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EXHIBIT 1
5,000,000 Depositary Shares
FELCOR SUITE HOTELS, INC.
EACH REPRESENTING 1/100 OF A SHARE OF 9%
SERIES B CUMULATIVE REDEEMABLE PREFERRED STOCK
PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
April 30, 1998
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April 30, 1998
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
FelCor Suite Hotels, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters"), an aggregate of 5,000,000 depositary shares (the
"Depositary Shares"), each representing 1/100 of a share of 9% Series B
Cumulative Redeemable Preferred Stock, $.01 par value per share (the
"Preferred Stock") of the Company. Morgan Stanley & Co. Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Prudential Securities Incorporated
and Smith Barney Inc. shall act as representatives (the "Representatives") of
the several Underwriters.
The Depositary Shares will be issued by SunTrust Bank, Atlanta, as
Depositary (the "Depositary"), under a Deposit Agreement dated as of May 7,
1998 (the "Deposit Agreement"), among the Company, the Depositary and the
holders from time to time of the Depositary Receipts issued thereunder. The
Depositary Shares will be evidenced by Depositary Receipts issued pursuant to
the Deposit Agreement (the "Depositary Receipts").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 750,000 depositary shares (the
"Additional Depositary Shares"), each representing 1/100 of a share of
Preferred Stock (the "Additional Preferred Stock"), if and to the extent that
the Representatives shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares granted to the Underwriters in
Section 2 hereof. Such Additional Depositary Shares will be issued by the
Depositary under the Deposit Agreement and will be evidenced by additional
depositary receipts (the "Additional Depositary Receipts") issued pursuant to
the Deposit Agreement. The Preferred Stock, the Additional Preferred Stock,
the Depositary Shares, the Additional Depositary Shares, the Depositary
Receipts and the Additional Depositary Receipts are described in the Prospectus
Supplement, which is referred to below, and are collectively referred to herein
as the "Securities."
Upon consummation of the transactions contemplated hereby and upon the
Company's contribution of the net proceeds from the sale of the Depositary
Shares, in exchange for units of
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partnership interest (the "Units") in FelCor Suites Limited Partnership, (the
"Partnership"), a Delaware limited partnership, the Company will own an
approximate 92.4% general partnership interest in the Partnership. As of April
17, 1998, the Partnership, directly or indirectly, owned interests in 76
hotels as described in the Prospectus, as defined herein (collectively, the
"Current Hotels"). On March 23, 1998, the Company entered into a merger
agreement (the "Merger Agreement") with Bristol Hotel Company ("Bristol") under
which the owned and leased hotel assets of Bristol will be merged with and into
the Company (the "Merger"). In addition, the Company has entered into an
agreement (the "Acquisition Agreement") as described in the Prospectus to
acquire eight additional hotels from an unaffiliated seller (such additional
hotels, along with the hotels being acquired in connection with the Merger
being hereinafter referred to as the "Acquisition Hotels") (the Current Hotels
and the Acquisition Hotels are hereinafter referred to as the "Hotels").
The Partnership leases the Current Hotels, and upon the purchase
thereof will lease eight of the Acquisition Hotels, to DJONT Operations, L.L.C.
or a subsidiary thereof (collectively, the "Lessee"), pursuant to separate
leases providing for the payment of certain base amounts (the "Percentage
Leases"). The Current Hotels are managed pursuant to separate management
agreements (collectively, the "Management Agreements"). The Partnership will
lease the remaining Acquisition Hotels to an affiliate of Bristol (the "Bristol
Lessee") pursuant to leases similar to the Percentage Leases (the "Bristol
Leases"). The Current Hotels are operated, and the Acquisition Hotels will be
operated, by the Lessee and the Bristol Lessee pursuant to the terms of the
Percentage Leases and the Bristol Leases, respectively. Other capitalized
terms used herein and not otherwise defined herein shall have the meaning set
forth in the Registration Statement (as hereinafter defined).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to
debt securities, preferred stock, depositary shares, common stock and common
stock warrants and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "Prospectus Supplement") specifically relating to
the Depositary Shares pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Securities Act"). The term "Registration Statement" means the
registration statement, including the exhibits thereto, as amended to the date
of this Agreement. The term "Basic Prospectus" means the prospectus included
in the Registration Statement. The term "Prospectus" means the Basic
Prospectus together with the Prospectus Supplement. The term "Preliminary
Prospectus" means a preliminary prospectus supplement specifically relating to
the Depositary Shares, together with the Basic Prospectus. As used herein, the
terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall
include in each case the documents, if any, incorporated by reference therein.
The terms "supplement" and "amendment" or "amend" as used herein shall include
all documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto.
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1. REPRESENTATIONS AND WARRANTIES. The Company and the
Partnership, jointly and severally, represent and warrant to and agree with
each of the Underwriters that:
(a) The Registration Statement has become effective; no
order preventing or suspending the use of any Preliminary Prospectus has been
issued and no proceeding for that purpose has been instituted or threatened by
the Commission or the securities authority of any state or other jurisdiction.
No stop order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceeding for that purpose has been
instituted or threatened or, to the best knowledge of the Company, contemplated
by the Commission or the securities authority of any state or other
jurisdiction.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements and conditions for using a registration
statement on Form S-3 under the Securities Act, set forth in the General
Instructions to Form S-3. When any Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements
of, the Securities Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was
declared effective, and on the Closing Date (or the Option Closing Date, as the
case may be, both as defined below) it (i) contained or will contain all
statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Securities
Act and the rules and regulations of the Commission thereunder and (ii) did not
or will not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading.
When the Prospectus or any amendment or supplement thereto is filed with the
Commission pursuant to Rule 424(b) and at the Closing Date (or the Option
Closing Date, as the case may be, both as defined below), the Prospectus, as
amended or supplemented at any such time, (i) contained or will contain all
statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Securities
Act and the rules and regulations of the Commission thereunder and (ii) did not
or will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representation and warranty in this paragraph (b) does not apply to statements
in or omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for use
therein.
(c) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder,
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any
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such document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and no such further document, when it is filed, will contain an
untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
Maryland with all requisite corporate power and authority to own and lease its
properties and to conduct its business. The Company has been duly qualified to
do business and is in good standing as a foreign corporation in each other
jurisdiction in which the ownership or leasing of its properties or the nature
or conduct of its business as now conducted requires such qualification, except
where the failure to do so would not have a material adverse effect on the
Company, the Partnership or the Hotels taken as a whole. The Company will be
duly qualified (at the time of the closing of the acquisition of the
Acquisition Hotels) in each jurisdiction in which the ownership or leasing of
its properties or the nature or conduct of its business requires such
qualification, except where the failure to do so would not have a material
adverse effect on the Company, the Partnership or any Hotels, taken as a whole.
Except for the entities listed on Schedule II hereto (the "Subsidiaries"), the
Company does not own or control, directly or indirectly, any corporation,
association or other entity. The Partnership owns the percentage equity
interests of each of the Subsidiaries as reflected on Schedule II. All of such
equity interests have been duly and validly authorized and issued and are fully
paid and are so owned free and clear of any pledge, lien, charge, encumbrance,
security interests, preemptive right or other claims.
(e) The Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Delaware Revised
Uniform Limited Partnership Act (the "Delaware Act") with all requisite
partnership power and authority to own and lease its properties and to conduct
its business. Each subsidiary of the Partnership has been duly formed and is
validly existing as a corporation, limited partnership or limited liability
company in good standing under the laws of its respective jurisdiction of
formation, except where the failure to do so would not have a material adverse
effect on the Company, the Partnership or the Hotels, taken as a whole. The
Partnership and its subsidiaries have been duly qualified or registered to do
business and are in good standing as foreign partnerships, corporations or
limited liability companies in each other jurisdiction in which the ownership
or leasing of their properties or the nature or conduct of their business as
now conducted requires such qualification, except where the failure to do so
would not have a material adverse effect on the Company, the Partnership or the
Hotels taken as a whole. The Partnership will be duly qualified (at the time
of the closing of the acquisition of the Acquisition Hotels) in each
jurisdiction in which the ownership or leasing of its properties or the nature
or conduct of its business requires such qualification, except where the
failure to do so would not have a material adverse effect on the Company, the
Partnership or the Hotels, taken as a whole. The Company is the sole general
partner of the Partnership, and at the Closing Date, will be the sole general
partner of the Partnership and will own an approximate 92.4% interest in the
Partnership. The Company owns all of the
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outstanding Series A Preferred Units in the Partnership and, upon issuance of
such units on the Closing Date, will own all of the outstanding Series B
Preferred Units in the Partnership.
(f) DJONT Operations, L.L.C. has been duly formed and is
validly existing as a limited liability company in good standing under the
Delaware Limited Liability Company Act. FCOAM, Inc. has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Texas. The Lessee has all requisite limited liability company or
corporate power and authority to own, lease and operate its properties and
conduct its business. Each subsidiary of DJONT Operations, L.L.C. (other than
FCOAM, Inc.) has been duly formed, is validly existing and is in good standing
under the laws of the State of Delaware. The Lessee and its subsidiaries have
been duly qualified to do business and are in good standing as a foreign
limited liability company or corporation in each other jurisdiction in which
the ownership or leasing of their properties or the nature or conduct of their
business as now conducted requires such qualification, except where the failure
to do so would not have a material adverse effect on the Lessee. The Lessee
will be duly qualified (at the time of the closing of the acquisition of the
Acquisition Hotels) in each jurisdiction in which the ownership or leasing of
its properties or the nature or conduct of its business requires such
qualification, except where the failure to do so would not have a material
adverse effect on the Lessee or the Hotels, taken as a whole.
(g) The Company has full legal right, power and authority
to enter into this Agreement, the Deposit Agreement and the amendment to the
articles of incorporation relating to the Preferred Stock (the "Articles
Supplementary"), to issue, sell and deliver the Securities as provided herein
and to consummate the transactions contemplated herein. This Agreement, the
Deposit Agreement and the Articles Supplementary have been duly authorized,
executed and delivered by the Company.
(h) The Partnership has full legal right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by the Partnership.
(i) The Company, the Partnership, and to the knowledge of
the Company and the Partnership, each of the other parties to the Amended and
Restated Agreement of Limited Partnership of the Partnership, as amended (the
"Partnership Agreement"), the Percentage Leases and the Management Agreements
have full legal right, power and authority to enter into each such agreement
and to consummate the transactions contemplated therein. Each such agreement
has been duly authorized, executed and delivered by the Company, the
Partnership, and to the knowledge of the Company and the Partnership, each of
the other parties. (This Agreement, the Deposit Agreement, the Articles
Supplementary, the Partnership Agreements, the New Percentage Leases (as
defined herein) and the New Management Agreements (as defined herein) sometimes
are hereinafter referred to collectively as the "Operative Documents").
(j) The Partnership and, to the knowledge of the Company
and the Partnership, each of the other parties to the Acquisition Agreement and
the Merger Agreement have full legal
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right, power and authority to enter into such agreements and to consummate the
transactions contemplated thereby. The Acquisition Agreement and the Merger
Agreement have been duly authorized, executed and delivered by the Company and,
to the Company's and the Partnership's knowledge, the other parties thereto and
constitute valid and binding agreements, enforceable in accordance with their
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general applicability relating to
or affecting creditors' rights or by general equity principles.
(k) Each consent, approval, authorization, order,
license, certificate, permit, registration, designation or filing by or with
any governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Securities, the execution, delivery and
performance of this Agreement, the Deposit Agreement and the Articles
Supplementary and the consummation by the Company and the Partnership of the
transactions contemplated hereby and thereby has been made or obtained and is
in full force and effect; provided, however, that the Articles Supplementary
have not been filed, but will be filed with the Maryland Department of
Assessments and Taxation on or before the Closing Date.
(l) Neither the issuance, sale and delivery by the
Company of the Securities, nor the execution, delivery and performance of this
Agreement, the Deposit Agreement or the Articles Supplementary nor the
consummation of the transactions contemplated hereby or thereby will conflict
with or result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or the passage of time or both)
constitute a default under, any of the Operative Documents, the articles of
incorporation (as amended by the Articles Supplementary), bylaws, certificate
of limited partnership or partnership agreement, as the case may be, of the
Company or the Partnership; any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which the Company or
the Partnership is a party or to which they, any of them, any of their
respective properties or other assets or any Current Hotel or the Acquisition
Hotels is subject; or any applicable statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to any of the
foregoing or any of their respective properties; or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of any of the foregoing.
(m) The Depositary Shares to be issued and sold to the
Underwriters hereunder and the Preferred Stock have been validly authorized by
the Company. When the Preferred Stock and the Depositary Receipts evidencing
the Depositary Shares representing interests in such Preferred Stock are
issued and delivered against payment therefor as provided in this Agreement and
the Deposit Agreement, the Preferred Stock will be duly and validly issued,
fully paid and nonassessable. The deposit of the Preferred Stock by the
Company with the Depositary pursuant to the Deposit Agreement has been duly
authorized and, when the Depositary Shares are issued and delivered in
accordance with the terms of the Agreement, the Depositary Shares will
represent legal and valid interests in the Preferred Stock as provided in the
Deposit Agreement. Assuming due authorization, execution and delivery of any
Deposit Agreement by the Depositary, each Depositary Share, if any, will
represent the interest described in the Prospectus in a validly issued,
outstanding, fully paid and
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nonassessable share of Preferred Stock. Assuming due execution and delivery of
the Depositary Receipts, if any, by the Depositary pursuant to such Deposit
Agreement, the Depositary Receipts will entitle the holders thereof to the
benefits provided therein and in the Deposit Agreement. There are no statutory
or other preemptive rights of shareholders with respect to any of the
Securities. No person or entity holds a right to require or participate in the
registration under the Securities Act of the Securities pursuant to the
Registration Statement other than those persons who have expressly waived such
rights. No person or entity has a right of participation or first refusal with
respect to the sale of the Securities by the Company. The form of certificates
evidencing the Preferred Stock comply with all applicable requirements of
Maryland law. The Depositary Receipts are in due and proper form.
(n) The Company's authorized, issued and outstanding
capital stock is as disclosed in the Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description of the Common Stock
and the Series A Preferred Stock contained in the Prospectus. The Securities
conform to their description contained in the Prospectus. None of the issued
and outstanding shares of capital stock of the Company has been issued or is
owned or held in violation of any preemptive rights of shareholders. The
Company has no other issued and outstanding capital stock. Except as disclosed
in the Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement to issue,
any shares of capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company.
(o) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly registered under the
Securities Act or exempt from the registration requirements of the Securities
Act by reason of Sections 3(b), 4(2) or 4(6) thereof and were duly registered
or were issued pursuant to an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
(p) All of the issued Units have been duly and validly
authorized and issued and are fully paid. None of the issued Units has been
issued or is owned or held in violation of any preemptive right. The Units to
be issued to the Company at the Closing Date have been duly and validly
authorized by the Partnership. At the Closing Date, such Units will be validly
issued and fully paid. All of the outstanding Units have been issued, offered
and sold in compliance with all applicable laws (including, without limitation,
federal and state securities laws). The Units to be issued to the Company at
the Closing Date will be issued, offered and sold in compliance with all
applicable laws (including, without limitation, federal and state securities
laws).
(q) The financial statements of the Company, the Lessee
and Bristol incorporated by reference in the Registration Statement and
Prospectus, together with related schedules and notes (and any amendment or
supplement thereto), present fairly the financial position of each entity, as
of the dates indicated, and the results of operations and cash flows of such
entity for the periods specified, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
specified. No other financial statements or schedules are required by Form S-3
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or otherwise to be included or incorporated by reference in the Registration
Statement, the Prospectus, or any Preliminary Prospectus.
(r) Each of Coopers & Lybrand L.L.P., Arthur Andersen
LLP and Price Waterhouse LLP, who have examined and are reporting upon the
audited financial statements and schedules included or incorporated by
reference in the Registration Statement, are and were, during the periods
covered by their reports included in the Registration Statement and the
Prospectus, independent public accountants within the meaning of the Act.
(s) Since December 31, 1997, neither the Company, the
Partnership, nor the Lessee has sustained any material loss or interference
with its business from fire, explosion, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
arbitrators' or court or governmental action, order or decree; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as otherwise stated in the Registration
Statement and Prospectus, there has not been (i) any material change in the
capital stock or partnership interests, as applicable, long-term debt,
obligations under capital leases or short-term borrowings of the Company, the
Partnership, or the Lessee, (ii) any material adverse change, or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company, the Partnership or the Lessee and their respective subsidiaries, taken
as a whole, from that set forth in the Prospectus, exclusive of any amendments,
or supplements thereto subsequent to the date of this Agreement, (iii) any
liability or obligation, direct or contingent, incurred or undertaken by the
Company, the Partnership or the Lessee which is material to the business or
condition (financial or other) of such entity, except for liabilities or
obligations incurred in the ordinary course of business, (iv) any declaration
or payment of any dividend or distribution of any kind on or with respect to
the capital stock or partnership interests, as applicable, of the Company or
the Partnership, or (v) any transaction that is material to the Company, the
Partnership or the Lessee, except transactions in the ordinary course of
business or as otherwise disclosed in the Registration Statement and the
Prospectus.
(t) The Partnership has good and indefeasible title in
fee simple to all real property and the improvements thereon owned by it free
and clear of all liens, encumbrances, claims, security interests, restrictions
and defects except (i) such as are described in the Prospectus, (ii) such
matters reflected in the owner's title insurance policies relating to such
properties and (iii) such as do not materially adversely affect the value of
the properties or the use proposed to be made of the property by the
Partnership. Upon consummation of the transactions contemplated by the
Acquisition Agreement and the Merger Agreement, the Partnership will have good
and indefeasible title in fee simple to the Acquisition Hotels, and all related
real property, free and clear of all liens, encumbrances, claims, security
interests, restrictions and defects except such as are described in the
proposed title commitments for the Acquisition Hotels or which do not
materially adversely affect the value of the property or the use proposed to be
made of the property by the Partnership or, with respect to the Acquisition
Hotels to be acquired in the Merger, such as would not have a material adverse
effect on the Company, the Partnership or any Hotels, taken as a whole. Except
as disclosed in the Prospectus, neither the Company nor the Partnership owns or
leases any real property as lessee
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other than pursuant to leases which individually or in the aggregate are not
material to the business, financial condition or results of operations of the
Company and the Partnership. Except as disclosed in the Prospectus, no person
other than the Partnership has an option or right of first refusal to purchase
all or part of any Current Hotel or any interest therein other than certain
options and rights of first refusal contained in the ground lease relating to
the Embassy Suites in Kansas City, Missouri or partnership agreements to which
the Partnership or its subsidiaries are parties. Each of the Hotels complies
with all applicable codes, laws and regulations (including, without limitation,
building and zoning codes, laws and regulations and laws relating to access to
the Hotels), except if and to the extent disclosed in the Prospectus and except
for such failures to comply that would not in the aggregate have a material
adverse impact on the condition, financial or otherwise, or on the earnings,
assets, business affairs or business prospects of the Partnership, the Company
or the Hotels, taken as a whole. Neither the Company nor the Partnership has
knowledge of any pending or threatened condemnation proceedings, zoning change,
or other proceeding or action that will in any manner affect the size of, use
of, improvements on, construction on or access to the Hotels, except such
proceedings or actions that would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, assets, business affairs
or business prospects of or with respect to the Partnership, the Company or the
Hotels, taken as a whole.
(u) Neither the Company nor the Partnership is in
violation of its respective articles of incorporation, bylaws, certificate of
limited partnership or partnership agreement, as the case may be, and no
default exists, and no event has occurred, nor state of facts exists, which,
with notice or after the lapse of time to cure or both, would constitute a
default in the due performance and observance of any obligation, agreement,
term, covenant, consideration or condition contained in any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which any such entity is a party or to which any such entity or
any of its properties is subject; provided, however, that the Merger will
require consents from certain third parties which either will be obtained or
the failure to obtain would not have a material adverse effect on the Company,
the Partnership or the Hotels, taken as a whole. Neither the Company nor the
Partnership is in violation of, or in default with respect to, any statute,
rule, regulation, order, judgment or decree, except as may be properly
described in the Prospectus or such as in the aggregate do not now have and
will not in the future have a material adverse effect on the financial
position, results of operations or business of each such entity, respectively.
(v) Except as described in the Prospectus, there is not
pending or, to the knowledge of the Company or the Partnership, threatened, any
action, suit, proceeding, inquiry or investigation against the Company, the
Partnership, the Lessee or any of their respective officers and directors or to
which the properties, assets or rights of any such entity are subject, before
or brought by any court or governmental agency or body or board of arbitrators,
which could result in any material adverse change in the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of any such entity or which could adversely affect the consummation of the
transactions contemplated by this Agreement or the Deposit Agreement.
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(w) The descriptions in the Registration Statement and
the Prospectus of the contracts, leases and other legal documents therein
described present fairly the information required to be shown, and there are no
contracts, leases, or other documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement which are not described or filed as required. To
the best knowledge of the Company and the Partnership, there are no statutes or
regulations applicable to the Company or the Partnership or certificates,
permits or other authorizations from governmental regulatory officials or
bodies required to be obtained or maintained by the Company or the Partnership
of a character required to be disclosed in the Registration Statement or the
Prospectus which have not been so disclosed and properly described therein.
All agreements between the Company, the Partnership, the Lessee, respectively,
and third parties expressly referenced in the Prospectus are legal, valid and
binding obligations of the Company, the Partnership and the Lessee,
respectively, enforceable against such parties in accordance with their
respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general applicability
relating to or affecting creditors' rights and by general equitable principles.
(x) Except as described in the Prospectus, the Company,
the Partnership or the Lessee owns, possesses or has obtained or has taken all
necessary action to obtain (and will obtain) all material permits, licenses,
franchises (including, with respect to the Lessee, the franchises relating to
the Hotels), certificates, consents, orders, approvals and other authorizations
of governmental or regulatory authorities or other entities as are necessary to
own or lease, as the case may be, and to operate its respective properties and
to carry on its business, and neither the Company, the Partnership nor the
Lessee has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, franchises, certificates, consents,
orders, approvals or authorizations.
(y) Except as described in the Prospectus, the Company,
the Partnership, and the Lessee own or possess or have the right to acquire
(and will acquire) adequate license 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, the Partnership, and the Lessee to conduct their respective businesses
as presently conducted, and neither the Company, the Partnership, nor the
Lessee has received notice of infringement or of conflict with (and knows of no
such infringement of or conflict with) asserted rights of others with respect
to any Intangibles which could materially and adversely affect the business,
prospects, properties, assets, results of operation or condition (financial or
otherwise) of the Company, the Partnership or the Lessee.
(z) The Company's, the Partnership's and to the best of
the Company's and the Partnership's knowledge, the Lessee's, system of internal
accounting controls taken as a whole is sufficient to meet the broad objectives
of internal accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that would be
material in relation to the Company's, the Partnership's, or the Lessee's
financial statements; and, to the best of the Company's and the Partnership's
knowledge, neither the Company, the Partnership, nor the
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Lessee, nor any employee or agent thereof, has made any payment of funds of the
Company, the Partnership, the Lessee, as the case may be, or received or
retained any funds, and no funds of the Company, the Partnership, the Lessee,
as the case may be, have been set aside to be used for any payment, in each
case in violation of any law, rule or regulation.
(aa) Each of the Company, the Partnership (to the extent
not consolidated with the Company), and the Lessee has filed on a timely basis
all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all taxes
shown as due thereon (except for certain tax returns, the failure of which to
file will not have a material adverse effect on the Company, the Partnership or
the Hotels, taken as a whole); and no tax deficiency has been asserted against
any such entity, nor does any such entity know of any tax deficiency which is
likely to be asserted against any such entity and which if determined adversely
to any such entity, could materially adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of any such entity, respectively. All tax liabilities are adequately provided
for on the respective books of such entities.
(bb) The Company, the Partnership, and the Lessee maintain
insurance (issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate for their respective
businesses and, to the best of the Company's and the Partnership's knowledge,
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company, the Partnership and the Lessee against
theft, damage, destruction, acts of vandalism, and all other risks customarily
insured against, all of which insurance is in full force and effect.
(cc) To the best of the Company's knowledge, no general
labor problem exists or is imminent with the employees of the Company or
Lessee. The Partnership has no employees.
(dd) Each of the Company, the Partnership, and their
officers, directors or affiliates has not taken and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in or constitute the stabilization or manipulation of any
security of the Company or to facilitate the sale or resale of the Depositary
Shares.
(ee) The Depositary Shares are registered, or will be
registered on or before the Closing Date, pursuant to Section 12(b) of the
Exchange Act, and the Depositary Shares will be, within 30 days of the date of
this Agreement, listed on the New York Stock Exchange.
(ff) The Company has not incurred any liability for a fee,
commission or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby or as described in the Registration Statement.
(gg) Except as otherwise disclosed in the Prospectus,
neither the Company, the Partnership, FelCor/CSS Holdings, L.P. ("Holdings")
nor, to the best knowledge of the Company and
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the Partnership, any entity from whom the Partnership acquired or will acquire
the Hotels has authorized or conducted or has knowledge of the generation,
transportation, storage, presence, use, treatment, disposal, release, or other
handling of any hazardous substance, hazardous waste, hazardous material,
hazardous constituent, toxic substance, pollutant, contaminant, asbestos,
radon, polychlorinated biphenyls ("PCBs"), petroleum product or waste
(including crude oil or any fraction thereof), natural gas, liquefied gas,
synthetic gas or other material defined, regulated, controlled, or potentially
subject to any remediation requirement under any environmental law
(collectively, "Hazardous Materials"), on, in, under, or affecting any real
property currently leased or owned (or proposed to be leased or owned) or by
any means controlled by the Company or the Partnership, including the Hotels
(the "Real Property"), except as in material compliance with applicable laws;
to the knowledge of the Company and the Partnership, the Real Property and the
Company's and the Partnership's operations with respect to the Real Property
are in compliance with all federal, state and local laws, ordinances, rules,
regulations and other governmental requirements relating to pollution, control
of chemicals, management of waste, discharges of materials into the
environment, health, safety, natural resources, and the environment
(collectively, "Environmental Laws"), and the Company and the Partnership have
complied with, and are in compliance with, all licenses, permits,
registrations, and government authorizations necessary to operate under all
applicable Environmental Laws. Except as otherwise disclosed in the
Prospectus, neither the Company nor the Partnership has received any written or
oral notice from any governmental entity or any other person, and there is no
pending or threatened claim, litigation, or any administrative agency
proceeding that alleges a violation of any Environmental Laws by the Company or
the Partnership; alleges that the Company or the Partnership is a liable party
or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section
9601, et seq., or any state superfund law; has resulted in or could result in
the attachment of an environmental lien on any of the Real Property; or alleges
that the Company or the Partnership is liable for any contamination of the
environment, contamination of the Real Property, damage to natural resources,
property damage, or personal injury based on their activities or the activities
of their predecessors or third parties (whether at the Real Property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards; except
with respect to this representation (gg), such matters relating to certain of
the Acquisition Hotels that will not have a material adverse effect on the
Company, the Partnership or the Hotels, taken as a whole.
(hh) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and the Company's
method of operation enables it to meet the requirements for taxation as a real
estate investment trust under the Code. The Partnership is treated as a
partnership for federal income purposes and not as a corporation or an
association taxable as a corporation.
(ii) None of the Company, the Partnership, or the Lessee
is, will become as a result of the transactions contemplated hereby, or will
conduct its respective business in a manner in which any such entity would
become, "an investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
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(jj) No real estate appraisal firm which prepared
appraisals of the Hotels, nor any environmental engineering firm which prepared
Phase I environmental assessment reports with respect to the Hotels, was
employed for such purpose on a contingent basis or has any substantial interest
in the Company, the Partnership, the Lessee, or any selling entity.
(kk) The Merger will not conflict with or result in a
breach or violation of any of the terms and provisions of, or (with or without
the giving of notice or the passage of time or both) constitute a default
under, any of the Operative Documents, the articles of incorporation, by-laws,
certificate of limited partnership or partnership agreement, as the case may
be, of the Company or the Partnership; any indenture, mortgagee, deed of trust,
loan agreement, note, lease or other agreement or instrument to which the
Company or the Partnership is a party or to which they, any of them, any of
their respective properties or other assets or any Current Hotel or the
Acquisition Hotels is subject (provided, however, that such Merger will require
consents from certain third parties which either will be obtained or the
failure to obtain will not have a material adverse effect on the Company, the
Partnership or the Hotels); or any applicable statute, judgment, decree, order,
rule or regulation of any court or governmental agency or body applicable to
any of the foregoing or any of their respective properties; or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of any of the foregoing.
(ll) Holdings is not currently prohibited, directly or
indirectly, from making distributions to the Company, from repaying to the
Company any loans or advances to Holdings, or from transferring any of
Holdings' property or assets to the Company, except as disclosed in the
Prospectus.
(mm) The Company has not, directly or indirectly (i) taken
any action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Depositary Shares or (ii) since the filing of the Registration Statement
(A) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Depositary Shares or (B) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company.
(nn) To the Company's knowledge, neither the Company nor
any of its subsidiaries nor any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule, or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
Any certificate signed by any officer of the Company on behalf of the
Company, or the Partnership and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by such entity to
each Underwriter as to the matters covered thereby.
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2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company, the respective numbers of Depositary Shares set forth in Schedule I
hereto opposite its name at U.S. $24.2125 a share (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Depositary Shares, and the Underwriters
shall have a one-time right to purchase, severally and not jointly, up to
750,000 Additional Depositary Shares at the Purchase Price. If the
Representatives, on behalf of the Underwriters, elect to exercise such option,
the Representatives shall so notify the Company in writing not later than 30
days after the date of this Agreement, which notice shall specify the number of
Additional Depositary Shares to be purchased by the Underwriters and the date
on which such shares would be purchased. Such date may be the same as the
Closing Date (as defined herein) but not earlier than the Closing Date nor
later than 10 business days after the date of such notice. Additional
Depositary Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Depositary Shares. If any Additional Depositary Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Depositary Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears
the same proportion to the total number of Additional Depositary Shares to be
purchased as the number of Depositary Shares set forth in Schedule 1 hereto
opposite the name of such Underwriter bears to the total number of Depositary
Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 30 days after the date of the Prospectus, directly or
indirectly sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any Depositary Shares or any shares of Preferred Stock. The
foregoing sentence shall not apply to (A) the Depositary Shares to be sold
hereunder, or (B) transactions by any person other than the Company relating to
Depositary Shares and/or shares of Preferred Stock or other securities acquired
in open market transactions after the completion of the offering of the
Depositary Shares.
3. TERMS OF PUBLIC OFFERING. The Company is advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Depositary Shares as soon after this Agreement has become
effective as in your judgment is advisable. The Company is further advised by
you that the Depositary Shares are to be offered to the public initially at
U.S. $25.00 a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of U.S.
$.50 a share under the Public Offering Price, and that any Underwriter may
allow, and such dealers may reallow, a concession, not in excess of U.S. $.40 a
share, to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Depositary
Shares to be sold by the Company shall be made in Federal or other funds
immediately available in New York City against
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delivery of such Depositary Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on May 7, 1998, or at such
other time on the same or such other date, not later than May 14, 1998, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Depositary Shares shall be made to the
Company in Federal or other funds immediately available in New York City
against delivery of such Additional Depositary Shares for the respective
accounts of the several Underwriters at 10:00 a.m., New York City time, on the
date specified in the notice described in Section 2 or at such other time on
the same or on such other date, in any event not later than June 12, 1998, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Option Closing Date."
Depositary Receipts and Additional Depositary Receipts for the
Depositary Shares and the Additional Depositary Shares, as applicable shall be
in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or Option Closing Date, as applicable. The Depositary Receipts
and Additional Depositary Receipts evidencing the Depositary Shares and the
Additional Depositary Shares, as applicable shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Depositary Shares and the Additional
Depositary Shares to the Underwriters duly paid, against payment of the
Purchase Price therefor.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Company to sell the Depositary Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Depositary
Shares on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any of the Company's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company, the Partnership and their respective subsidiaries, taken
as a whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Depositary
Shares on the terms and in the manner contemplated in the Prospectus.
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(b) The Underwriters shall have received on the Closing Date (i) a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in clause (a)(ii) above and (ii) a
certificate, dated the Closing Date and signed by an executive officer of the
Company and the general partner of the Partnership to the effect that the
representations and warranties of the Company and the Partnership contained in
this Agreement are true and correct as of the Closing Date and that the Company
and the Partnership have complied with all of the agreements and satisfied all
of the conditions on their part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date, an
opinion of Jenkens & Gilchrist, a Professional Corporation, counsel for the
Company and the Partnership, dated the Closing Date and addressed to the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under
Maryland law with all requisite corporate power and
authority to own, lease and operate its properties
and to conduct its business. The Company has been
duly qualified to do business and is in good standing
as a foreign corporation in the states of Arizona,
California, Colorado, Delaware, Florida, Georgia,
Illinois, Kentucky, Louisiana, Massachusetts,
Minnesota, Missouri, Nebraska, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Pennsylvania, South
Carolina, Tennessee, and Texas. To such counsel's
knowledge, there are no other jurisdictions in which
the ownership or leasing the Company's properties or
the nature or conduct of its business requires such
qualification, except where the failure to do so
would not have a material adverse effect on the
financial condition, business, prospects, net worth
or results of operations of the Company and the
Partnership, taken as a whole. To such counsel's
knowledge, except for the entities listed on Schedule
II to this Agreement, the Company does not own or
control, directly or indirectly, any corporation,
association or control, directly or indirectly, any
corporation, association or other entity. The
Partnership owns the percentage equity interests of
each of the Subsidiaries as reflected on Schedule II.
All of such equity interests have been duly and
validly authorized and issued and are fully paid and
are so owned free and clear of any pledge, lien,
charge, encumbrance, security interests, preemptive
right or other claims.
(ii) The Partnership has been duly formed and validly
existing under the Delaware Act with all requisite
partnership power and authority to own, lease and
operate its properties and to conduct its business.
The Partnership has been duly qualified or registered
to do business and is in good standing as a foreign
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partnership in the states of Arizona, California,
Colorado, Florida, Georgia, Illinois, Kentucky,
Louisiana, Massachusetts, Minnesota, Missouri,
Nebraska, New Jersey, New York, North Carolina, Ohio,
Oklahoma, Pennsylvania, South Carolina, Tennessee and
Texas. To such counsel's knowledge, there are no
other jurisdictions in which the ownership or leasing
of the Partnership's properties or the nature or
conduct of its business requires such qualification,
except where the failure to do so would not have a
material adverse effect on the financial condition,
business, prospects, net worth or results of
operations of the Company and the Partnership, taken
as a whole. The Company is the sole general partner
of the Partnership and upon its delivery to the
Partnership of the net proceeds from the sale of the
Depositary Shares pursuant hereto, will own an
approximate 92.4% general partnership interest in the
Partnership. The Company owns all of the outstanding
Series A Preferred Units in the Partnership and, upon
issuance of such units on the Closing Date, will own
all of the outstanding Series B Preferred Units in
the Partnership.
(iii) Holdings has been duly formed and is validly existing
as a limited partnership in good standing under the
Delaware Act. It has all requisite partnership power
and authority to own, lease and operate its
properties and conduct its business. It has been
duly qualified to do business and is in good standing
as a foreign partnership or corporation in the states
of Alabama, Arizona, California, Florida, Louisiana,
Minnesota, Ohio and Texas. To such counsel's
knowledge, there are no other jurisdictions in which
the ownership or leasing of its properties or the
nature or conduct of its business requires such
qualification, except where the failure to do so
would not have a material adverse effect on the
financial condition, business, prospects, net worth
or results of the Company and the Partnership taken
as a whole.
(iv) DJONT Operations, L.L.C. has been duly formed and is
validly existing as a limited liability company in
good standing under the Delaware Limited Liability
Company Act. DJONT Operations, L.L.C. has all
requisite limited liability company power and
authority to own, lease and operate its properties
and conduct its business. DJONT Operations, L.L.C.
has been duly qualified to do business and is in good
standing as a foreign limited liability company in
the states of Alabama, Arizona, California, Colorado,
Florida, Georgia, Illinois, Kentucky, Louisiana,
Minnesota, New Jersey, Ohio, Oklahoma, Tennessee and
Texas. To such counsel's knowledge, there are no
other jurisdictions in which the ownership or leasing
of its properties or the nature or conduct of its
business requires such qualification, except where
the failure to do so would not have a material
adverse effect on the financial condition, business,
prospects, net worth or results of the Lessee. The
subsidiaries of DJONT Operations, L.L.C. consist of
DJONT Leasing, L.L.C., FCH/DT
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Leasing, L.L.C., FCH/DT Leasing II, L.L.C., FCH/SH
Leasing, L.L.C., FCH/SH Leasing II, L.L.C., and
DJONT/EPT Leasing, L.L.C., each of which is a
Delaware limited liability company (collectively, the
"LLC Subsidiaries"), and FCOAM, Inc., a Texas
corporation ("FCOAM"). Each of the LLC Subsidiaries
has been duly formed and is validly existing as a
limited liability company in good standing under the
Delaware Limited Liability Company Act. FCOAM has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
State of Texas. Each of the LLC Subsidiaries and
FCOAM has all requisite limited liability company or
corporate power and authority to own, lease and
operate its properties and conduct its business.
Each of the LLC Subsidiaries has been duly qualified
to do business and is in good standing as a foreign
limited liability company in the states indicated on
Schedule III hereto. FCOAM has been duly qualified
to do business and is in good standing as a foreign
corporation in the state of Massachusetts. To such
counsel's knowledge, there are no other jurisdictions
in which the ownership or leasing of the LLC
Subsidiaries, and FCOAM's respective properties or
the nature or conduct of their respective business
requires such qualification, except where the failure
to do so would not have a material adverse effect on
the financial condition, business, prospects, net
worth or results of the LLC Subsidiaries, FCOAM and
the Lessee taken as a whole.
(v) The Company has full corporate right, power and
authority to enter into, deliver and perform this
Agreement, the Deposit Agreement and the Articles
Supplementary, to issue, sell and deliver the
Depositary Shares and the Preferred Stock as provided
herein and therein and to consummate the transactions
contemplated herein. This Agreement, the Deposit
Agreement and the Articles Supplementary have been
duly authorized, executed and delivered by the
Company.
(vi) The Partnership has full partnership right, power and
authority to enter into this Agreement and to
consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed and
delivered by the Partnership.
(vii) The Partnership has full partnership right, power and
authority to enter into, either for itself or on
behalf of a subsidiary, each of the Percentage Leases
(the "New Percentage Leases") relating to the Current
Hotels acquired since October 1, 1997. Each New
Percentage Lease has been duly authorized, executed
and delivered by the Partnership. Each New
Percentage Lease should be construed to create a
valid leasehold interest in favor of the Lessee.
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(viii) The Lessee has full limited liability company right,
power and authority to enter into each of the New
Percentage Leases and the Management Agreements (the
"New Management Agreements") relating to the Current
Hotels acquired since October 1, 1997 and to
consummate the transactions contemplated therein.
Each such agreement relating to the Current Hotels
acquired since October 1, 1997 has been duly
authorized, executed and delivered by the Lessee.
(ix) Each consent, approval, authorization, order,
license, certificate, permit, registration,
designation or filing by or with any governmental
agency or body necessary for the valid authorization,
issuance, sale and delivery of the Depositary Shares,
the execution, delivery and performance of this
Agreement and the consummation by the Company and the
Partnership of the transactions contemplated hereby,
the execution, delivery and performance of the other
Operative Documents to which either the Company or
the Partnership is a party and the consummation by
the Company and/or the Partnership, as applicable, of
the transactions contemplated thereby, including
without limitation the issuance of Units, has been
made or obtained and is in full force and effect,
except such (i) as may be necessary under state
securities or real estate syndication laws or by the
NASD in connection with the purchase and distribution
of the Depositary Shares by the Underwriters, as to
which such counsel need express no opinion, or (ii)
solely as the same may relate to the Operative
Documents, the lack of which would not have a
material adverse effect on the financial condition,
business, prospects, net worth or results of
operations of the Company and the Partnership, taken
as a whole.
(x) Each consent, approval, authorization, order,
license, certificate, permit, registration,
designation or filing by or with any governmental
agency or body necessary for the execution, delivery
and performance of the Operative Documents by the
Lessee, and the consummation by the Lessee of the
transactions contemplated thereby, has been made or
obtained or filed and is in full force and effect,
except such (i) as may be necessary under state
securities or real estate syndication laws or by the
NASD in connection with the purchase and distribution
of the Depositary Shares by the Underwriters, as to
which such counsel need express no opinion, or (ii)
the lack of which would not have a material adverse
effect on the financial condition, business,
prospects, net worth or results of operations of the
Lessee.
(xi) Neither the issuance, sale and delivery by the
Company of the Preferred Stock or the Depositary
Shares, nor the execution, delivery and performance
of this Agreement, the Deposit Agreement nor the
Articles Supplementary by the Company and/or the
Partnership, nor the consummation of the transactions
contemplated hereby or thereby by the Company or the
Partnership, will
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violate any of the terms and provisions of, or
constitute a default under, any of the Operative
Documents, the articles of incorporation, bylaws,
certificate of limited partnership or partnership
agreement, as the case may be, of any such entity, as
applicable; or, to such counsel's knowledge, under
any material indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or
instrument to which the Company or the Partnership is
a party or to which they, either of them, any of
their respective properties or other assets or any
Current Hotel owned by the Partnership or Holdings as
of the date hereof is subject, except for violations
or defaults under agreements or instruments which
have since been terminated, cured or otherwise
satisfied or such violations or defaults as would not
have a material adverse effect on the financial
condition, business, prospects, net worth or results
of operations of the Company and the Partnership,
taken as a whole; or, to such counsel's knowledge,
violate any applicable statute, judgment, decree,
order, rule or regulation of any court or
governmental agency or body; or, to such counsel's
knowledge, result in the creation or imposition of
any lien, charge, claim or encumbrance upon any
property or asset of any of the foregoing, except for
liens, charges, claims or encumbrances which are
created by the Operative Documents or which have
since been terminated, cured or otherwise would not
have a material adverse effect on the financial
condition, business, prospects, net worth or results
of operations of the Company and the Partnership,
taken as a whole.
(xii) The Depositary Shares to be issued and sold to the
Underwriters hereunder and the Preferred Stock have
been validly authorized by the Company. When the
Preferred Stock and the Depositary Receipts
evidencing the Depositary Shares representing
interests in such Preferred Stock are issued and
delivered against payment therefor as provided in
this Agreement and the Deposit Agreement, the
Preferred Stock will be duly and validly issued,
fully paid and nonassessable. The deposit of the
Preferred Stock by the Company with the Depositary
pursuant to the Deposit Agreement has been duly
authorized and, when the Depositary Shares are issued
and delivered in accordance with the terms of the
Agreement, the Depositary Shares will represent legal
and valid interests in the Preferred Stock as
provided in the Deposit Agreement. Assuming due
authorization, execution and delivery of the Deposit
Agreement by the Depositary, each Depositary Share,
if any, will represent the interest described in the
Prospectus in a validly issued, outstanding, fully
paid and nonassessable share of Preferred Stock.
Assuming due execution and delivery of the Depositary
Receipts, if any, by the Depositary pursuant to such
Deposit Agreement, the Depositary Receipts will
entitle the holders thereof to the benefits provided
therein and in the Deposit Agreement. To such
counsel's knowledge, no person or entity has a right
of participation or first refusal with respect to the
sale of the Depositary Shares by the Company. The
form of
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certificates evidencing the Preferred Stock comply in
all material respects with all applicable
requirements of Maryland law. The Depositary
Receipts are in due and proper form. All offers and
sales of the Company's capital stock prior to the
date hereof were at all relevant times duly
registered under the Securities Act or exempt from
the registration requirements of the Securities Act
by reason of Sections 3(b), 4(2) or 4(6) thereof, and
(with the exception of shares of Common Stock and
Series A Preferred Stock registered under the
Securities Act, as to which such counsel need not
opine) were duly registered or the subject of an
available exemption from the registration
requirements of the applicable state securities or
blue sky laws.
(xiii) The Company's authorized, issued and outstanding
capital stock is as disclosed in the Prospectus. All
of the issued shares of capital stock of the Company
have been duly authorized and validly issued, fully
paid and nonassessable. To the knowledge of such
counsel, except as disclosed in the Prospectus, there
is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan
or arrangement to issue, any shares of capital stock
of the Company or any security convertible into or
exchangeable for capital stock of the Company.
(xiv) All of the issued Units have been duly and validly
authorized and issued and are fully paid. None of
the issued Units have been issued or is owned or held
in violation of any preemptive rights. The Units to
be issued to the Company at the Closing Date have
been duly and validly authorized by the Partnership.
When issued and delivered against payment thereof as
provided in the Partnership Agreement, such Units
will be duly and validly issued and fully paid. All
of the outstanding Units have been issued, offered
and sold in compliance with all applicable laws
(including, without limitation, federal and state
securities laws). The Units to be issued to the
Company at the Closing Time will be issued, offered
and sold in compliance with all applicable laws
(including, without limitation, federal and state
securities laws).
(xv) Neither the Company, the Partnership nor the Lessee
is in violation of its respective articles of
incorporation, bylaws, certificate of limited
partnership, partnership agreement, or limited
liability company agreement, as the case may be, and
to the knowledge of such counsel no material default
exists and no event has occurred which, with notice
or after the lapse of time to cure or both, would
constitute a material default in the due performance
and observance of any obligation, agreement, term,
covenant, or condition contained in any indenture,
mortgage, deed of trust, loan agreement, note, lease
or other agreement or instrument known to such
counsel to which any such entity is a party or by
which any such entity or any of its properties is
subject. To the knowledge of such counsel, neither
the Company, the
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Partnership nor the Lessee is in violation of, or in
default with respect to, any statute, rule,
regulation, order, judgment or decree, except as may
be properly described in the Prospectus or such as in
the aggregate do not now have and will not in the
future have a material adverse effect on the
financial position, results of operations or business
of each such entity, respectively.
(xvi) To such counsel's knowledge and except as described
in the Prospectus, there is not pending or
threatened, any action, suit, proceeding, inquiry or
investigation against the Company, the Partnership,
the Lessee or Holdings or any of their respective
officers and directors or to which the properties,
assets or rights of any such entity are subject,
which, if determined adversely to any such entity,
would individually or in the aggregate have a
material adverse effect on the financial position,
results of operations or business of the Company and
the Partnership, taken as a whole.
(xvii) There are no contracts, leases or other documents
known to such counsel of a character required to be
described in the Registration Statement or the
Prospectus or to be filed as exhibits to the
Registration Statement which are not described or
filed as required. To such counsel's knowledge, there
are no statutes or regulations applicable to the
Company, the Partnership or the Lessee or
certificates, permits or other authorizations from
governmental regulatory officials or bodies required
to be obtained or maintained by any such entity,
known to such counsel, of a character required to be
disclosed in the Registration Statement or the
Prospectus which have not been so disclosed and
properly described therein. To such counsel's
knowledge, all material agreements between the
Company, the Partnership or the Lessee, respectively,
and third parties expressly referenced in the
Prospectus, assuming due authorization, execution and
delivery thereof by each other party thereto, are
legal, valid and binding obligations of each such
entity, respectively, enforceable against such entity
in accordance with their respective terms, except to
the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
other laws of general applicability relating to or
affecting creditors' rights and to general equitable
principles.
(xviii) The Company has applied to list the Depositary Shares
on the New York Stock Exchange.
(xix) The Registration Statement has become effective under
the Securities Act and, to the knowledge of such
counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or is
pending or contemplated under the Securities Act.
Other than financial statements and other financial
and
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operating information data and schedules contained
therein, as to which counsel need express no opinion,
the Registration Statement, all Preliminary
Prospectuses, the Prospectus and any amendment or
supplement thereto, appear on their face to conform
as to form in all material respects with the
requirements of Form S-3 under the Securities Act.
To such counsel's knowledge, the conditions for use
of a registration statement on Form S-3 set forth in
the General Instructions to Form S-3 have been
satisfied with respect to the Company and the
transactions contemplated by this Agreement.
(xx) Such counsel has no reason to believe that the
Registration Statement including the Incorporated
Documents, or any further amendment thereto made
prior to the Closing Date, on its effective date and
as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or
omits to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or
any amendment or supplement thereto made prior to the
Closing Date, as of its issue date and as of the
Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading (provided
that such counsel need express no belief regarding
the financial statements and related schedules and
other financial data contained in the Registration
Statement, any amendment thereto, or the Prospectus,
or any amendment or supplement thereto).
(xxi) The Incorporated Documents (other than the financial
statements and related schedules therein, as to which
such counsel need express no opinion), when they were
filed with the Commission, complied on their face as
to conform in all material respects with the
requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder; and nothing
has come to such counsel's attention which causes
them to believe that any of such Incorporated
Documents (other than the financial statements and
related schedules therein, as to which such counsel
need express no belief), when such Incorporated
Documents were so filed, contained an untrue
statement of material fact or omitted to state a
material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made when such documents were
so filed, not misleading.
(xxii) None of the Company, the Partnership or the Lessee
is, or solely as a result of the consummation of the
transactions contemplated hereby will become, an
"investment company," or a company "controlled" by an
"investment company," within the meaning of the
Investment Company Act of 1940, as amended.
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(xxiii) The descriptions in or incorporated by reference in
the Prospectus or the Preliminary Prospectus of
statutes, regulations, legal or governmental
proceedings, the Percentage Leases, and the
Management Agreements therein described present
fairly a summary of the information required to be
shown under the Act. The descriptions in the
Registration Statement and the Prospectus or the
Preliminary Prospectus of the contracts, leases and
other legal documents therein described present
fairly the information required to be shown.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
and jurisdictions in which they are admitted, provided that (1) each such local
counsel is acceptable to the Underwriters, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Underwriters and is, in form and substance satisfactory to
them and their counsel, and (3) counsel shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon. In
addition, in rendering the foregoing opinion, such counsel may rely on, as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company, the Partnership and the Lessee and certificates or
other written statements of officers or departments of various jurisdictions,
having custody of documents respecting the existence or good standing of the
Company, the Partnership and the Lessee provided that copies of all such
opinions, statements or certificates shall be delivered to Underwriters'
counsel. The opinion of counsel for the Company shall state that the opinion
of any other counsel, or certificate or written statement, on which such
counsel is relying is in form satisfactory to such counsel and that you and
they are justified in relying thereon.
(d) The Underwriters shall have received on the Closing
Date, an opinion of Hunton & Williams, tax counsel for the Company and the
Partnership, dated the Closing Date and addressed to the Underwriters, to the
effect that the Company is organized in conformity with the requirements for
qualification as a real estate investment trust ("REIT"), pursuant to Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
and that the Company's proposed method of operation enables it to meet the
requirements for qualification and taxation as a REIT under the Code. The
Company has taken all necessary action to be treated, effective beginning with
the year ended December 31, 1994, as a REIT under the Code. The Partnership
will be treated as a partnership for federal income purposes and not as a
corporation or an association taxable as a corporation. In rendering the
foregoing opinion, such counsel may rely on, as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company, the Partnership and the Lessee and certificates or other written
statements of officers or departments of various jurisdictions, having custody
of documents respecting the existence or good standing of the Company, the
Partnership and the Lessee provided that copies of all such opinions,
statements or certificates shall be delivered to Underwriters' counsel.
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(e) The Underwriters shall have received on the Closing
Date an opinion of King & Spalding, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (v), (xii) (but
only with respect to the due authorization, issuance and delivery of the
Depositary Shares), (xix) and (xx) of paragraph (c) above, and to the effect
that the statements in the Prospectus Supplement under the captions
"Description of Series B Preferred Stock and Depositary Shares," and
"Underwriting" fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the matters
referred to therein.
With respect to subparagraph (xx) of paragraph (c) above, Jenkens &
Gilchrist and King & Spalding may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification,
except as specified.
The opinions of Jenkens & Gilchrist and Hunton & Williams described in
paragraphs (c) and (d) above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from each of Coopers & Lybrand L.L.P., Arthur Andersen LLP and
Price Waterhouse LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
The several obligations of the Underwriters to purchase Additional
Depositary Shares hereunder are subject to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Depositary Shares and other matters related to the issuance of the
Additional Depositary Shares.
6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, seven conformed
copies of the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to furnish to you in New York City,
without charge, prior to 3:00 p.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
paragraph (c) below, as many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
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(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the
public offering of the Depositary Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in connection
with sales by an Underwriter or dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Underwriters, it is necessary to amend
or supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish to
the Company) to which Depositary Shares may have been sold by you on behalf of
the Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Depositary Shares and the
Preferred Stock for offer and sale under the securities or Blue Sky laws of
such jurisdictions as you shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering the
twelve-month period ending June 30, 1999 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to
be paid all expenses incident to the performance of their obligations under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Depositary Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any Preliminary Prospectus, each Preliminary Prospectus
Supplement, the Prospectus Supplement and amendments and supplements to any of
the foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers, in
the quantities hereinabove specified, (ii) all costs and expenses related to
the transfer and delivery of the Depositary Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky or Legal Investment memorandum in connection
with the offer and sale of the Depositary Shares under state securities laws
and all expenses in connection with the qualification of the Depositary Shares
and the Preferred Stock for offer and sale under state securities laws as
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provided in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of the
offering of the Depositary Shares by the National Association of Securities
Dealers, Inc., (v) all fees and expenses in connection with the preparation and
filing of the registration statement on Form 8-A relating to the Depositary
Shares and all costs and expenses incident to listing the Depositary Shares on
the NYSE, (vi) the cost of printing the Depositary Receipts and the
certificates representing the Preferred Stock, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Depositary Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other costs and expenses incident
to the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however,
that except as provided in this Section, Section 7 entitled "Indemnity and
Contribution", and the last paragraph of Section 9 below, the Underwriters will
pay all of their costs and expenses, including fees and disbursements of their
counsel, stock transfer taxes payable on resale of any of the Depositary Shares
by them and any advertising expenses connected with any offers they may make.
7. INDEMNITY AND CONTRIBUTION. (a) The Company and the
Partnership, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any Preliminary Prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Partnership, their respective
directors and officers who sign the Registration Statement and each person, if
any, who controls the Company or the Partnership within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused
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by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
Preliminary Prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a) or (b) of this Section 7,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, the Partnership, their
respective directors and officers who sign the Registration Statement and each
person, if any, who controls the Company or the Partnership within the meaning
of either such Section. In the case of any such separate firm for the
Underwriters and such control persons of any Underwriters, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated. In the case of any
such separate firm for the Company and the Partnership, and such directors,
officers and control persons of the Company and the Partnership, such firm
shall be designated in writing by the Company. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have
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reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Depositary Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Partnership on the one hand
and the Underwriters on the other hand in connection with the offering of the
Depositary Shares shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Depositary Shares (before deducting
expenses) received by the Company and the Partnership and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Depositary Shares. The relative fault
of the Company and the Partnership on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, the Partnership or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Depositary Shares they have purchased hereunder, and not
joint.
(e) The Company, the Partnership and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
of this Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any
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amount in excess of the amount by which the total price at which the Depositary
Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company and the Partnership contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, or the Company, the Partnership, their
respective officers or directors or any person controlling the Company or the
Partnership and (iii) acceptance of and payment for any of the Depositary
Shares.
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of
any securities of the Company shall have been suspended on any exchange or in
any over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a) (i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable
to market the Depositary Shares on the terms and in the manner contemplated in
the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase
Depositary Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Depositary Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the aggregate number of the Depositary Shares to be
purchased on such date, the other Underwriters shall be obligated severally in
the proportions that the number of Depositary Shares set forth opposite their
respective names in Schedule I bears to the aggregate number of Depositary
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as you may specify, to purchase the Depositary Shares
which such defaulting Underwriter
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or Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Depositary Shares that any Underwriter has
agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such number of Depositary
Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Depositary Shares and the aggregate number of Depositary Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Depositary Shares to be purchased and arrangements satisfactory to you and the
Company for the purchase of such Depositary Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company. In any such case either
you or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional
Depositary Shares and their aggregate number of Additional Depositary Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Additional Depositary Shares to be purchased, the non-
defaulting Underwriters shall have the option to (i) terminate their obligation
hereunder to purchase Additional Depositary Shares or (ii) purchase not less
than the number of Additional Depositary Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, 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 (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
31
33
Very truly yours,
FELCOR SUITE HOTELS, INC.
By:/s/ Randall L. Churchey
Randall L. Churchey,
Senior Vice President and
Chief Financial Officer
FELCOR SUITES LIMITED PARTNERSHIP
By: FELCOR SUITE HOTELS, INC., General
Partner
By:/s/ Randall L. Churchey
Randall L. Churchey,
Senior Vice President and
Chief Financial Officer
34
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
Acting severally on behalf
of themselves and the several
Underwriters named in
Schedule I hereto.
By Morgan Stanley & Co.
Incorporated
By: /s/ Michael Fusco
--------------------------------
Name: Michael Fusco
Title: Vice President
35
SCHEDULE I
Underwriters
Number of
Depositary Shares
Underwriter To Be Purchased
----------- -----------------
Morgan Stanley & Co. Incorporated 1,157,195
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 1,157,185
Prudential Securities Incorporated 1,157,185
Smith Barney Inc. 1,157,185
BT Alex Brown Incorporated 57,500
Bear, Stearns & Co. Inc. 57,500
CIBC Oppenheimer Corp. 57,500
Dain Rauscher Incorporated 57,500
A.G. Edwards & Sons, Inc. 57,500
Goldman, Sachs & Co. 57,500
Lehman Brothers Inc. 57,500
Morgan Keegan & Company, Inc. 57,500
Advest, Inc. 28,750
Robert W. Baird & Co. Incorporated 28,750
J.C. Bradford & Co. 28,750
Cowen & Company 28,750
Craigie Incorporated 28,750
Crowell, Weedon & Co. 28,750
Davenport & Company LLC 28,750
First Albany Corporation 28,750
First of Michigan Corporation 28,750
Gibraltar Securities Co. 28,750
Interstate/Johnson Lane Corporation 28,750
Janney Montgomery Scott Inc. 28,750
McDonald & Company Securities, Inc. 28,750
McGinn, Smith & Co., Inc. 28,750
H.J. Meyers & Co., Inc. 28,750
W.J. Nolan & Company Inc. 28,750
Piper Jaffray Inc. 28,750
The Robinson-Humphrey Company, LLC 28,750
Roney & Co., L.L.C. 28,750
36
Scott & Stringfellow, Inc. 28,750
Southwest Securities, Inc. 28,750
Stifel, Nicolaus & Company, Incorporated 28,750
Tucker Anthony Incorporated 28,750
---------
Total Depositary Shares 5,750,000
=========
37
SCHEDULE II
Subsidiaries of FelCor Suite Hotels, Inc.
THE FOLLOWING IS A TRUE AND CORRECT LIST OF THE SUBSIDIARIES
OF FELCOR SUITE HOTELS, INC. ("FELCOR") AS OF APRIL 20, 1998
STATE AND FORM OF
NAME ORGANIZATION OWNERSHIP INTEREST(1)
---- ------------------------- ------------------
FelCor Suites Limited Partnership Delaware; Limited 92.4% GP interest owned by FelCor
("FelCor LP") Partnership
FelCor/CSS Hotels, L.L.C. ("FelCor/CSS Delaware; Limited 100% owned by FelCor LP
Hotels") Liability Company
FelCor/CSS Holdings, L.P. Delaware; 1% GP interest owned by
Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
FelCor/St. Paul Holdings, L.P. Delaware; 1% GP interest owned by
Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
FelCor/LAX Hotels, L.L.C. ("FelCor/LAX Delaware; Limited 100% owned by FelCor LP
Hotels") Liability Company
FelCor/LAX Holdings, L.P. ("FelCor/LAX Delaware; 1% GP Interest owned by
Holdings") Limited Partnership FelCor/LAX Hotels; 99% LP
interest owned by FelCor LP
Los Angeles International Airport Hotel Texas; 50% GP interest owned by
Associates, L.P. Limited Partnership FelCor/LAX Holdings and
47.2% LP interest owned by
FelCor/LAX Hotels
FCH/DT Hotels, L.L.C. Delaware; Limited 90% owned by FelCor LP
Liability Company
FCH/DT Holdings, L.P. Delaware; 1% GP interest owned by FCH/DT
Limited Partnership Hotels, L.L.C.; 89.1% LP interest
owned by FelCor LP
38
FCH/DT BWI Holdings, L.P. Delaware; 1% GP interest owned by FCH/DT
Limited Partnership Hotels, L.L.C.; 99% LP interest
owned by FCH/DT Holdings, LP
FelCor/Charlotte Hotel, L.L.C. Delaware; Limited 50% owned by FelCor/CSS Hotels
("FelCor/Charlotte") Liability Company
E. S. Charlotte Limited Partnership Minnesota; 2% GP interest owned by
Limited Partnership FelCor/Charlotte; 49% LP interest
owned by FelCor LP
FelCor/Indianapolis Hotel, L.L.C. Delaware; Limited 50% owned by FelCor/CSS Hotels
("Felcor/Indianapolis") Liability Company
E.S. North, an Indiana Limited Indiana; 2% GP interest owned by
Partnership Limited Partnership FelCor/Indianapolis; 49% LP
interest owned by FelCor LP
FelCor Eight Hotels, L.L.C. Delaware; 100% owned by FelCor LP
("FelCor Eight Hotels") Limited Liability
Company
EPT Atlanta - Perimeter Center Limited Delaware; 1% GP interest owned by FelCor
Partnership Limited Partnership Eight Hotels; 49% LP interest
("EPT Atlanta") owned by FelCor LP
EPT - Austin Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Austin") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Covina Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Covina") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Kansas City Limited Partnership Delaware; 1% GP interest owned by FelCor
Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Meadowlands Limited Partnership Delaware; 1% GP interest owned by FelCor
Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Overland Park Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Overland Park") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
39
EPT - Raleigh Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Raleigh") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - San Antonio Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT San Antonio") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
Promus/FelCor Lombard Venture Illinois; 50% GP interest owned by FelCor
("Lombard JV") General Partnership LP
MHV Joint Venture Texas; 50% GP interest owned by FelCor
("MHV JV") General Partnership LP
Promus/FelCor Parsippany Venture New Jersey; 50% GP interest owned by FelCor
("Parsippany JV") General Partnership LP
Promus/FelCor San Antonio Venture Texas; 50% GP interest owned by FelCor
General Partnership LP
Kingston Plantation Development Delaware; 97% non-voting Class B
Corporation ("KPDC") Corporation interest owned by FelCor LP
Promus/FelCor Manager, Inc. Delaware; 50% owned by KPDC
Corporation
Promus/FelCor Hotels, L.L.C. Delaware; Limited 1% owned by Promus/FelCor
Liability Company Manager, Inc.; 99% owned by EPT
Atlanta, EPT Austin, EPT Covina,
EPT Overland Park, EPT Raleigh,
EPT San Antonio, Lombard JV, MHV
JV and Parsippany JV
Promus/FCH Development Company, L.L.C. Delaware; 50% owned by FelCor LP
Limited Liability
Company
Promus/FCH Condominium Company, L.L.C. Delaware; 50% owned by FelCor LP
Limited Liability
Company
FCH/PSH, L.P. Pennsylvania; 1% GP interest owned by
Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
40
# # # #
(1) THE PERCENTAGE INTERESTS REFLECTED ABOVE REPRESENT THE PERCENTAGES OF
AGGREGATE EQUITY INTEREST IN THE RESPECTIVE ENTITIES. EACH OF THE GP INTERESTS
REFLECTED ABOVE REPRESENTS EITHER THE ENTIRE GENERAL PARTNER INTEREST IN SUCH
ENTITY OR AN INTEREST AS THE SOLE ADMINISTRATIVE GENERAL PARTNER OF SUCH ENTITY
WITH POWER TO CONTROL THE DAY-TO-DAY OPERATIONS THEREOF.
41
LESSEE QUALIFICATION STATUS
NAME OF ENTITY STATE
- -------------- -----
DJONT Operations, L.L.C. Delaware*
Alabama
Arizona
California
Colorado
Florida
Georgia
Illinois
Kentucky
Louisiana
Minnesota
New Jersey
Ohio
Oklahoma
Tennessee
Texas
DJONT Leasing, L.L.C. Delaware*
Arizona
California
Georgia
Illinois
Indiana
Kansas
Minnesota
Missouri
Nebraska
New Jersey
New York
North Carolina
South Carolina
Texas
FCH/DT Leasing, L.L.C. Delaware*
Colorado
Maryland
Michigan
New Jersey
Ohio
Pennsylvania
Texas
42
FCH/DT Leasing II, L.L.C. Delaware*
Florida
North Carolina
Ohio
Tennessee
Texas
FCH/SH Leasing, L.L.C. Delaware*
Arizona
Florida
Georgia
Illinois
Kentucky (pending)
Pennsylvania
Texas
FCH/SH Leasing II, L.L.C. Delaware*
Vermont
DJONT/EPT Leasing, L.L.C. Delaware*
California
Georgia
Illinois
Kansas
New Jersey
North Carolina
Texas
DJONT/EPT Manager, Inc. Delaware*
California
Georgia
Illinois
Kansas
New Jersey
North Carolina
Texas
FCOAM, Inc. Texas*
Massachusetts
- -----------------------
* Domicile state