except to the extent that any failure to have
such accreditation or certification could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(l) the Company and the transactions contemplated by this Agreement
meet the requirements for the use of Form S-3 under the Securities Act; each of
the Registration Statement and any Rule 462(b) Registration Statement has become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the Securities Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the Company,
are threatened by the Commission, and, to the knowledge of the Company, the
Company has complied to the Commission's satisfaction with any request on the
part of the Commission for additional information;
(m) the Preliminary Prospectus and the Registration Statement comply,
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply, in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement, the Preliminary Prospectus or the Prospectus, in
reliance upon and in conformity with the information concerning the Underwriters
and furnished in writing by or on behalf of the Underwriters through the
Representatives to the Company expressly for use in the Registration Statement,
the Preliminary Prospectus or the Prospectus (that information being limited to
that described in the penultimate sentence of the first paragraph of Section
9(b) hereof);
(n) each document incorporated by reference in the Prospectus or the
Registration Statement (the "Incorporated Documents"), when it became effective
or was filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the Securities Act Regulations and the Exchange Act Regulations,
and none of such documents
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contained or will contain an untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and, when read together with the other
information in the Prospectus, at the time the Registration Statement became
effective and at the Closing Date, each such incorporated document did not or
will not, as the case may be, 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;
(o) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
respective version of the Preliminary Prospectus or Prospectus created to be
transmitted to the Commission under the Securities Act for filing via the
Electronic Data Gathering Analysis and Retrieval System ("EDGAR"), except to the
extent permitted by Regulation S-T;
(p) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or any of their respective officers and directors
or to which the properties, assets or rights of any such entity are subject, at
law or in equity, before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority, arbitral panel or agency,
where in any such case (A) there is a reasonable possibility that such action,
suit or proceeding will be determined adversely to the Company or such
Subsidiary and (B) if so determined adversely, could reasonably be expected to
result in a judgment, decree, award or order having a Material Adverse Effect;
(q) the financial statements, including the related supporting
schedules and notes thereto, included in (or incorporated by reference into) the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the entities to which such financial statements relate
(the "Covered Entities") as of the dates indicated and the consolidated results
of operations and changes in financial position and cash flows of the Covered
Entities for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles as applied in the
United States and on a consistent basis during the periods involved and in
accordance with Regulation S-X promulgated by the Commission; the financial data
in the Prospectus fairly present the information shown therein and have been
compiled on a basis consistent with the financial statements included in the
Registration Statement and the Prospectus; no other financial statements or
supporting schedules are required to be included in the Registration Statement;
the unaudited pro forma financial information (including the related notes)
included in the Prospectus and the Preliminary Prospectus complies as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations, and management of the Company
believes that the assumptions underlying the pro forma adjustments are
reasonable; such pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such information
fairly presents with respect to the Company and the Subsidiaries, the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified; no
other pro forma financial information is required to be
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included in the Registration Statement; all disclosures contained in the
Registration Statement or the Prospectus regarding "non-GAAP financial measures"
(as such term is defined by the rules and regulations of the Commission) comply
with Regulation G of the Exchange Act and the Exchange Act Regulations and Item
10 of Regulation S-K under the Securities Act, to the extent applicable.
(r) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Company and the Subsidiaries and the predecessor are filed
with the Commission as part of the Registration Statement and Prospectus or are
incorporated by reference therein and any other accounting firm (including
Holland Shipes Vann, P.C. and Berdon LLP) that has certified Company or
predecessor financial statements (including financial statements of acquired
properties) and delivered its reports with respect thereto, are, and were during
the periods covered by their reports, independent public accountants as required
by the Securities Act and the Securities Act Regulations;
(s) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (i) any
change, or any development or event that reasonably could be expected to result
in a change, that has or reasonably could be expected to have a Material Adverse
Effect, whether or not arising in the ordinary course of business, (ii) any
transaction that is material to the Company and the Subsidiaries taken as a
whole entered into or agreed to be entered into by the Company or any of the
Subsidiaries, (iii) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any Subsidiary that is material to the
Company and Subsidiaries taken as a whole or (iv) except for regular quarterly
dividends on the Common Stock and Preferred Stock, and related Units and
Preferred Units distributions, any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock or by
the Operating Partnership on any of its partnership interests;
(t) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(u) there are no persons with registration or other similar rights to
have any equity or debt securities, including securities that are convertible
into or exchangeable or redeemable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company or the
Operating Partnership under the Securities Act except for those registration or
similar rights that have been waived or that are inapplicable with respect to
the offering contemplated by this Agreement;
(v) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise;
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(w) at or before the initial Closing Time, the Shares will have been
registered under Section 12(b) of the Exchange Act and approved for listing on
the New York Stock Exchange, subject to official notice of issuance;
(x) the Company has not taken, and will not take, directly or
indirectly, any action that is designed to or that has constituted or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares;
(y) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act or the Exchange Act Regulations, or (ii) directly, or indirectly
through one or more intermediaries, controls or has any other association with
(within the meaning of Article I of the By-laws of the National Association of
Securities Dealers, Inc. (the "NASD")) any member firm of the NASD;
(z) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(aa) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(bb) except as described in the Prospectus, neither the Company nor any
Subsidiary has sold or issued any securities during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants, that would not be required to be integrated with the sale of the
Shares;
(cc) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the organizational documents of the Company and the
requirements of the New York Stock Exchange;
(dd) all of the mezzanine loans of which the Company is the owner,
directly or indirectly (the "Mezzanine Loans"), and all of the participation
interests in loans of which the Company is the owner, directly or indirectly
(the "Participation Interests," and such loans, together with the Mezzanine
Loans, collectively are referred to hereinafter as the "Loans"), are set forth
or described in the Prospectus. The Company is the sole owner and holder of the
Mezzanine Loans and Participation Interests, and has not sold, assigned,
hypothecated or otherwise encumbered such Mezzanine Loans and Participation
Interests, except as set forth in the Prospectus; to the Company's knowledge,
there is no offset, defense, counterclaim or right to rescission with respect to
any of the notes or any of the other loan documents; neither the Company nor, to
the knowledge of the Company,
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any other party has given or received a written notice of default under any
Loans and, to the Company's knowledge, no event exists which, with the giving of
notice or the passing of time, or both, would constitute an event of default
thereunder; the Company has not subordinated its interest in the loans to which
the Participation Interests relate to any other party except as set forth in the
Prospectus;
(ee) the Company and the Subsidiaries have good and indefeasible title
in fee simple to, or a valid leasehold interest in, all real property described
in the Prospectus, and good title to all personal property owned by them, in
each case free and clear of all liens, security interests, pledges, charges,
encumbrances, encroachments, restrictions, mortgages and defects, except such as
are disclosed in the Prospectus or such as do not materially and adversely
affect the value of such property and do not interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries; any
real property, improvements, equipment and personal property held under lease by
the Company or any Subsidiary are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made of such
real property, improvements, equipment and personal property by the Company or
such Subsidiary; the Company or a Subsidiary has obtained an owner's or
leasehold title insurance policy, from a title insurance company licensed to
issue such policy, on any real property owned in fee or leased, as the case may
be, by the Company or any Subsidiary, that insures the Company's or the
Subsidiary's fee or leasehold interest, as the case may be, in such real
property, which policies include only commercially reasonable exceptions, and
with coverages in amounts at least equal to amounts that are generally deemed in
the Company's industry to be commercially reasonable in the markets where the
Company's properties are located, or a lender's title insurance policy insuring
the lien of its mortgage securing the real property with coverage equal to the
maximum aggregate principal amount of any indebtedness held by the Company or a
Subsidiary and secured by the real property;
(ff) all real property owned or leased by the Company or a Subsidiary
is free of material structural defects and all building systems contained
therein are in good working order in all material respects, subject to ordinary
wear and tear or, in each instance, the Company has created an adequate reserve
to effect reasonably required repairs, maintenance and capital expenditures; to
the knowledge of the Company and the Operating Partnership, water, storm water,
sanitary sewer, electricity and telephone service are all available at the
property lines of such property over duly dedicated streets or perpetual
easements of record benefiting such property; except as described in the
Prospectus, to the knowledge of the Company and the Operating Partnership, there
is no pending or threatened special assessment, tax reduction proceeding or
other action that, individually or in the aggregate, could reasonably be
expected to increase or decrease the real property taxes or assessments of any
of such property, that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(gg) the mortgages and deeds of trust encumbering any real property
owned in fee or leased by the Company or a Subsidiary (i) are not convertible
(in the absence of foreclosure) into an equity interest in the Real Property or
in the Company, the Operating Partnership or any Subsidiary, and none of the
Company, the Operating Partnership or
- 11 -
the Subsidiaries hold a participating interest therein, (ii) except as set forth
in the Prospectus, are not and will not be cross-defaulted to any indebtedness
other than indebtedness of the Company or any of the Subsidiaries, and (iii) are
not and will not be cross-collateralized to any property not owned by the
Company, the Operating Partnership or any of the Subsidiaries;
(hh) the descriptions in the Registration Statement and the Prospectus
of the legal or governmental proceedings, contracts, leases and other legal
documents therein described present fairly the information required to be shown,
and there are no legal or governmental proceedings, contracts, leases, or other
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required; all agreements between the Company or
any of the Subsidiaries and third parties expressly referenced in the Prospectus
are legal, valid and binding obligations of the Company or one or more of the
Subsidiaries, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general equitable principles and, to the knowledge of the Company and the
Operating Partnership, no party is in breach or default under any such
agreements;
(ii) the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively,
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in the Prospectus, and neither the Company nor any
Subsidiary has received notice of infringement of or conflict with (and the
Company knows of no such infringement of or conflict with) asserted rights of
others with respect to any Intangibles that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
(jj) the Company, the Operating Partnership and the Subsidiaries have
established and maintain disclosure controls and procedures (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information
relating to the Company and its Subsidiaries, is made known to the Company's
Chief Executive Officer and its Chief Financial Officer by others within those
entities, and such disclosure controls and procedures are effective to perform
the functions for which they were established. The Company, the Operating
Partnership and the Subsidiaries have established and maintain internal control
over financial reporting (as such term is defined in Rule 13a-15 and 15d-15
under the Exchange Act); such internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, including providing
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on the financial statements. The Company's auditors and the
Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies and material weaknesses in the design or operation of
internal controls which could adversely affect the Company's ability to
- 12 -
record, process, summarize, and report financial data; and (ii) any fraud,
whether or not material, that involves management or other employees who have a
role in the Company's internal controls. Since the date of the most recent
evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses;
(kk) each of the Company, the Operating Partnership and the
Subsidiaries has filed on a timely basis (including in accordance with any
applicable extensions) all necessary federal, state, local and foreign income
and franchise tax returns required to be filed through the date hereof or have
properly requested extensions thereof, and have paid all taxes shown as due
thereon, and if due and payable, any related or similar assessment, fine or
penalty levied against the Company, the Operating Partnership or any of the
Subsidiaries; no tax deficiency has been asserted against any such entity, and
the Company and the Subsidiaries do not know of any tax deficiency that is
likely to be asserted against any such entity that, individually or in the
aggregate, if determined adversely to any such entity, could reasonably be
expected to have a Material Adverse Effect; all tax liabilities are adequately
provided for on the respective books of the Company and the Subsidiaries;
(ll) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiaries against theft,
damage, destruction, environmental liabilities, acts of vandalism, terrorism,
earthquakes, flood and all other risks customarily insured against, all of which
insurance is in full force and effect;
(mm) neither the Company nor any of the Subsidiaries is in violation,
or has received notice of any violation with respect to, any applicable
environmental, safety or similar law, regulation or rule applicable to the
business of the Company or any of the Subsidiaries; the Company and the
Subsidiaries have received all permits, licenses or other approvals required of
them under applicable federal and state occupational safety and health and
environmental laws, regulations and rules to conduct their respective
businesses, and the Company and the Subsidiaries are in compliance with all
terms and conditions of any such permit, license or approval, except any such
violation of law, regulation or rule, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals that individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect;
(nn) neither the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state law,
regulation or rule relating to discrimination in the hiring, termination,
promotion, employment or pay of employees, nor any applicable federal or state
wages and hours law, nor any state law, regulation or rule precluding the denial
of credit due to the neighborhood in which a property is
- 13 -
situated, the violation of any of which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(oo) the Company and each of the Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of the Subsidiaries would have any material
liability; the Company and each of the Subsidiaries have not incurred and do not
expect to incur material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and each "pension plan" for
which the Company or any of its Subsidiaries would have any material liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, that would cause the loss of such qualification;
(pp) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any officer or director purporting to act on behalf of the
Company or any of the Subsidiaries has at any time (i) made any payment outside
the ordinary course of business to any investment officer or loan broker or
person charged with similar duties of any entity to which the Company or any of
the Subsidiaries sells or from which the Company or any of the Subsidiaries buys
loans or servicing arrangements for the purpose of influencing such agent,
officer, broker or person to buy loans or servicing arrangements from or sell
loans to the Company or any of the Subsidiaries, or (ii) engaged in any
transactions, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company and the Subsidiaries;
(qq) there are no outstanding loans or advances or guarantees of
indebtedness by the Company or any of the Subsidiaries to or for the benefit of
any of the officers or directors of the Company or any of the Subsidiaries or
any of the members of the families of any of them;
(rr) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company or the Operating Partnership, any employee or agent of
the Company or any of the Subsidiaries, has made any payment of funds of the
Company or of any Subsidiary or received or retained any funds in violation of
any law, rule or regulation or of a character required to be disclosed in the
Prospectus;
(ss) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws and
the laws of the applicable jurisdiction of incorporation of the issuing entity,
except as, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and (ii) to the extent applicable to the issuing
entity, the requirements of the New York Stock Exchange;
- 14 -
(tt) except as otherwise disclosed in the Prospectus, (i) none of the
Operating Partnership, the Company, any of the Subsidiaries nor, to the
knowledge of the Operating Partnership and the Company, any other owners of the
property at any time or any other party has at any time, handled, stored,
treated, transported, manufactured, spilled, leaked, or discharged, dumped,
transferred or otherwise disposed of or dealt with, Hazardous Materials (as
hereinafter defined) on, in, under, to or from any real property leased, owned
or controlled, including any real property underlying any loan held or to be
held by the Company or the Subsidiaries (collectively, the "Real Property"),
other than by any such action taken in compliance with all applicable
Environmental Statutes (hereinafter defined) or by the Operating Partnership,
the Company, any of the Subsidiaries or any other party in connection with the
ordinary use of residential, retail or commercial properties owned by the
Operating Partnership; (ii) the Operating Partnership and the Company do not
intend to use the Real Property or any subsequently acquired properties for the
purpose of using, handling, storing, treating, transporting, manufacturing,
spilling, leaking, discharging, dumping, transferring or otherwise disposing of
or dealing with Hazardous Materials other than by any such action taken in
compliance with all applicable Environmental Statues or by the Operating
Partnership, the Company, any of the Subsidiaries or any other party in
connection with the ordinary use of residential, retail or commercial properties
owned by the Operating Partnership; (iii) none of the Operating Partnership, the
Company, nor any of the Subsidiaries knows of any seepage, leak, discharge,
release, emission, spill, or dumping of Hazardous Materials into waters on or
adjacent to the Real Property or any other real property owned or occupied by
any such party, or onto lands from which Hazardous Materials might seep, flow or
drain into such waters; (iv) none of the Operating Partnership, the Company, nor
any of the Subsidiaries has received any notice of, or has any knowledge of any
occurrence or circumstance that, with notice or passage of time or both, would
give rise to a claim under or pursuant to any federal, state or local
environmental statute, regulation or rule or under common law, pertaining to
Hazardous Materials on or originating from any of the Real Property or any
assets described in the Prospectus or any other real property owned or occupied
by any such party or arising out of the conduct of any such party, including
without limitation a claim under or pursuant to any Environmental Statute; (v)
the Real Property is not included or, to the Company's and the Operating
Partnership's knowledge, proposed for inclusion on the National Priorities List
issued pursuant to CERCLA (as hereinafter defined) by the United States
Environmental Protection Agency (the "EPA") or, to the Operating Partnership's
and the Company's knowledge, proposed for inclusion on any similar list or
inventory issued pursuant to any other Environmental Statute or issued by any
other Governmental Authority (as hereinafter defined); (vi) in the operation of
the Company's and the Operating Partnership's businesses, the Company acquires,
before acquisition of any real property, an environmental assessment of the real
property and, to the extent they become aware of any condition that could
reasonably be expected to result in liability associated with the presence or
release of a Hazardous Material, or any violation or potential violation of any
Environmental Statute, the Company and the Operating Partnership take all
commercially reasonable action necessary or advisable (including any capital
improvements) for clean up, closure or other compliance with such Environmental
Statute;
As used herein, "Hazardous Material" includes, without limitation any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes,
- 15 -
toxic substances, or related materials, asbestos or any hazardous material as
defined by any federal, state or local environmental law, regulation or rule
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Sections
9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Sections 1801-1819, the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances
Control Act, 15 U.S.C. Sections 2601-2671, the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C.
Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control Act),
33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections
300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. Sections
651-678, as any of the above statutes may be amended from time to time, and in
the regulations promulgated pursuant to each of the foregoing (individually, an
"Environmental Statute" and collectively the "Environmental Statutes") or by any
federal, state or local governmental authority having or claiming jurisdiction
over the properties and assets described in the Prospectus (a "Governmental
Authority");
(uu) there are no costs or liabilities associated with the Real
Property pursuant to any Environmental Statute (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with any Environmental Statute or any permit, license
or approval, any related constraints on operating activities and any potential
liabilities to third parties) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(vv) none of the entities that prepared Phase I or other environmental
assessments with respect to the Real Property was employed for such purpose on a
contingent basis or has any substantial interest in the Company or any of the
Subsidiaries, and none of their directors, officers or employees is connected
with the Company or any of the Subsidiaries as a promoter, selling agent,
trustee, officer, director or employee;
(ww) (A) none of the Operating Partnership, the Company nor any
Subsidiary knows of any violation of any municipal, state or federal law, rule
or regulation (including those pertaining to environmental matters) concerning
the Real Property or any part thereof that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; (B) the Real
Property complies with all applicable zoning laws, ordinances, regulations and
deed restrictions or other covenants in all material respects and, if and to the
extent there is a failure to comply, such failure does not materially impair the
value of any of the Real Property and will not result in a forfeiture or
reversion of title; (C) none of the Operating Partnership, the Company nor any
Subsidiary has received from any governmental authority any written notice of
any condemnation of or zoning change affecting the Real Property or any part
thereof, and none of the Operating Partnership, the Company nor any Subsidiary
knows of any such condemnation or zoning change which is threatened and which,
individually or in the aggregate, if consummated could reasonably be expected to
have a Material Adverse Effect; (D) all liens, charges, encumbrances, claims, or
restrictions on or affecting the properties and assets (including the Real
Property) of the Operating Partnership or any of the Subsidiaries that are
required to be described in the Prospectus are disclosed therein;
- 16 -
(E) no lessee of any portion of any of the Real Property is in default under any
of the leases governing such properties and there is no event which, but for the
passage of time or the giving of notice or both would constitute a default under
any of such leases, except such defaults that individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; and (F) no
tenant under any lease pursuant to which the Operating Partnership or any of the
Subsidiaries leases any Real Property has an option or right of first refusal to
purchase the premises leased thereunder or the building of which such premises
are a part, except as such options or rights of first refusal that, individually
or in the aggregate, if exercised, could not reasonably be expected to have a
Material Adverse Effect;
(xx) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable or redeemable for Common Stock in a manner in
violation of the Securities Act; the Company has not distributed and will not
distribute any prospectus or other offering material, other than the Preliminary
Prospectus filed with the Commission on January 10, 2005, pursuant to Rule
424(b)(3) and the Prospectus in connection with the offer and sale of the
Shares;
(yy) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated;
(zz) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of the Subsidiaries
on the other hand, that is required by the Securities Act and the Securities Act
Regulations to be described in the Registration Statement and the Prospectus and
that is not so described;
(aaa) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(bbb) there are no existing or, to the knowledge of the Company or the
Operating Partnership, threatened labor disputes with the employees of the
Company or any of the Subsidiaries that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(ccc) commencing with the taxable year ending December 31, 2003, the
Company has been organized and operated in conformity with the requirements for
qualification as a real estate investment trust (a "REIT") under the Code, and
the current and proposed method of operation of the Company and the Subsidiaries
described in the Prospectus will enable the Company to meet the requirements for
qualification and taxation as a REIT under the Code, and the Operating
Partnership is treated as a partnership for federal income tax purposes and not
as a corporation or association taxable as a corporation; the Company intends to
continue to qualify as a REIT for all subsequent years, and the Company does not
know of any event that could reasonably be expected to cause the Company to fail
to qualify as a REIT at any time; and
- 17 -
(ddd) the conduct of business by the Company and the Subsidiaries as
presently and proposed to be conducted is not subject to continuing oversight,
supervision, regulation or examination by any governmental official or body of
the United States or any other jurisdiction wherein the Company or the
Subsidiaries conduct or propose to conduct such business, except as described in
the Prospectus and except such regulation as is applicable to commercial
enterprises generally.
4. Certain Covenants:
The Company and the Operating Partnership hereby, jointly and
severally, agree with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as requested by the Representatives for the distribution of the Shares;
provided that neither the Company nor the Operating Partnership shall be
required to qualify as a foreign corporation or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation as a foreign
corporation or partnership;
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representatives promptly and, if requested by
the Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) if required, to prepare a Prospectus in a form reasonably approved
by the Underwriters and file such Prospectus with the Commission pursuant to
Rule 424(b) under the Securities Act not later than 10:00 a.m. (New York City
time), on the second day following the execution and delivery of this Agreement
or on such other day as the parties may mutually agree and to furnish promptly
(and with respect to the initial delivery of such Prospectus, not later than
10:00 a.m. (New York City time)) on the second day following the execution and
delivery of this Agreement, or on such other day as the parties may mutually
agree, to the Underwriters copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement) in
such quantities and at such locations as the Underwriters may reasonably request
for the purposes contemplated by the Securities Act Regulations, which
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the version created to be transmitted to the
Commission for filing via EDGAR, except to the extent permitted by Regulation
S-T;
(d) to advise the Representatives promptly and, if requested by the
Representatives, to confirm such advice in writing, when the Registration
Statement has
- 18 -
become effective and when any post-effective amendment thereto becomes effective
under the Securities Act Regulations;
(e) to advise the Representatives immediately, and, if requested by the
Representatives, confirming such advice in writing, of (i) the receipt of any
comments from, or any request by, the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional information with
respect thereto, or (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes and, if the Commission or any other
government agency or authority should issue any such order, to make every
reasonable effort to obtain the lifting or removal of such order as soon as
possible; and to advise the Representatives promptly of any proposal to amend or
supplement the Registration Statement or Prospectus and to file no such
amendment or supplement to which the Representatives shall reasonably object in
writing;
(f) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of shares of
Common Stock not publicly available, (ii) as soon as practicable after the
filing thereof, copies of all reports filed by the Company with the Commission,
the NASD or any securities exchange not publicly available and (iii) such other
information not publicly available as the Underwriters may reasonably request
regarding the Company, the Operating Partnership and the Subsidiaries;
(g) to advise the Underwriters promptly of the happening of any event
known to the Company or the Operating Partnership within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Securities Act or the Securities Act Regulations that, in the judgment of the
Company or in the reasonable opinion of the Representatives or counsel for the
Underwriters, would require the making of any change in the Prospectus then
being used so that the Prospectus would not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus to comply with the Securities Act and the
Securities Act Regulations and, during such time, to promptly prepare and
furnish to the Underwriters copies of the proposed amendment or supplement
before filing any such amendment or supplement with the Commission and
thereafter promptly furnish at the Company's own expense to the Underwriters and
to dealers, copies in such quantities and at such locations as the
Representatives may from time to time reasonably request of an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the Securities Act and the Securities Act Regulations;
- 19 -
(h) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish for review a copy
thereof to the Representatives and counsel for the Underwriters and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(j) to furnish promptly to the Representatives a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(k) to furnish to the Representatives, not less than one business day
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period in which a Prospectus relating to the Shares is
required to be delivered under the Securities Act or the Securities Act
Regulations, a copy of any document proposed to be filed with the Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act and during such period
to file all such documents in the manner and within the time periods required by
the Exchange Act and the Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus;
(m) to make generally available to its security holders and to deliver
to the Representatives as soon as practicable, but in any event not later than
45 days after the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement (or later than
90 days, if such fiscal quarter is the last fiscal quarter of the Company's
fiscal year) an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act (in such form, at the option of the Company, as complies with
Rule 158 under the Securities Act Regulations) covering a period of 12 months
beginning after the effective date of the Registration Statement;
(n) to use its best efforts to maintain the listing of the Shares on
the New York Stock Exchange and to file with the New York Stock Exchange all
documents and notices required by the New York Stock Exchange of companies that
have securities that are traded on the New York Stock Exchange;
(o) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
(p) to refrain during a period of 45 days from the date of the
Prospectus, without the prior written consent of the Representatives, from,
directly or indirectly, (i) offering, pledging, selling, contracting to sell,
selling any option or contract to purchase,
- 20 -
purchasing any option or contract to sell, granting any option for the sale of,
or otherwise disposing of or transferring (or entering into any transaction or
device which is designed to, or could be expected to, result in the disposition
by any person at any time in the future of), any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock,
including Units, or filing any registration statement under the Securities Act
with respect to any of the foregoing, or (ii) entering into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of Common Stock, whether
any such swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise; provided, however, that the foregoing sentence shall not apply to
Shares to be sold hereunder or to shares sold to Security Capital Preferred
Growth Incorporated pursuant to the Series B Cumulative Convertible Redeemable
Preferred Stock Purchase Agreement dated as of December 27, 2004, among Security
Capital Preferred Growth Incorporated, the Company and the Operating
Partnership;
(q) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly, prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(r) that the Company shall (i) obtain or maintain, as appropriate,
Directors and Officers liability insurance in the minimum amount of $20,000,000,
which shall apply to the offering contemplated herein and (ii) cause the
Representatives to be added to such policy such that its expenses pursuant to
Section 9(a) shall be paid directly by such insurer and (iii) shall cause the
Representatives to be added as additional insureds to such policy in respect of
the offering contemplated herein;
(s) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement and will file with the Commission
such reports as may be required pursuant to Rule 463 of the Securities Act
Regulations;
(t) that the Company will continue to use its best efforts to meet the
requirements to qualify as a REIT under the Code for each of the taxable years
in the period ending December 31, 2008; and
(u) that the Company will not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of its Subsidiaries to register as an investment
company under the Investment Company Act.
- 21 -
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with: (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment); (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters; (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment); (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representatives have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
reasonable legal fees and other disbursements of counsel for the Underwriters,
not to exceed $5,000 related thereto), and the printing and furnishing of copies
of any blue sky surveys or legal investment surveys to the Underwriters and to
dealers; (v) filing for review of the public offering of the Shares by the NASD
(including the reasonable legal fees and other disbursements of counsel for the
Underwriters, not to exceed $5,000, relating thereto); (vi) the fees and
expenses of any transfer agent or registrar for the Shares and miscellaneous
expenses referred to in the Registration Statement; (vii) the fees and expenses
incurred in connection with the inclusion of the Shares in the New York Stock
Exchange; (viii) all costs and expenses incident to the travel and accommodation
of employees of the Company in making road show presentations with respect to
the offering of the Shares; (ix) costs and expenses of any internet road show;
(x) preparing and distributing bound volumes of transaction documents for the
Representatives and their legal counsel; and (xi) the performance of the
Company's and the Operating Partnership's other obligations hereunder. Upon the
request of the Representatives, the Company will provide funds in advance for
filing fees. The Company agrees that the Underwriters may deduct from the
aggregate purchase price for the Initial Shares or the Option Shares otherwise
payable to the Company pursuant to this Agreement the amounts for which the
Representatives are entitled to reimbursement pursuant to this subsection (a)
and any additional amounts the Representatives incur on behalf of the Company
that are payable by the Company pursuant to this subsection (a).
(b) If this Agreement shall be terminated by the Underwriters, or any
of them, pursuant to clause (i) of Section 7, the Company will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (such as
printing, facsimile, courier service, direct computer expenses, accommodations,
travel and the fees and disbursements of Underwriters' counsel) and any other
advisors, accountants, appraisers, etc. reasonably incurred by such Underwriters
in connection with this Agreement or the transactions contemplated herein.
- 22 -
6. Conditions of the Underwriters' Obligations:
The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company and
the Operating Partnership hereunder on the date hereof and at the Closing Time
and on each Date of Delivery, as applicable (as if made on and as of such date),
the performance by the Company and the Operating Partnership of their respective
obligations hereunder and the satisfaction of the following further conditions
at the Closing Time or on each Date of Delivery, as applicable:
(a) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of Andrews & Kurth L.L.P., counsel
for the Company and the Subsidiaries, addressed to the Underwriters and dated
the Closing Time and each Date of Delivery and in form and substance
satisfactory to Alston & Bird LLP, counsel for the Underwriters, stating that:
(i) the outstanding shares of capital stock, partnership
interests, membership interests or other equity interests, as
applicable, of the Subsidiaries (other than the Operating Partnership)
have been duly and validly authorized and issued and are fully paid
and, with respect to shares of capital stock, limited partnership
interests and membership interests, non-assessable (except to the
extent such non-assessability may be affected by Section 17-607 of the
Delaware Revised Uniform Limited Partnership Act or Section 18-607 of
the Delaware Limited Liability Company Act), and, except as set forth
on a schedule, all of the outstanding shares of capital stock,
partnership interests, membership interests or other equity interests,
as applicable, of the Subsidiaries are directly or indirectly owned of
record and beneficially by the Company, free and clear of any security
interest perfected by the filing of a financing statement with the
Secretary of State of the State of Delaware pursuant to the Uniform
Commercial Code of the State of Delaware naming a Subsidiary as
debtor, other than as specifically set forth in such counsel's
opinion; and except with respect to Units and Preferred Units (as
defined below) convertible into common stock pursuant to the
Partnership Agreement or pursuant to an agreement disclosed on a
schedule, to such counsel's knowledge, there are no outstanding (a)
securities or obligations of the Company or any of the Subsidiaries
convertible into or exchangeable for any capital stock, partnership
interests, membership interests or other equity interests, as
applicable, of the Company or any such Subsidiary, (b) warrants,
rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock, partnership interests,
membership interests or other equity interests, as applicable, or any
such convertible or exchangeable securities or obligations, or (c)
obligations of the Company or any such Subsidiary to issue any shares
of capital stock, partnership interests, membership interests or other
equity interests, as applicable, or any such convertible or
exchangeable securities or obligation, or any such warrants, rights or
options;
(ii) each of the Subsidiaries has been duly incorporated
or formed and is validly existing as a corporation, limited
partnership or limited liability
-23-
company, as the case may be, in good standing under the laws of its
respective jurisdiction of incorporation or formation with full
corporate, limited partnership or limited liability company power and
authority to own its respective properties and to conduct its
respective businesses as described in the Prospectus and, as
applicable, to execute and deliver this Agreement and to consummate
the transactions described herein;
(iii) the Company and each of the Subsidiaries are duly
qualified and are in good standing in each jurisdiction set forth
opposite their respective names on a schedule to counsel's opinion
letter; except as disclosed in the Prospectus, no Subsidiary is
prohibited or restricted, directly or indirectly, from paying
dividends to the Company, or from making any other distribution with
respect to such Subsidiary's capital stock, partnership interests,
membership interests or other equity interests, as applicable, or from
repaying to the Company or any other Subsidiary any amounts which may
from time to time become due under any loans or advances to such
Subsidiary from the Company or such other Subsidiary, or from
transferring any such Subsidiary's property or assets to the Company
or to any other Subsidiary;
(iv) to such counsel's knowledge, neither the Company nor
any of the Subsidiaries is in violation of any term or provision of
its organizational documents, is in breach of, or in default under
(nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default under), any license,
indenture, mortgage, deed of trust, loan or credit agreement or any
other agreement or instrument identified on a schedule to such
counsel's opinion or under any law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the
Subsidiaries, except such breaches or defaults that would not have a
Material Adverse Effect;
(v) the execution, delivery and performance of this
Agreement by the Company and the Operating Partnership and the
consummation by the Company and the Operating Partnership of the
transactions contemplated by this Agreement do not and will not
conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of or default under), (i) any
provisions of the charter or bylaws or other organizational documents
of the Company, the Operating Partnership or any other Subsidiary,
(ii) any provision of any license, indenture, mortgage, deed of trust,
loan credit or other agreement or instrument identified on a schedule
to such counsel's opinion, (iii) any law or regulation binding upon or
applicable to the Company, the Operating Partnership or any other
Subsidiary or any of their respective properties or assets, or (iv)
any decree, judgment or order known to such counsel to be applicable
to the Company, the Operating Partnership or any other Subsidiary;
(vi) this Agreement has been duly authorized, executed
and delivered by the Company and the Operating Partnership;
-24-
(vii) no approval, authorization, consent or order of or
filing with any federal or state governmental or regulatory
commission, board, body, authority or agency is required in connection
with the execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated herein, and the sale and
delivery of the Shares by the Company as contemplated herein, other
than such as have been obtained or made under the Securities Act and
the Securities Act Regulations and the Exchange Act and Exchange Act
Regulations, and except as (A) may be required under the state
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters, or (B) may be required
by the NASD;
(viii) the Company is not subject to registration as an
investment company under the Investment Company Act, and the
transactions contemplated by this Agreement will not cause the Company
to become an "investment company" within the meaning of the Investment
Company Act;
(ix) the issuance and sale of the Initial Shares (or the
Option Shares, as applicable) by the Company is not subject to
preemptive or other similar rights arising under any agreement known
to such counsel to which the Company or any of the Subsidiaries is a
party, other than the participation rights granted to Security Capital
Preferred Growth Incorporated pursuant to the Series B Cumulative
Convertible Redeemable Preferred Stock Purchase Agreement dated as of
December 27, 2004, among Security Capital Preferred Growth
Incorporated, the Company and the Operating Partnership;
(x) all of the issued and outstanding Units and
preferred units of limited partnership interest (the "Preferred
Units") have been duly authorized and validly issued, and are fully
paid in accordance with the Partnership Agreement; none of such Units
or Preferred Units will have been issued or sold in violation of
preemptive or similar rights arising by operation of law, under the
Partnership Agreement or under any other agreement known to such
counsel to which the Operating Partnership is a party; and the Units
to be issued to the Company in connection with the Company's sale of
the Shares have been duly authorized and upon the Company's
contribution of the net proceeds from the sale of the Shares will be
validly issued and fully paid in accordance with the Partnership
Agreement, and the issuance of such Units is not subject to preemptive
or similar rights arising by operation of law, under the Partnership
Agreement or under any other agreement known to such counsel to which
the Operating Partnership is a party;
(xi) except as disclosed in the Prospectus, to such
counsel's knowledge, there are no persons with registration or other
similar rights to have any equity or debt securities, including
securities that are convertible into or exchangeable for equity
securities, registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act, except
for those registration or similar rights that have been waived or that
are inapplicable with respect to the offering contemplated by this
Agreement;
-25-
(xii) the Shares have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance;
(xiii) the form of certificate used to evidence the Shares
complies in all material respects with the requirements of the New
York Stock Exchange;
(xiv) the Registration Statement has been declared
effective under the Securities Act and, to such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued and, to such counsel's knowledge, no
proceedings with respect thereto have been commenced or threatened;
any required filing of the Prospectus or any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the
manner and the time period required by Rule 424(b);
(xv) as of the effective date of the Registration
Statement and as of the date hereof, the Registration Statement and,
as of its issue date, the Prospectus (except as to the financial
statements, notes and related schedules and other related financial
and accounting data contained therein, as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the Securities Act and the Securities Act
Regulations (including Form S-3);
(xvi) the documents incorporated by reference in the
Registration Statement or the Prospectus (except as to the financial
statements, notes and related schedules and other related financial
and accounting data contained therein, as to which such counsel need
express no opinion), at the time they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Exchange Act and the
Exchange Act Regulations;
(xvii) the statements under the captions "Additional
Federal Income Tax Consequences," "Risk Factors -- Risks Related to
Our Business -- Tax indemnification obligations that apply in the
event that we sell certain properties could limit our operating
flexibility," "Risk Factors -- Risks Related to Our Status as a REIT,"
"Description of our Capital Stock" (except for matters relating to
Maryland law), "Partnership Agreement," and "Federal Income Tax
Consequences of our Status as a REIT" in the Prospectus, insofar as
such statements constitute a summary of the legal matters, proceedings
or documents referred to therein, constitute accurate summaries
thereof in all material respects;
(xviii) to such counsel's knowledge, there are no actions,
suits or proceedings, inquiries, or investigations pending or
threatened against the Company or any of the Subsidiaries or any of
their respective officers and directors or to which the properties,
assets or rights of any such entity are subject, at law or in equity,
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or
agency that are required to be disclosed in the Prospectus but are not
so disclosed;
-26-
(xix) all descriptions in the Registration Statement or
the Prospectus of contracts and other documents identified on a
schedule are accurate in all material respects; to such counsel's
knowledge, there are no contracts or documents of a character that are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement, the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 2004, the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2004, the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2004, or any Current Report on Form 8-K of the Company
incorporated into the Prospectus that have not been so filed or
described, and all such descriptions, in all material respects, fairly
and accurately set forth the information called for with respect to
such contracts and documents;
(xx) commencing with its taxable year ending December 31,
2003, the Company has been organized in conformity with the
requirements for qualification and taxation as a REIT under the Code,
and its present and proposed method of operation will enable it to
meet the requirements for qualification and taxation as a REIT under
the Code; and
(xxi) the Operating Partnership is classified as a
partnership for federal income tax purposes and not as an association
taxable as a corporation or a "publicly traded partnership" taxable as
a corporation under the Code.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, and representatives of the Representatives,
at which the contents of the Registration Statement and Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except as and to the
extent expressly specified above), and based on the foregoing (relying as to
factual matters in respect of the determination of materiality upon the
statements of fact made by officers and other representatives of the Company),
no facts have come to such counsel's attention that have led such counsel to
believe that the Registration Statement, at the time such Registration Statement
became effective, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date or as of the date of
such counsel's opinion, the Prospectus contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Such counsel, however, need not express a
belief with respect to the financial statements and notes and related schedules
and other related financial and accounting data included in the Registration
Statement or in the Prospectus or any further amendment or supplement thereto.
(b) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of Hogan & Hartson LLP, special
Maryland counsel of the Company, addressed to the Underwriters and dated the
Closing Time and each Date
-27-
of Delivery and in form and substance satisfactory to Alston & Bird LLP,
counsel for the Underwriters, stating that:
(i) the Company is a corporation duly incorporated and,
as of the date of the certificate delivered at Closing, validly
existing and in good standing under the laws of the State of Maryland;
(ii) the Company has the corporate power to own its
properties and to conduct its businesses as described in the
Prospectus and to execute, deliver and perform this Agreement;
(iii) the authorized capital stock of the Company consists
of 200 million shares of common stock, par value $.01 per share, and
50 million shares of Preferred Stock;
(iv) the Initial Shares (or Option Shares, as applicable)
have been duly authorized and, when issued in accordance with the
provisions of this Agreement, will be validly issued, fully paid and
non-assessable;
(v) no holder of outstanding shares of Common Stock or
Preferred Stock has any statutory preemptive right under the Maryland
General Corporation Law or any similar right under the charter or
bylaws of the Company to subscribe for any of the Shares;
(vi) this Agreement has been duly authorized, executed
and delivered on behalf of the Company;
(vii) the form of certificate evidencing the Shares
complies with the requirements of Section 2-211 of the Maryland
General Corporation Law and the Company's charter and bylaws;
(viii) the Shares conform as to legal matters in all
material respects to the description thereof set forth in the
Prospectus under the caption "Description of our Common Stock"; the
statements under the captions "Risk Factors -- Risk Factors Related to
Our Corporate Structure -- Our charter does not permit ownership in
excess of 9.8% of our capital stock, and attempts to acquire our
capital stock in excess of the 9.8% limit without prior approval from
our board of directors are void," "Risk Factors -- Risk Factors
Related to Our Corporate Structure -- Because provisions contained in
Maryland law and our charter may have an anti-takeover effect,
investors may be prevented from receiving a 'control premium' for
their shares," "Description of Capital Stock" (to the extent related
to Maryland law), "Description of our Common Stock," "Description of
our Preferred Stock," "Description of Maryland Law and of Our Charter
and Bylaws," in the Prospectus and under Item 15 of the Registration
Statement, to the extent that such information constitutes matters or
summaries of law or summaries of the Company's charter or bylaws or
constitutes legal conclusions, has been reviewed by us, and is correct
in all material respects;
-28-
(ix) the execution, delivery and performance on the date
hereof by the Company of this Agreement does not (i) violate the
Maryland General Corporation Law or the charter or bylaws of the
Company, (ii) violate any provision of the Maryland General
Corporation Law, or (iii) violate any court or administrative order,
judgment, or decree listed on a schedule to be delivered with the
opinion that names the Company and is specifically directed to it or
any of its property; and
(x) no approval or consent of, or registration or filing
with, any Maryland regulatory agency is required to be obtained or
made by the Company under the Maryland General Corporation Law in
connection with the execution, delivery and performance on the date
hereof by the Company of the Agreement.
(c) The Representatives shall have received from Ernst & Young
LLP, Holland Shipes Vann, P.C., and Berdon LLP, letters dated, respectively, as
of the date of this Agreement, the Closing Time and each Date of Delivery, as
the case may be, addressed to the Representatives, in form and substance
satisfactory to the Representatives, relating to the combined financial
statements, including pro forma financial statements, of the Company (and its
accounting predecessor), and such other matters customarily covered by comfort
letters issued in connection with registered public offerings.
(d) The Representatives shall have received at the Closing Time
and on each Date of Delivery the favorable opinion of Alston & Bird LLP, dated
the Closing Time or such Date of Delivery, addressed to the Representatives and
in form and substance satisfactory to the Representatives.
(e) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have
reasonably objected in writing.
(f) Prior to the Closing Time and each Date of Delivery (i) no
stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus has been issued, and no proceedings for such purpose shall have been
initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representatives; and (iii) the Registration Statement and the Prospectus shall
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(g) All filings with the Commission required by Rule 424 and Rule
430A under the Securities Act to have been filed by the Closing Time shall have
been made within the applicable time period prescribed for such filing by such
Rule.
(h) Between the time of execution of this Agreement and the
Closing Time or the relevant Date of Delivery there shall not have been any
change, or any development or
-29-
event that reasonably could be expected to result in a change, that has or
reasonably could be expected to have a Material Adverse Effect, whether or not
arising in the ordinary course of business, and (ii) no transaction that is
material and unfavorable to the Company shall have been entered into by the
Company or any of the Subsidiaries, in each case, that in the Representatives'
sole judgment, makes it impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Registration Statement.
(i) The Shares shall have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance. (j) The NASD
shall not have raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(k) The Representatives shall have received lock up agreements
from each executive officer and director of the Company substantially in the
form provided by the Representatives to the Company.
(l) The Representatives shall have received at or before the
applicable Closing Time and on the applicable Date of Delivery, a certificate
of the Company's Chairman of the Board, Chief Executive Officer, President,
Chief Operating Officer or Vice President and Chief Accounting Officer or Chief
Financial Officer, to the effect that:
(i) the representations and warranties of the Company
and the Operating Partnership in this Agreement are true and correct,
as if made on and as of such date, and the Company and the Operating
Partnership have complied with all the agreements and satisfied all
the conditions on their part to be performed or satisfied at or prior
to the date hereof;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto has
been issued and no proceedings for that purpose have been instituted
or are pending or threatened under the Securities Act; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any change, or any development or event that
reasonably could be expected to result in a change, that has or
reasonably could be expected to have a Material Adverse Effect,
whether or not arising in the ordinary course of business, (b) any
transaction that is material to the Company and the Subsidiaries
considered as one enterprise, (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries
considered as one enterprise, incurred by the Company or the
Subsidiaries, (d) any change in the capital stock or outstanding
indebtedness of the Company or any Subsidiary that is material to the
Company and the Subsidiaries considered as one enterprise, (e) any
dividend or distribution of any kind declared, paid or made on the
capital stock or other equity interests of the Company or any
Subsidiary, or (f) any loss or damage (whether or not insured) to the
property of the Company or any Subsidiary that has been sustained or
will
-30-
have been sustained that has or may reasonably be expected to have a
Material Adverse Effect.
(m) The Company and the Operating Partnership shall have
furnished to the Underwriters such other documents and certificates as to the
accuracy and completeness of any statement in the Registration Statement and
the Prospectus, the representations, warranties and statements of the Company
or the Operating Partnership contained herein, and the performance by the
Company and the Operating Partnership of their covenants contained herein, and
the fulfillment of any conditions contained herein, as of the Closing Time or
any Date of Delivery, as the Underwriters may reasonably request.
7. Termination:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any time
prior to any Closing Time or Date of Delivery, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if, in the judgment of the
Representatives, there has been since the respective dates as of which
information is given in the Registration Statement, any change, or any
development or event that reasonably could be expected to result in a change,
that has or reasonably could be expected to have a Material Adverse Effect, or
any material change in management of the Company, whether or not arising in the
ordinary course of business, or (iii) if there has occurred any outbreak or
escalation of hostilities or other national or international calamity or crisis
(including, without limitation, any terrorist or similar attack) or change in
national or international economic, political or other conditions, the effect of
which on the financial markets of the United States is such as to make it, in
the judgment of the Representatives, impracticable to market the Shares or
enforce contracts for the sale of the Shares, or (iv) if trading in any
securities of the Company has been suspended by the Commission or by the New
York Stock Exchange, or if trading generally on the New York Stock Exchange, the
American Stock Exchange or in the Nasdaq over-the-counter market has been
suspended (including an automatic halt in trading pursuant to market-decline
triggers, other than those in which solely program trading is temporarily
halted), or limitations on prices for trading (other than limitations on hours
or numbers of days of trading) have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or the NASD or the
over-the-counter market or by order of the Commission or any other governmental
authority, or (v) a general banking moratorium shall have been declared by any
federal, Maryland, New York or Texas authorities, or (vi) if there has been any
downgrade in the rating of any of the Company's debt securities or preferred
stock by any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Securities Act), or (vii) any federal or
state statute, regulation, rule or order of any court or other governmental
authority has been enacted, published, decreed or otherwise promulgated that, in
the reasonable opinion of the Representatives, will have a Material Adverse
Effect.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
-31-
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representatives shall have the right,
within 48 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 48-hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (ii) if the total number of Defaulted
Shares exceeds 10% of such total, the Representatives may terminate this
Agreement by notice to the Company, without liability of any party to any other
party (other than the defaulting Underwriter), except that the provisions of
Sections 5 and 9 hereof shall at all times be effective and shall survive such
termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
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9. Indemnity and Contribution by the Company, the Operating
Partnership and the Underwriters:
(a) The Company and the Operating Partnership, jointly and
severally, agree to indemnify, defend and hold harmless each Underwriter and
any person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
expense, liability, damage or claim (including the reasonable cost of
investigation) that, jointly or severally, any such Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability, damage or claim arises out of or is
based upon (A) any breach of any representation, warranty or covenant of the
Company or the Operating Partnership contained herein, (B) any failure on the
part of the Company or the Operating Partnership to comply with any applicable
law, rule or regulation relating to the offering of securities being made
pursuant to the Prospectus, (C) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus (the term Prospectus for the purpose of this Section 9 being deemed
to include each Preliminary Prospectus), or (D) any omission or alleged
omission to state a material fact required to be stated in any such
Registration Statement or Prospectus or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading; except insofar as any such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in and
in conformity with information furnished in writing by the Underwriters through
the Representatives to the Company expressly for use in such Registration
Statement or Prospectus; and except that, with respect to a Preliminary
Prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, expense, liability,
damage or claim purchased Shares, or any person controlling such Underwriter,
if copies of the Prospectus were timely delivered to the Underwriter pursuant
to Section 1 hereof and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, expense, liability, damage or claim. The indemnity agreement
set forth in this Section 9(a) shall be in addition to any liabilities that the
Company and the Operating Partnership may otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company and the Operating
Partnership shall assume the defense of such action, including the employment of
counsel and payment of expenses; provided, however, that any failure or delay to
so notify the Company will not relieve the Company or the Operating Partnership
of any obligation hereunder, except to the extent that their ability to defend
is actually impaired by such failure or delay. Such Underwriter or controlling
person shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless the employment of such counsel
shall
-33-
have been authorized in writing by the Company in connection with the defense
of such action, or the Company and the Operating Partnership shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company and the Operating Partnership (in which case neither the Company nor
the Operating Partnership shall have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the Company and the Operating
Partnership and paid as incurred (it being understood, however, that the
Company shall not be liable for the expenses of more than one separate firm of
attorneys for the Underwriters or controlling persons in any one action or
series of related actions in the same jurisdiction (other than local counsel in
any such jurisdiction) representing the indemnified parties who are parties to
such action).
(b) Each Underwriter agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, the Operating Partnership, the
Company's directors, the Company's officers that signed the Registration
Statement, and any person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) that, jointly or severally, the Company, the Operating
Partnership or any such person may incur under the Securities Act, the Exchange
Act or otherwise, but only insofar as such loss, expense, liability, damage or
claim arises out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by such Underwriter through the Representatives to the
Company expressly for use in the Registration Statement or the Prospectus, or
(B) any omission or alleged omission to state a material fact in connection
with such information required to be stated either in such Registration
Statement or Prospectus or necessary to make such information, in the light of
the circumstances under which made, not misleading; provided, however, that the
statements set forth in the table in the first paragraph, the third paragraph,
the seventh paragraph, the eighth paragraph, and the ninth paragraph under the
caption "Underwriting" in the Prospectus constitute the only information
furnished by or on behalf of any Underwriter through the Representatives to the
Company for purposes of Section 3(m) and this Section 9. The indemnity
agreement set forth in this Section 9(b) shall be in addition to any
liabilities that such Underwriter may otherwise have.
If any action is brought against the Company, the Operating Partnership
or any such person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, the Operating
Partnership or such person shall promptly notify the Representatives in writing
of the institution of such action and the Representatives, on behalf of the
Underwriters, shall assume the defense of such action, including the employment
of counsel and payment of expenses. The Company, the Operating Partnership or
such person shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of the Company,
the Operating Partnership or such person unless the employment of such counsel
shall have been authorized in writing by the Representatives in connection with
the defense of such action or the Representatives shall not have
-34-
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them that are different from or additional to those available to the
Underwriters (in which case the Representatives shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by such
Underwriter and paid as incurred (it being understood, however, that the
Underwriters shall not be liable for the expenses of more than one separate
firm of attorneys in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action).
(c) The indemnifying party under this Section 9 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify (to the extent
provided in this Section 9) the indemnified party against any loss, claim,
damage, liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) or (c) of this Section 9 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Operating Partnership and by the Underwriters from the offering
of the Shares or (ii) if (but only if) the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Company and the Operating Partnership and of the
Underwriters in connection with the statements or omissions that resulted in
such losses, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Operating Partnership and by the Underwriters shall be deemed
to be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company (which, for purposes of this subsection, account for the
relative benefits received by the Operating Partnership) bear to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of the Company and the Operating Partnership and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue statement or alleged untrue statement of a material fact or omission
or alleged omission relates to information supplied by the Company or the
Operating Partnership or by the Underwriters and the parties' relative intent,
knowledge, access to information and
-35-
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
(e) The Company, the Operating Partnership and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
clause (i) and, if applicable clause (ii), of subsection (d) above.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint. For purposes of this Section
9, each officer and employee of an Underwriter and each person, if any, who
controls an Underwriter within the meaning of the Section 15 of the Securities
Act and Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act shall have the same rights to
contribution as the Company.
10. Survival:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company and the Operating
Partnership contained in Sections 3, 4 and 5 of this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter, or any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, its directors and officers, the Operating Partnership
or any person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the sale and delivery of the Shares. The
Company, the Operating Partnership and each Underwriter agree promptly to notify
the others of the commencement of any litigation or proceeding against it and,
in the case of the Company, against any of the Company's officers and directors,
in connection with the sale and delivery of the Shares, or in connection with
the Registration Statement or Prospectus.
11. Notices:
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Wachovia Capital Markets,
LLC, 7 St. Paul Street, 1st Floor, Baltimore, Maryland 21202, or if to the
Company or the Operating Partnership
-36-
shall be sufficient in all respects if delivered to the Company at the offices
of the Company at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254.
12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company, the Operating Partnership and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
[signatures on next page]
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If the foregoing correctly sets forth the understanding among the
Company, the Operating Partnership and the Underwriters, please so indicate in
the space provided below for the purpose, whereupon this Agreement shall
constitute a binding agreement among the Company, the Operating Partnership and
the Underwriters.
Very truly yours,
ASHFORD HOSPITALITY TRUST, INC.
By: /s/ David A. Brooks
-----------------------------------
Name: David A. Brooks
Title: Chief Legal Officer
ASHFORD HOSPITALITY LIMITED PARTNERSHIP
By: Ashford OP General Partner LLC,
its sole general partner
By: Ashford Hospitality Trust, Inc.,
its sole member
By: /s/ David A. Brooks
-----------------------------------
Name: David A. Brooks
Title: Chief Legal Officer
-38-
Accepted and agreed to as of
the date first above written:
WACHOVIA CAPITAL MARKETS, LLC
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By: Wachovia Capital Markets, LLC,
on behalf of the Representatives
By: /s/ Mark Waxman
--------------------------------
Name: Mark Waxman
Title: Director
For themselves and as Representatives
of the other Underwriters named on
Schedule I hereto.
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Schedule I
Number of Initial
Shares to be Option Shares,
Underwriter Purchased if any
- ----------- ----------------- --------------
Wachovia Capital Markets, LLC 2,700,000 405,000
Friedman, Billings, Ramsey & Co., Inc. 2,700,000 405,000
A.G. Edwards & Sons, Inc. 1,125,000 168,750
Legg Mason Wood Walker, Incorporated 1,125,000 168,750
Calyon Securities (USA) Inc. 450,000 67,500
JMP Securities LLC 450,000 67,500
Stifel, Nicolaus & Company, Incorporated 450,000 67,500
Total........................................... 9,000,000 1,350,000
========= =========
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