EXHIBIT 1.1
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HERSHA HOSPITALITY TRUST
(a Maryland real estate investment trust)
3,500,000 Common Shares
($0.01 Par Value)
UNDERWRITING AGREEMENT
September 20, 2004
UNDERWRITING AGREEMENT
September 20, 2004
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Hersha Hospitality Trust, a Maryland real estate investment trust (the
"Company"), proposes to issue and sell to Citigroup Global Markets, Inc. (the
"Underwriter"), an aggregate of 3,500,000 shares (the "Firm Shares") of common
shares, $ 0.01 par value (the "Common Stock"), of the Company. In addition,
solely for the purpose of covering over-allotments, the Company proposes to
grant to the Underwriter the option to purchase from the Company up to an
additional 525,000 shares of Common Stock (the "Additional Shares"). The Firm
Shares and the Additional Shares are hereinafter collectively sometimes referred
to as the "Shares." The Shares are described in the Prospectus which is
referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-113061)
including a base prospectus, relating to the Shares, which incorporates by
reference documents which the Company has filed or will file in accordance with
the provisions of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (collectively, the "Exchange Act"). The Company has
prepared a prospectus supplement (the "Prospectus Supplement") to the base
prospectus included as part of such registration statement setting forth the
terms of the offering, sale and plan of distribution of the Shares and
additional information concerning the Company and its business. Except where the
context otherwise requires, such registration statement, as amended when it
became effective, including all documents filed as part thereof or incorporated
by reference therein, and including any information contained in a Prospectus
(as defined below) subsequently filed with the Commission pursuant to Rule
424(b) under the Act and also including any other registration statement filed
pursuant to Rule 462(b) under the Act, collectively, are herein called the
"Registration Statement," and the base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as
supplemented by the Prospectus Supplement, in the form filed by the Company with
the Commission pursuant to Rule 424(b) under the Act on or before the second
business day following the date of this Underwriting Agreement (the "Agreement")
(or on such other day as the parties may mutually agree), is herein called the
"Prospectus." As used herein, "business day" shall mean a day on which the
American Stock Exchange is open for trading. Any reference herein to the
Registration Statement, the Prospectus, or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing after the execution hereof of any
document with the Commission
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deemed to be incorporated by reference therein. For purposes of this Agreement,
all references to the Registration Statement or the Prospectus or to any
amendment or supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System ("EDGAR"), and such copy shall be identical in content to any Prospectus
delivered to the Underwriter for use in connection with the offering of the
Shares.
The Company, Hersha Hospitality Limited Partnership (the
"Partnership") and the Underwriter agree as follows:
1. Sale and Purchase. Upon the basis of the representations and
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warranties and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Underwriter and the Underwriter agrees to
purchase from the Company the Firm Shares at a purchase price of $9.37 per
Share. The Company is advised by you that the Underwriter intends (i) to make a
public offering of the Firm Shares as soon as the Underwriter deems advisable
after this Agreement has been executed and delivered and (ii) initially to offer
the Firm Shares upon the terms set forth in the Prospectus. You may from time
to time increase or decrease the public offering price after the initial public
offering to such extent as you may determine.
In addition, the Company hereby grants to the Underwriter the option
to purchase, and upon the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Underwriter shall have
the right to purchase from the Company all or a portion of the Additional Shares
as may be necessary to cover over-allotments made in connection with the
offering of the Firm Shares, at the same purchase price per share to be paid by
the Underwriter to the Company for the Firm Shares. This option may be
exercised by the Underwriter at any time and from time to time on or before the
thirtieth day following the date of the Prospectus, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the "additional time of purchase"); provided, however, that the additional
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time of purchase shall not be earlier than the time of purchase (as defined
below) nor earlier than the second business day after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised.
2. Payment and Delivery. Payment of the purchase price for the Firm
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Shares shall be made to the Company by Federal Funds wire transfer, against
delivery to the Underwriter of Firm Shares through the facilities of The
Depository Trust Company ("DTC") for the account of the Underwriter. Such
payment and delivery shall be made at 10:00 A.M., New York City time, on
September 24, 2004 (unless another time shall be agreed to by you and the
Company). The time at which such payment and delivery are to be made is
hereinafter sometimes called "the time of purchase." Electronic transfer of the
Firm Shares shall be made to you at the time of purchase in such names and in
such denominations as you shall specify.
Payment of the purchase price for the Additional Shares shall be made
at the additional time of purchase in the same manner and at the same office as
the payment for the
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Firm Shares. Electronic transfer of the Additional Shares shall be made to you
at the additional time of purchase in such names and in such denominations as
you shall specify.
Deliveries of the documents described in Section 6 hereof with respect
to the purchase of the Shares shall be made at the offices of Underwriter's
Counsel and the address of its New York office, at 9:00 A.M., New York City
time, on the date of the closing of the purchase of the Firm Shares or the
Additional Shares, as the case may be.
3. Representations and Warranties of the Company. Each of the
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representations and warranties made herein with respect to HHMLP (as defined
below) are made to the best of the Company's knowledge, after due inquiry. The
Company and the Partnership, jointly and severally, represent and warrant to and
agree with the Underwriter that:
(a) the Company meets the requirements for use of Form S-3 under
the Act. The Registration Statement has been filed with the Commission and
has been declared effective under the Act. The Company has not received,
and has no notice of, any order of the Commission preventing or suspending
the use of the Registration Statement, or threatening or instituting
proceedings for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
have been so described or filed. The Prospectus Supplement has been or will
be so prepared and will be filed pursuant to Rule 424(b) of the Act on or
before the second business day following the date of this Agreement or on
such other day as the parties may mutually agree. Copies of the
Registration Statement and the Prospectus, any such amendments or
supplements and all documents incorporated by reference therein that were
filed with the Commission on or prior to the date of this Agreement
(including one fully executed copy of the Registration Statement and each
amendment thereto for the Underwriter) have been delivered to the
Underwriter and its counsel. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than
the Registration Statement, the Prospectus or any other materials, if any,
permitted by the Act;
(b) each part of the Registration Statement, when such part became
or becomes effective or was or is filed with the Commission, and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the time of purchase and any additional
times of purchase, conformed or will conform in all material respects with
the requirements of the Act. Each part of the Registration Statement, when
such part became or becomes effective or was or is filed with the
Commission, did not or will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus and
any amendment or supplement thereto, on the date of filing thereof with the
Commission and at the time of purchase and any additional times of
purchase, did not or will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the
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foregoing shall not apply to statements in, or omissions from, any such
document in reliance upon, and in conformity with, written information
concerning the Underwriter that was furnished in writing to the Company by
the Underwriter, on behalf of the Underwriter, specifically for use in the
preparation thereof;
(c) the documents incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto, that were
or are filed prior to the time of purchase, when they became or become
effective under the Act or were or are filed with the Commission under the
Act or the Exchange Act, as the case may be, conformed or will conform in
all material respects with the requirements of the Act and the Exchange
Act, as applicable, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(d) the Prospectus delivered to the Underwriter for use in
connection with this offering will be identical to the versions of the
Prospectus created to be transmitted to the Commission for filing via
EDGAR, except to the extent permitted by Regulation S-T;
(e) no stop order of the Commission preventing or suspending the
use of the Prospectus or the effectiveness of the Registration Statement
has been issued and no proceedings for such purpose have been instituted
or, to the Company's knowledge are contemplated by the Commission;
(f) as of the date of this Agreement, the Company has an
authorized and outstanding capitalization as set forth in the Prospectus
under the heading "Capitalization" and all of the issued and outstanding
shares of capital stock, including the Common Stock, of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right;
(g) the Company is and at each Closing Date will be the sole
general partner of the Partnership; as of June 30, 2004, the Company owns
approximately 85.2% of the units in the Partnership, and the limited
partners of the Partnership own, in the aggregate, approximately 14.8% of
the units in the Partnership.
(h) the Company has been duly organized and is validly existing as
a real estate investment trust in good standing under the laws of the State
of Maryland, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as contemplated herein;
(i) the Company is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the
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conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing would not, individually or
in the aggregate, have a material adverse effect on the business,
properties, financial condition, or results of operation or prospects of
the Company and the Subsidiaries (as defined below ) taken as a whole (a
"Material Adverse Effect");
(j) the Company has no subsidiaries (as defined in the Act) other
than the subsidiaries provided on Schedule A (collectively, the
"Subsidiaries"); the Company owns, directly or indirectly, the interests in
each of the Subsidiaries as provided on Schedule A; other than the
interests in the Subsidiaries, the Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, limited liability company, joint venture, association or other
entity; complete and correct copies of the organizational documents of the
Company, the Partnership and the Subsidiaries and all amendments thereto
have been delivered to you, and no changes therein will be made subsequent
to the date hereof and prior to the time of purchase; each Subsidiary has
been duly organized and is validly existing as a corporation, limited
liability company, limited partnership or trust in good standing under the
laws of the jurisdiction of its organization, with full power and authority
to own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus; each Subsidiary
is duly qualified to do business as a foreign entity and is in good
standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect; all of
the outstanding shares of capital stock of each of the Subsidiaries which
are corporations have been duly authorized and validly issued, are fully
paid and non-assessable and, except as disclosed in the Prospectus, the
ownership interest of the Company in each Subsidiary are owned by the
Company subject to no security interest, other encumbrance or adverse
claims; and, except as disclosed in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding;
(k) the Partnership has been duly organized and is validly
existing as a limited partnership in good standing under the laws of the
Commonwealth of Virginia, with full partnership power and authority to own,
lease and operate its properties and conduct its business as described in
the Registration Statement and the Prospectus and to execute and deliver
this Agreement;
(l) the Partnership is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Partnership;
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(m) Hersha Hospitality Management, L.P. ("HHMLP") has been duly
organized and is validly existing as a limited partnership under the laws
of the Commonwealth of Pennsylvania with all requisite partnership power
and authority to conduct its business as now conducted and as proposed to
be conducted, and to own, lease and operate its properties, as described in
the Registration Statement and Prospectus, and is qualified to do business
and is in good standing as a foreign limited partnership in each other
jurisdiction in which the failure so to qualify could reasonably be
expected to have a Material Adverse Effect on HHMLP. HHMLP is not in
violation of any provision of its partnership agreement or other governing
documents and is not in default or in breach of, and does not know of the
occurrence of any event that with the giving of notice or the lapse of time
or both would constitute a default under or breach of, any term or
condition of any material agreement or instrument to which it is a party or
by which any of its properties is bound, except as disclosed in the
Registration Statement and Prospectus. No consent, approval, authorization
or order from any court, governmental agency or body is required in
connection with the consummation by HHMLP of the transactions contemplated
herein and in the Registration Statement and Prospectus, except such as may
be required by the Act, the Exchange Act, and applicable state securities
or blue sky laws.
(n) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and free of
statutory and contractual preemptive rights, resale rights, rights of first
refusal and similar rights;
(o) the capital stock of the Company, including the Shares, and
the units of the Partnership conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus and the certificates for the Shares are in due and proper form
and the holders of the Shares will not be subject to personal liability by
reason of being such holders;
(p) this Agreement has been duly authorized, executed and
delivered by the Company and the Partnership;
(q) neither the Company, the Partnership nor any of the
Subsidiaries is in breach or violation of or in default under (nor has any
event occurred which with notice, lapse of time or both would result in any
breach or violation of, constitute a default under or give the holder of
any indebtedness (or a person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a part of such
indebtedness under) (i) its respective charter or by-laws, or (ii) any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company, the Partnership or any of the
Subsidiaries is a party or by which any of them or any of their properties
may be bound or affected, except with respect to (ii) as individually or in
the aggregate would not have a Material Adverse Effect, and the execution,
delivery and performance of this Agreement, the issuance and sale of the
Shares and the
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consummation of the transactions contemplated hereby will not conflict
with, result in any breach or violation of or constitute a default under
(nor constitute any event which with notice, lapse of time or both would
result in any breach or violation of or constitute a default under) the
charter or by-laws of the Company or the organizational documents of the
Partnership or any of the Subsidiaries, or any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or
any license, lease, contract or other agreement or instrument to which the
Company, the Partnership or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound or affected,
or any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company, the Partnership or any
of the Subsidiaries;
(r) during the period of at least the last 24 calendar months
prior to the date of this Agreement, the Company has timely filed with the
Commission all documents and other material required to be filed pursuant
to Sections 13, 14 and 15(d) under the Exchange Act. During the period of
at least the last 36 calendar months preceding the filing of the
Registration Statement, the Company has filed all reports required to be
filed pursuant to Sections 13, 14 and 15(d) under the Exchange Act. As of
the date of this Agreement, the aggregate market value of the Company's
voting stock held by nonaffiliates of the Company was equal to or greater
than $150 million;
(s) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares or the consummation by the Company or the
Partnership of the transactions contemplated hereby other than registration
of the Shares under the Act, which has been or will be effected, and any
necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriter or under the rules and regulations of the American Stock
Exchange or NASD;
(t) except as set forth in the Registration Statement and the
Prospectus, (i) no person has the right, contractual or otherwise, to cause
(a) the Company to issue or sell to it any shares of Common Stock or shares
of any other capital stock or other equity interests of the Company, or (b)
the Partnership to issue or sell to it any units or other equity interests
of the Partnership, (ii) no person has any preemptive rights, resale
rights, rights of first refusal or other rights to purchase any shares of
Common Stock or shares of any other capital stock or other equity interests
of the Company, and (iii) no person has the right to act as an underwriter
or as a financial advisor to the Company in connection with the offer and
sale of the Shares, in the case of each of the foregoing clauses (i), (ii)
and (iii), whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby or
otherwise; except as provided on Schedule B, no person has the right,
contractual or otherwise, to cause the Company to register under the Act
any shares of Common Stock or shares of any other capital stock or other
equity interests of the Company, or to include any such shares or interests
in the Registration Statement or the offering contemplated thereby, whether
as a result of the
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filing or effectiveness of the Registration Statement or the sale of the
Shares as contemplated thereby or otherwise;
(u) each of the Company, the Partnership, HHMLP and the
Subsidiaries has all necessary licenses, authorizations, franchises,
consents and approvals and has made all necessary filings required under
any federal, state, local or foreign law, regulation or rule, and has
obtained all necessary authorizations, consents and approvals from other
persons, in order to conduct its respective business, except where the
failure to so have, file or obtain would not have a Material Adverse
Effect; neither the Company, the Partnership nor any of the Subsidiaries is
in violation of, or in default under, or has received notice of any
proceedings relating to revocation or modification of, any such license,
authorization, consent or approval or any federal, state, local or foreign
law, regulation or rule or any decree, order or judgment applicable to the
Company, the Partnership or any of the Subsidiaries, except where such
violation, default, revocation or modification would not, individually or
in the aggregate, have a Material Adverse Effect;
(v) all legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
(w) there are no actions, suits, claims, investigations or
proceedings pending or threatened or, to the Company's or Partnership's
knowledge, contemplated to which the Company, the Partnership, HHMLP or any
of the Subsidiaries or any of their respective directors or officers is or
would be a party or of which any of their respective properties is or would
be subject at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority or
agency, except any such action, suit, claim, investigation or proceeding
which would not result in a judgment, decree or order having, individually
or in the aggregate, a Material Adverse Effect or preventing consummation
of the transactions contemplated hereby;
(x) all agreements between or among the Company, the Partnership
and HHMLP and their respective Subsidiaries, respectively, are legal,
valid, and binding obligations of the Company, the Partnership and HHMLP
and their respective Subsidiaries, respectively, enforceable in accordance
with their respective terms, except to the extent enforceability may be
limited by (i) bankruptcy, insolvency, moratorium, liquidation,
reorganization, or similar laws affecting creditors' rights generally,
regardless of whether such enforceability is considered in equity or at
law, (ii) general equity principles and (iii) limitations imposed by
federal or state securities laws or the public policy underlying such laws
regarding the enforceability of indemnification or contribution provisions.
(y) Moore Stephens, P.C. and Reznick, Fedder & Silverman, CPAs,
PC, whose reports on the consolidated financial statements of the Company,
the Partnership and the Subsidiaries were filed with the Commission and
incorporated by reference in the
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Registration Statement and the Prospectus, as of the date of such reports,
were independent public accountants as required by the Act. KPMG LLP is an
independent public accountant as required by the Act;
(z) the audited financial statements included or incorporated in
the Registration Statement and the Prospectus, together with the related
notes and schedules, are accurate in all material respects and present
fairly the consolidated financial position of the Company, the Partnership
and the Subsidiaries as of the dates indicated and the consolidated results
of operations and cash flows of the Company, the Partnership and the
Subsidiaries for the periods specified and have been prepared in compliance
with the requirements of the Act and in conformity with generally accepted
accounting principles applied on a consistent basis during the periods
involved; any pro forma financial statements or data included or
incorporated in the Registration Statement and the Prospectus comply with
the requirements of Regulation S-X of the Act and the assumptions used in
the preparation of such pro forma financial statements and data are
reasonable, the pro forma adjustments used therein are appropriate to give
effect to the transactions or circumstances described therein and the pro
forma adjustments have been properly applied to the historical amounts in
the compilation of those statements and data; the other financial and
statistical data set forth in the Registration Statement and the Prospectus
are accurately presented and prepared on a basis consistent with the
financial statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to be
included in the Registration Statement and the Prospectus that are not
included as required; and the Company, the Partnership and the Subsidiaries
do not have any material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations), not disclosed in the
Registration Statement and the Prospectus;
(aa) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development reasonably expected to
result in a material adverse change, in the business, properties,
management, financial condition or results of operations of the Company,
the Partnership, and the Subsidiaries, taken as a whole, or HHMLP, (ii)
except as contemplated by the Prospectus, any transaction which is material
to the Company, the Partnership and the Subsidiaries taken as a whole,
(iii) except as disclosed in the prospectus, any obligation, direct or
contingent (including any off-balance sheet obligations), incurred by the
Company, the Partnership, HHMLP or the Subsidiaries, which is material to
the Company, the Partnership and the Subsidiaries taken as a whole, or
HHMLP, (iv) except as disclosed in the prospectus, any material change in
the capital stock, ownership interests or outstanding indebtedness of the
Company, the Partnership or the Subsidiaries or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company;
(bb) the Company has obtained for the benefit of the Underwriter
the agreement (a "Lock-Up Agreement"), in the form set forth as Exhibit A
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hereto, of each of the individuals listed on Schedule C;
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(cc) the Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(dd) the Company, the Partnership and each of the Subsidiaries has
good and marketable title to all property (real and personal) described the
Registration Statement and in the Prospectus as being owned by each of
them, free and clear of all liens, claims, security interests or other
encumbrances except for such liens, security interests and encumbrances
related to debt financing as provided on Schedule D or that would not
individually or in the aggregate have a Material Adverse Effect; no person
other than the Company and HT/CNL Metro Hotels, L.P. has an option or right
of first refusal to purchase all or part of any hotel owned by the Company,
the Partnership or the Subsidiaries (the "Hotels") or any interest therein;
each Hotel complies with all applicable codes, laws, and regulations
(including, without limitation, building and zoning codes, laws and
regulations, and laws relating to access to hotels), except if and to the
extent disclosed in the Prospectus and except for such failures to comply
that would not individually or in the aggregate have a Material Adverse
Effect; 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 effect the size of, use of,
improvements on, construction on, or access to any of the Hotels, except
such proceedings or actions that would not have a Material Adverse Effect;
(ee) the Company, the Partnership and the Subsidiaries own, or
have obtained valid and enforceable licenses for, or other rights to use,
the inventions, patent applications, patents, trademarks (both registered
and unregistered), tradenames, copyrights, trade secrets and other
proprietary information described in the Registration Statement and the
Prospectus as being owned or licensed by them or which are necessary for
the conduct of their respective businesses, except where the failure to
own, license or have such rights would not, individually or in the
aggregate, have a Material Adverse Effect (collectively, "Intellectual
Property"); to the Company's knowledge (i) there are no third parties who
have or will be able to establish rights to any Intellectual Property,
except for the ownership rights of the owners of the Intellectual Property
which is licensed to the Company; (ii) there is no infringement by third
parties of any Intellectual Property; (iii) there is no pending or
threatened action, suit, proceeding or claim by others challenging the
Company's, the Partnership's rights, or HHMLP's in or to any Intellectual
Property, and the Company and the Partnership are unaware of any facts
which could form a reasonable basis for any such claim; (iv) there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property, and the
Company and the Partnership are unaware of any facts which could form a
reasonable basis for any such claim; (v) there is no pending or threatened
action, suit, proceeding or claim by others that the Company or the
Partnership infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the
Company and the Partnership are unaware of any facts which could form a
reasonable basis for any such claim; (vi) there is no patent or patent
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application that contains claims that interfere with the issued or pending
claims of any of the Intellectual Property; and (vii) there is no prior art
that may render any patent application owned by the Company or the
Partnership of the Intellectual Property unpatentable that has not been
disclosed to the U.S. Patent and Trademark Office;
(ff) except for matters which would not, individually or in the
aggregate, have a Material Adverse Effect, (i) neither the Company, the
Partnership nor any of the Subsidiaries is engaged in any unfair labor
practice; (ii) there is (A) no unfair labor practice complaint pending or,
to the Company's or the Partnership's knowledge after due inquiry,
threatened against the Company, the Partnership or any of the Subsidiaries
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is
pending or threatened, (B) no strike, labor dispute, slowdown or stoppage
pending or, to the Company's or the Partnership's knowledge after due
inquiry, threatened against the Company, the Partnership or any of the
Subsidiaries and (C) no union representation dispute currently existing
concerning the employees of the Company, the Partnership, HHMLP or any of
the Subsidiaries, and (iii) to the Company's knowledge after due inquiry,
(A) no union organizing activities are currently taking place concerning
the employees of the Company, the Partnership, HHMLP or any of the
Subsidiaries and (B) there has been no violation of any federal, state,
local or foreign law relating to discrimination in the hiring, promotion or
pay of employees, any applicable wage or hour laws or any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder concerning the employees of the Company,
the Partnership, HHMLP or any of the Subsidiaries;
(gg) the Company, the Partnership, HHMLP and the Subsidiaries and
their properties, assets and operations are in compliance with, and hold
all permits, authorizations and approvals required under, Environmental
Laws (as defined below), except to the extent that failure to so comply or
to hold such permits, authorizations or approvals would not, individually
or in the aggregate, have a Material Adverse Effect; except as would not,
individually or in the aggregate, have a Material Adverse Effect, there are
no past, present or, to the Company's or Partnership's knowledge after due
inquiry, reasonably anticipated future events, conditions, circumstances,
activities, practices, actions, omissions or plans that could reasonably be
expected to give rise to any material costs or liabilities to the Company,
the Partnership, HHMLP or the Subsidiaries under, or to interfere with or
prevent compliance by the Company, the Partnership, HHMLP or the
Subsidiaries with, Environmental Laws; except as would not, individually or
in the aggregate, have a Material Adverse Effect, neither the Company, the
Partnership, HHMLP nor any of the Subsidiaries (i) is the subject of any
investigation, (ii) has received any notice or claim, (iii) is a party to
or affected by any pending or threatened action, suit or proceeding, (iv)
is bound by any judgment, decree or order or (v) has entered into any
agreement, in each case relating to any alleged violation of any
Environmental Law or any actual or alleged release or threatened release or
cleanup at any location of any Hazardous Materials (as defined below) (as
used herein, "Environmental Law" means any federal, state, local or foreign
law, statute, ordinance,
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rule, regulation, order, decree, judgment, injunction, permit, license,
authorization or other binding requirement, or common law, relating to
health, safety or the protection, cleanup or restoration of the environment
or natural resources, including those relating to the distribution,
processing, generation, treatment, storage, disposal, transportation, other
handling or release or threatened release of Hazardous Materials, and
"Hazardous Materials" means any material (including, without limitation,
pollutants, contaminants, hazardous or toxic substances or wastes) that is
regulated by or may give rise to liability under any Environmental Law);
(hh) in the ordinary course of its business, the Company, the
Partnership, HHMLP and each of the Subsidiaries conducts a periodic review
of the effect of the Environmental Laws on its business, operations and
properties, in the course of which it identifies and evaluates associated
costs and liabilities (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties or
compliance with the Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties);
(ii) all tax returns required to be filed as of the date hereof by
the Company, the Partnership, HHMLP and each of the Subsidiaries have been
filed or valid extensions to such filings have been obtained, and all taxes
and other assessments of a similar nature (whether imposed directly or
through withholding) including any interest, additions to tax or penalties
applicable thereto due or claimed to be due from such entities have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided;
(jj) commencing with the Company's taxable year ended December 31,
1999, the Company was organized and has operated in conformity with the
requirements for qualification and taxation as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended (the "Code"), and its proposed method of operations
will enable it to continue to meet the requirements for qualification and
taxation as a REIT. All statements in the Prospectus regarding the
Company's qualification as a REIT are true, complete and correct in all
material respects;
(kk) the Company, the Partnership, HHMLP and each of the
Subsidiaries maintains insurance covering its properties, operations,
personnel and businesses as the Company and the Partnership deem adequate;
such insurance insures against such losses and risks to an extent which is
in accordance with customary industry practice to protect the Company, the
Partnership, HHMLP and the Subsidiaries and their businesses; all such
insurance is fully in force on the date hereof and will be fully in force
at the time of purchase;
(ll) neither the Company, the Partnership, HHMLP nor any of the
Subsidiaries has sustained since the date of the last audited financial
statements included in the Registration Statement and the Prospectus any
loss or interference with its respective business from fire, explosion,
flood (except as would not, individually or in the
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aggregate, have a Material Adverse Effect) or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree;
(mm) except as disclosed in the Registration Statement and
Prospectus, neither the Company, the Partnership nor HHMLP has sent or
received any communication regarding termination of, or intent not to
renew, any of the contracts or agreements referred to or described in, or
filed as an exhibit to, the Registration Statement, and no such termination
or non-renewal has been threatened by the Company, the Partnership or, to
the Company's knowledge, any other party to any such contract or agreement;
(nn) the Company, the Partnership, HHMLP and each of the
Subsidiaries maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences;
(oo) the Company has established, maintains and evaluates
disclosure controls and procedures (as such term is defined in Rule 13a-15
and 15d-15 under the Exchange Act) in accordance with such rules and any
related rules of the Commission or the American Stock Exchange; such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's Chief Executive Officer and
its Chief Financial Officer by others within those entities, and such
disclosure controls and procedures are effective to perform the functions
for which they were established; the Company's auditors and the Audit
Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record, process,
summarize, and report financial data; and (ii) any fraud, whether or not
material, that involves management or other employees who have a role in
the Company's internal controls; and since the date of the most recent
evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses;
(pp) the Company is in compliance with all presently applicable
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder (the "Sarbanes-Oxley Act") and is actively taking
steps to ensure that it will be in compliance with other applicable
provisions of the Sarbanes-Oxley Act upon the effectiveness of such
provisions;
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(qq) the Company has provided you true, correct, and complete
copies of all documentation pertaining to any extension of credit in the
form of a personal loan made, directly or indirectly, by the Company to any
director or executive officer of the Company, or to any family member or
affiliate of any director or executive officer of the Company; and since
July 30, 2002, the Company has not, directly or indirectly, including
through any subsidiary: (i) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or for
any director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the Company; or
(ii) made any material modification, including any renewal thereof, to any
term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002;
(rr) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate;
(ss) neither the Company, the Partnership nor any of the
Subsidiaries nor, to the Company's and the Partnership's knowledge after
due inquiry, any employee or agent of the Company, the Partnership or the
Subsidiaries has made any payment of funds of the Company, the Partnership
or the Subsidiaries 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 Registration Statement or the
Prospectus;
(tt) neither the Company, the Partnership nor any of the
Subsidiaries nor any of their respective directors, officers, affiliates or
controlling persons has taken, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result
in, under the Exchange Act or otherwise, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares;
(uu) to the Company's knowledge after due inquiry, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater securityholders, except as
set forth in the Registration Statement and the Prospectus;
In addition, any certificate signed by any officer of the Company, the
Partnership or any of the Subsidiaries and delivered to the Underwriter or
counsel for the Underwriter in connection with the offering of the Shares shall
be deemed to be a representation and warranty by the Company, the Partnership or
Subsidiary, as the case may be, as to matters covered thereby, to the
Underwriter.
-15-
4. Certain Covenants of the Company. The Company and the Partnership
--------------------------------
hereby agree:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states or other jurisdictions as you
may designate and to maintain such qualifications in effect so long as you
may request for the distribution of the Shares; provided that the Company
--------
shall not be required to qualify as a foreign corporation or to consent to
the service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the Shares);
and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(b) the Company will prepare the Prospectus in a form approved by
the Underwriter and file such Prospectus with the Commission pursuant to
Rule 424(b) under the Act not later than 10:00 A.M. (New York City time),
on or before the second business day following the date of this Agreement
or on such other day as the parties may mutually agree and to furnish
promptly (and with respect to the initial delivery of such Prospectus, not
later than 10:00 A.M. (New York City time) on or before the second business
day following the date of this Agreement or on such other day as the
parties may mutually agree) to the Underwriter copies of the Prospectus (or
of the Prospectus as amended or supplemented if the Company shall have made
any amendments or supplements thereto after the effective date of the
Registration Statement) in such quantities and at such locations as the
Underwriter may reasonably request for the purposes contemplated by the
Act, and the Prospectus and any amendments or supplements thereto furnished
to the Underwriter will be identical to the version created to be
transmitted to the Commission for filing via EDGAR, except to the extent
permitted by Regulation S-T;
(c) the Company will advise the Underwriter, confirming such
advice in writing, of (i) the receipt of any comments from the Commission
relating to any filing of the Company under the Act or the Exchange Act,
(ii) any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information with
respect thereto, (iii)a notice of institution of proceedings for, or the
entry of a stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of the
Prospectus, (iv) the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, (v) the initiation, threatening or
contemplation of any proceedings for any of such purposes and, if the
Commission or any other governmental agency or authority should issue any
such order, the Company will make every reasonable effort to obtain the
lifting or removal of such order as soon as possible. The Company will
advise the Underwriter promptly of any proposal to amend or supplement the
Registration Statement or the Prospectus including by filing any documents
that would be incorporated therein by reference and to file no such
amendment or supplement to which the Underwriter shall object to in
writing;
-16-
(d) the Company will advise the Underwriter promptly and, if
requested by the Underwriter, will confirm such advice in writing when any
post-effective amendment to the Registration Statement becomes effective
under the Act;
(e) if necessary, to file a registration statement pursuant to
Rule 462(b) under the Act;
(f) to advise the Underwriter promptly of the happening of any
event within the time during which a Prospectus relating to the Shares is
required to be delivered under the Act which is reasonably likely to
require the making of any change in the Prospectus then being used, or in
the information incorporated by reference therein, so that the Prospectus
would not include an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with any law. If within the time during
which a Prospectus relating to the Shares is required to be delivered under
the Act any event shall occur or condition shall exist which, in the
reasonable opinion of the Company, the Underwriter or its counsel, would
require the making of any change in the Prospectus then being used, or in
the information incorporated by reference therein, so that the Prospectus
would not include an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company will promptly
prepare and furnish to the Underwriter copies of the proposed amendment or
supplement before filing any such amendment or supplement with the
Commission and thereafter promptly furnish, at the Company's own expense,
to the Underwriter and to dealers copies in such quantities and at such
locations as the Underwriter may from time to time reasonably request of an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not,
in the circumstances when it is so delivered, be misleading or so that the
Prospectus will comply with the law;
(g) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which will satisfy
the provisions of Section 11(a) of the Act) covering a period of twelve
months beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act) as soon as is reasonably practicable
after the termination of such twelve-month period but not later than April
2, 2005;
(h) to furnish to its shareholders as soon as practicable after
the end of each fiscal year an annual report (including a consolidated
balance sheet and statements of income, shareholders' equity and cash flow
of the Company, the Partnership and the Subsidiaries for such fiscal year,
accompanied by a copy of the certificate or report thereon of nationally
recognized independent certified public accountants);
-17-
(i) to furnish to the Underwriter a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto and documents
incorporated by reference therein) and such number of conformed copies of
the foregoing (other than exhibits) as the Underwriter may reasonably
request;
(j) to furnish to you promptly for a period of five years from the
date of this Agreement (i) copies of any reports, proxy statements, or
other communications which the Company shall send to its stockholders or
shall from time to time publish or publicly disseminate, (ii) copies of all
annual, quarterly and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by the
Commission, (iii) copies of documents or reports filed with any national
securities exchange on which any class of securities of the Company is
listed, and (iv) such other information as you may reasonably request
regarding the Company, the Partnership or the Subsidiaries provided that
the obligations of this Section 4(j) shall be deemed satisfied if such
filings are report are timely filed with the Commission and are generally
available to the public through EDGAR;
(k) to furnish to you as early as practicable prior to the time of
purchase and any additional time of purchase, as the case may be, a copy of
the latest available unaudited interim and monthly consolidated financial
statements, if any, of the Company, the Partnership and the Subsidiaries
which have been read by the Company's independent certified public
accountants, as stated in their letter to be furnished pursuant to Section
6(c) hereof;
(l) to apply the net proceeds from the sale of the Shares in
the manner set forth under the caption "Use of Proceeds" in the Prospectus;
(m) to pay all costs, expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, the
Prospectus, and any amendments or supplements thereto, and the printing and
furnishing of copies of each thereof to the Underwriter and to dealers
(including costs of mailing and shipment), (ii) the registration, issue,
sale and delivery of the Shares including any stock or transfer taxes and
stamp or similar duties payable upon the sale, issuance or delivery of the
Shares to the Underwriter, (iii) the producing, word processing and/or
printing of this Agreement and any closing documents (including
compilations thereof) and the reproduction and/or printing and furnishing
of copies of each thereof to the Underwriter and (except closing documents)
to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state or foreign
laws and the determination of their eligibility for investment under state
or foreign law as aforesaid (including the legal fees and filing fees and
other disbursements of counsel for the Underwriter) and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys to
the Underwriter and to dealers, (v) the listing of the Shares on the
American Stock Exchange, (vi) any filing for review of the public offering
of the Shares by the NASD, including the legal fees and filing fees and
other disbursements of counsel to the Underwriter, (vii) the
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fees and disbursements of any transfer agent or registrar for the Shares,
(viii) the costs and expenses of the Company relating to presentations or
meetings undertaken in connection with the marketing of the offering and
sale of the Shares to prospective investors and the Underwriter's sales
forces, 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, travel,
lodging and other expenses incurred by the officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with
the road show, and the performance of the Company's and the Partnership's
other obligations hereunder;
(n) not to sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of
or agree to dispose of, directly or indirectly, any Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock
or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock,
or file or cause to be declared effective a registration statement under
the Act relating to the offer and sale of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock
or other rights to purchase Common Stock or any other securities of the
Company that are substantially similar to Common Stock for a period of 45
days after the date hereof (the "Lock-Up Period"), without the prior
written consent of the Underwriter, except for (i) the registration of the
Shares and the sales to the Underwriter pursuant to this Agreement, (ii)
issuances of Common Stock upon the exercise of options or warrants
disclosed as outstanding in the Registration Statement and the Prospectus,
(iii) the issuance of employee stock options not exercisable during the
Lock-Up Period pursuant to stock option plans described in the Registration
Statement and the Prospectus, (iv) the issuance of up to 10,000,000 units
of limited partnership interest in the Partnership in connection with the
acquisition of hotel properties, provided that the recipient of such units
of limited partnership agrees in writing, prior to the issuance, with the
Underwriter to be bound by the terms of this section and (v) the issuance
of shares of Common Stock pursuant to any dividend reinvestment component
of the Company's dividend reinvestment plan;
(o) to use its best efforts to cause the Common Stock to be listed
on the American Stock Exchange;
(p) the Company shall use its best efforts to obtain for the
benefit of the Underwriter the agreement (a "Lock-Up Agreement"), in the
form set forth as Exhibit A hereto, of each of the individuals listed on
---------
Schedule C; and
(q) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common
Stock.
5. Reimbursement of Underwriter's Expenses. If the Shares are not
---------------------------------------
delivered for any reason other than the termination of this Agreement pursuant
to a default by the Underwriter in its obligations hereunder, the Company and
the Partnership, jointly and severally, shall, in
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addition to paying the amounts described in Section 4(m) hereof, reimburse the
Underwriter for all of its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of its counsel.
6. Conditions of Underwriter's Obligations. The obligations of the
---------------------------------------
Underwriter hereunder are subject to the accuracy of the representations and
warranties on the part of the Company and the Partnership on the date hereof, at
the time of purchase and, if applicable, at the additional time of purchase, the
performance by the Company and the Partnership of their obligations hereunder
and to the following additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase and,
if applicable, at the additional time of purchase, an opinion of Hunton &
Williams LLP, counsel for the Company, addressed to the Underwriter, and
dated the time of purchase or the additional time of purchase, as the case
may be, and in form and substance satisfactory to Clifford Chance US LLP,
counsel for the Underwriter, as provided in Exhibit B.
---------
(b) The Company shall furnish to you at the time of purchase and,
if applicable, at the additional time of purchase, an opinion of Shah &
Byler, counsel for HHMLP, addressed to the Underwriter, and dated the time
of purchase or the additional time of purchase, as the case may be, and in
form and substance satisfactory to Clifford Chance US LLP, counsel for the
Underwriter, stating that:
(i) HHMLP has been duly formed and is validly existing as a
limited partnership under the laws of the Commonwealth of Pennsylvania
with the partnership power and authority to conduct its business as
described in the Prospectus. HHMLP is not in violation of any
provision of its certificate of limited partnership, partnership
agreement or other governing documents. HHMLP is not in default under
or in breach of, or subject to any event that with the giving of
notice or the lapse of time or both would constitute a default under
or breach of, any term or condition of any material agreement or
instrument to which HHMLP is a party or by which any of its properties
is bound, except as disclosed in the Prospectus.
(ii) HHMLP owns, possesses or has obtained such permits as
are necessary to own or lease the properties owned by the Company or
its Subsidiaries and to carry on its businesses in the manner
described in the Prospectus; HHMLP has fulfilled and performed all of
its obligations with respect to all such permits, and no event has
occurred that allows, or after notice or lapse of time or both would
allow, revocation or modification thereof or would result in any other
impairment of the rights of the holder of any such permit to the
extent the same would have a Material Adverse Effect on HHMLP.
(iii) The execution, delivery, and performance of this
Agreement, the compliance with the terms and provisions hereof and the
consummation of the
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transactions contemplated herein and in the Registration Statement and
Prospectus, do not and will not:
A. violate or constitute a breach of or default under the
certificate of limited partnership, partnership agreement or
other governing documents of HHMLP;
B. result in a breach of, or constitute a default under, any
contract that was filed, or the form of which was filed, as an
exhibit to the Registration Statement;
C. to such counsel's knowledge, violate any applicable statute,
rule or regulation, order of any court or any federal, state, or
local governmental authority or agency binding on HHMLP or any of
their respective businesses, investments, properties, assets or
Hotels;
D. 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.
(iv) To the knowledge of such counsel, HHMLP is not in
violation of, or in default with respect to, any statute, rule,
regulations, 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 materially adverse effect on
the financial position, results of operations, or business of HHMLP.
(v) To such counsel's knowledge, neither the Company nor any
of the Subsidiaries is in material breach or material violation of or
in material default under (nor has any event occurred which with
notice, lapse of time, or both would result in any material breach or
material violation of, or constitute a material default under any
indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their
respective properties may be bound or affected;
(vi) To such counsel's knowledge, except as described in the
Prospectus, there is not pending, threatened or contemplated, any
action, suit, proceeding, inquiry or investigation before or by any
court or any federal, state or local governmental authority or agency
to which HHMLP or any of its officers, directors or partners are or
may be a party, or to which any of the properties, assets or rights of
any such entity or person may be subject, which, if determined
adversely to HHMLP, (A) could reasonably be expected to have a
material adverse effect on the financial position, results of
operations, business or material assets of HHMLP, or (B) that could
reasonably be expected to adversely affect the consummation of the
transactions contemplated by this Agreement.
-21-
(c) You shall have received from Moore Stephens, P.C., Reznick
Fedder & Silverman, CPAs, PC and KPMG LLP letters dated, respectively, the
date of this Agreement, the time of purchase and, if applicable, the
additional time of purchase, and addressed to the Underwriter in the forms
heretofore approved by the Underwriter.
(d) You shall have received at the time of purchase and, if
applicable, at the additional time of purchase, the favorable opinion of
Clifford Chance US LLP, counsel for the Underwriter, dated the time of
purchase or the additional time of purchase, as the case may be, in form
and substance satisfactory to you.
(e) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus shall have been filed to which you object in
writing.
(f) Prior to the time of purchase, and, if applicable, the
additional time of purchase, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto shall not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and (iii) the Prospectus and all amendments or
supplements thereto shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
(g) Between the time of execution of this Agreement and the time
of purchase or the additional time of purchase, as the case may be, no
material adverse change or any development reasonably expected to result in
a material adverse change in the business, properties, management,
financial condition or results of operations of the Company, the
Partnership and the Subsidiaries taken as a whole shall occur or become
known.
(h) The Company and the Partnership will, at the time of purchase
and, if applicable, at the additional time of purchase, deliver to you a
certificate of its Chief Executive Officer and its Chief Financial Officer,
in the case of the Company, and of its general partner, in the case of the
Partnership, in the form attached as Exhibit C hereto.
---------
(i) You shall have received signed Lock-up Agreements referred to
in Section 3(bb) hereof.
(j) The Company and the Partnership shall have furnished to you
such other documents and certificates as to the accuracy and completeness
of any statement in the Registration Statement and the Prospectus as of the
time of purchase and, if applicable, the additional time of purchase, as
you may reasonably request.
-22-
(k) The Shares shall have been approved for listing on the
American Exchange.
7. Termination. The obligations of the Underwriter hereunder shall be
-----------
subject to termination in the absolute discretion of the Underwriter if (x)
since the time of execution of this Agreement or the earlier respective dates as
of which information is given in the Registration Statement and the Prospectus,
there has been any material adverse change or any development reasonably
expected to result in a material adverse change in the business, properties,
management, financial condition or results of operations of the Company, the
Partnership, HHMLP and the Subsidiaries taken as a whole, which would, in the
Underwriter's judgment, make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the Prospectus, or (y) since of
execution of this Agreement, there shall have occurred: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on the American Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States; (iv) an outbreak or escalation of hostilities or acts of terrorism
involving the United States or a declaration by the United States of a national
emergency or war; or (v) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere,
if the effect of any such event specified in clause (iv) or (v) in the
Underwriter's judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the Prospectus, or (z) since the
time of execution of this Agreement, there shall have occurred any downgrading,
or any notice or announcement shall have been given or made of (i) any intended
or potential downgrading or (ii) any watch, review or possible change that does
not indicate an affirmation or improvement in the rating accorded any securities
of or guaranteed by the Company or any Subsidiary by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Act.
If the Underwriter elects to terminate this Agreement as provided in
this Section 7, the Company shall be notified promptly in writing.
If the sale to the Underwriter of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriter for any reason permitted under
this Agreement or if such sale is not carried out because the Company or the
Partnership shall be unable to comply with any of the terms of this Agreement,
the Company shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 4(m), 5 and 8 hereof), and the
Underwriter shall be under no obligation or liability to the Company or the
Partnership under this Agreement (except to the extent provided in Section 8
hereof).
-23-
8. Indemnity and Contribution.
--------------------------
(a) The Company and the Partnership, jointly and severally, agree
to indemnify, defend and hold harmless the Underwriter, its partners, directors
and officers, and any person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss, damage,
expense, liability or claim (including the reasonable cost of investigation)
which, jointly or severally, the Underwriter or any such person may incur under
the Act, the Exchange Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 8 being deemed to include documents
filed under the Exchange Act and deemed to be incorporated by reference therein
prior to the time of purchase, the Prospectus, including any Prospectus as
amended or supplemented by the Company), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be stated in
either such Registration Statement or such Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in conformity
with information concerning the Underwriter furnished in writing by or on behalf
of the Underwriter through you to the Company expressly for use in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or such
Prospectus or necessary to make such information not misleading, or (ii) any
untrue statement or alleged untrue statement of any material fact contained in
any audio or visual materials provided by the Company or the Partnership or
based upon written information furnished by or on behalf of the Company or the
Partnership including, without limitation, slides, videos, films or tape
recordings used in connection with the marketing of the Shares.
If any action, suit or proceeding (each, a "Proceeding") is brought
against the Underwriter or any such person in respect of which indemnity may be
sought against the Company or the Partnership pursuant to the foregoing
paragraph, the Underwriter or such person shall promptly notify the Company in
writing of the institution of such Proceeding and the Company shall assume the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided, however, that the omission to so notify the Company shall not relieve
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the Company or the Partnership from any liability which the Company or the
Partnership may have to the Underwriter or any such person or otherwise, unless
and to the extent such failure to so notify results in the forfeiture of
substantive rights or defenses by the Company or the partnership. The
Underwriter or such person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Underwriter or of such person unless the employment of such
counsel shall have been authorized in writing by the Company or the Partnership
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge
-24-
of the defense of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from, additional to or in conflict with those available to
the Company or the Partnership (in which case the Company shall not have the
right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company and paid as incurred (it being understood, however, that the
Company shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The Company and the Partnership shall not be
liable for any settlement of any Proceeding effected without their written
consent but if settled with the written consent of the Company or the
Partnership, the Company and the Partnership agree to indemnify and hold
harmless the Underwriter and any such person from and against any loss or
liability by reason of such settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have fully reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. 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 and does not include an
admission of fault, culpability or a failure to act, by or on behalf of such
indemnified party.
(b) The Underwriter agrees to indemnify, defend and hold harmless
the Company and the Partnership, their directors and officers, and any person
who controls the Company or the Partnership within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and the successors and assigns of all
of the foregoing persons, from and against any loss, damage, expense, liability
or claim (including the reasonable cost of investigation) which, jointly or
severally, the Company, the Partnership or any such person may incur under the
Act, the Exchange Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and in
conformity with information concerning the Underwriter furnished in writing by
the Underwriter to the Company expressly for use in the Registration Statement
(or in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or in a Prospectus, or arises out of or is based upon
any omission or alleged omission to state a material fact in connection with
such information required to be stated in such Registration Statement or such
Prospectus or necessary to make such information not misleading.
If any Proceeding is brought against the Company or the Partnership or
any such person in respect of which indemnity may be sought against the
Underwriter pursuant to the
-25-
foregoing paragraph, the Company, the Partnership or such person shall promptly
notify the Underwriter in writing of the institution of such Proceeding and the
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
-------- -------
notify the Underwriter shall not relieve the Underwriter from any liability
which the Underwriter may have to the Company, the Partnership or any such
person or otherwise. The Company, the Partnership or such person shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Company, the Partnership or such
person unless the employment of such counsel shall have been authorized in
writing by the Underwriter in connection with the defense of such Proceeding or
the Underwriter shall not have, within a reasonable period of time in light of
the circumstances, employed counsel to defend such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to or in
conflict with those available to the Underwriter (in which case the Underwriter
shall not have the right to direct the defense of such Proceeding on behalf of
the indemnified party or parties, but the Underwriter may employ counsel and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of the Underwriter), in any of which events such fees
and expenses shall be borne by the Underwriter and paid as incurred (it being
understood, however, that the Underwriter shall not be liable for the expenses
of more than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). The
Underwriter shall not be liable for any settlement of any such Proceeding
effected without its written consent of the Underwriter but if settled with the
written consent of the Underwriter, the Underwriter agrees to indemnify and hold
harmless the Company, the Partnership and any such person from and against any
loss or liability by reason of such settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 8 or insufficient to hold an indemnified party harmless in respect of
any losses, damages, expenses, liabilities or claims referred to therein, then
each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the
-26-
Company on the one hand and the Underwriter on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Partnership on the one hand and of the Underwriter
on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Partnership on the one hand and the Underwriter on the other
shall be deemed to be in the same respective proportions as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriter, bear to the aggregate public
offering price of the Shares. The relative fault of the Company and the
Partnership on the one hand and of the Underwriter on the other shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company or the Partnership or by the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending any Proceeding.
(d) The Company, the Partnership and the Underwriter agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in subsection (c)
above. Notwithstanding the provisions of this Section 8, the Underwriter shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by the Underwriter and distributed
to the public were offered to the public exceeds the amount of any damage which
the Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this
Section 8 and the covenants, warranties and representations of the Company and
the Partnership contained in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the Underwriter,
its partners, directors or officers or any person (including each partner,
officer or director of such person) who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, the Partnership, their directors or officers or any
person who controls the Company or the Partnership within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of the Shares. The
Company, the Partnership and the Underwriter agree promptly to notify each other
of the commencement of any Proceeding against it and, in the case of the
Company, against any of the Company's officers or
-27-
directors in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement or the Prospectus.
9. Information Furnished by the Underwriter. The statements set forth
----------------------------------------
in the seventh through tenth paragraphs under the caption "Underwriting" in the
Prospectus constitute the only information furnished by or on behalf of the
Underwriter as such information is referred to in Sections 3 and 8 hereof.
10. Notices. Except as otherwise herein provided, all statements,
-------
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriter, shall be sufficient in all respects if delivered or sent to
Citigroup Global Markets Inc., 388 Greenwich Street, New York, N.Y. 10013,
Attention: Transaction Structuring Group, and, if to the Company or the
Partnership shall be sufficient in all respects if delivered or sent to the
Company at the offices of the Company at 148 Sheraton Drive, Box A, New
Cumberland, PA 17070, Attention: Ashish R. Parikh.
11. Governing Law; Construction. This Agreement and any claim,
---------------------------
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim
--------------------------
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
and the Partnership consent to the jurisdiction of such courts and personal
service with respect thereto. The Company and the Partnership hereby consent to
personal jurisdiction, service and venue in any court in which any Claim arising
out of or in any way relating to this Agreement is brought by any third party
against the Underwriter or any indemnified party. The Underwriter and the
Company (on its behalf and, to the extent permitted by applicable law, on behalf
of its stockholders and affiliates) and the Partnership waive all right to trial
by jury in any action, proceeding or counterclaim (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this Agreement. The
Company and the Partnership agree that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company and/or the Partnership and may be enforced in any other
courts to the jurisdiction of which the Company or the Partnership is or may be
subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and
-------------------
is made solely for the benefit of the Underwriter, the Company and the
Partnership and to the extent provided in Section 8 hereof the controlling
persons, partners, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or corporation
(including a purchaser,
-28-
as such purchaser, from the Underwriter) shall acquire or have any right under
or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one
------------
or more counterparts which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
----------------------
Underwriter, the Company, the Partnership and their successors and assigns and
any successor or assign of any substantial portion of the Company's, the
Partnership's and any of the Underwriter's respective businesses and/or assets.
-29-
If the foregoing correctly sets forth the understanding between the
Company, the Partnership and the Underwriter, please so indicate in the space
provided below for that purpose, whereupon this agreement and your acceptance
shall constitute a binding agreement between the Company, the Partnership and
the Underwriter, severally.
Very truly yours,
HERSHA HOSPITALITY TRUST
By: /s/ Ashish R. Parikh
-------------------------------------
Title: Chief Financial Officer
HERSHA HOSPITALITY LIMITED
PARTNERSHIP
By: Hersha Hospitality Trust, its sole general
partner
By: /s/ Ashish R. Parikh
--------------------------------
Title: Chief Financial Officer
-30-
Accepted and agreed to as of the
date first above written.
CITIGROUP GLOBAL MARKETS INC.
By: /s/ Jeffrey D. Horowitz
---------------------------------------
Name: Jeffrey D. Horowitz
Title: Managing Director