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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT JULY 24, 1997
(DATE OF EARLIEST EVENT REPORTED) (JULY 24, 1997)
INNKEEPERS USA TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 0-24568 65-0503831
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
306 ROYAL POINCIANA WAY
PALM BEACH, FLORIDA 33480
(Address and zip code of
principal executive offices)
Registrant's telephone number, including area code: (561) 835-1800
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ITEM 5. OTHER EVENTS
This report contains as exhibits (a) the form of Underwriting Agreement
among Innkeepers USA Trust and Innkeepers USA Limited Partnership and Lehman
Brothers Inc., Montgomery Securities, Bear, Stearns & Co. Inc., Alex. Brown &
Sons Incorporated, EVEREN Securities, Inc. and Salomon Brothers Inc in
connection with the sale of 9,500,000 shares of the Company's common shares
pursuant to the Company's Prospectus Supplement dated July 24, 1997 to
a Prospectus dated April 11, 1997, included as part of a Registration
Statement on Form S-3 (No. 333-20309) filed with the Commission on January 24,
1997, and (b) the form of opinion as to tax matters.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit Description
1.1 Form of Underwriting Agreement among Innkeepers USA
Trust and Innkeepers USA Limited Partnership and
Lehman Brothers Inc., Montgomery Securities, Bear,
Stearns & Co. Inc., Alex. Brown & Sons Incorporated,
EVEREN Securities, Inc. and Salomon Brothers Inc
8.1 Form of Opinion of Hunton & Williams as to Tax
Matters
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INNKEEPERS USA TRUST
(REGISTRANT)
Date: July 25, 1997 By: /s/ David Bulger
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David Bulger
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
1.1 Form of Underwriting Agreement among Innkeepers USA Trust and
Innkeepers USA Limited Partnership and Lehman Brothers Inc.,
Montgomery Securities, Bear, Stearns & Co. Inc., Alex. Brown &
Sons Incorporated, EVEREN Securities, Inc. and Salomon
Brothers Inc
8.1 Form of Opinion of Hunton & Williams as to Tax Matters
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EXHIBIT 1.1
9,500,000 SHARES
INNKEEPERS USA TRUST
COMMON SHARES OF BENEFICIAL INTEREST
UNDERWRITING AGREEMENT
July 24, 1997
LEHMAN BROTHERS
MONTGOMERY SECURITIES
BEAR, STEARNS & CO. INC.
ALEX. BROWN & SONS INCORPORATED
EVEREN SECURITIES, INC.
SALOMON BROTHERS INC
As Representatives of the several
Underwriters named in Schedule 1,
c/o LEHMAN BROTHERS
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Innkeepers USA Trust, a Maryland real estate investment trust (the
"Company", which term shall also include, where appropriate, each of the
subsidiaries of the Company defined in Section 15 hereof, as the context
requires) proposes to sell 9,500,000 shares (the "Firm Stock") of the Company's
authorized but unissued common shares of beneficial interest, par value $0.01
per share (the "Common Shares"). In addition, the Company proposes to grant to
the Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 1,425,000 Common Shares on the terms and for the
purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock."
This is to confirm the agreement concerning the purchase of the Stock from the
Company by the Underwriters named in Schedule 1 hereto (the "Underwriters") and
the agreement of the Partnership (as defined in Section 15 hereof) with respect
thereto.
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1. Representations, Warranties and Agreements of the Company and the
Partnership. The Company and the Partnership, jointly and severally, represent,
warrant and agree that:
(a) A registration statement on Form S-3 (No. 333-20309) with
respect to the Stock has (i) been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Rule and
Regulations") of the United States Securities and Exchange Commission
(the "Commission") thereunder, (ii) been filed with the Commission under
the Securities Act and (iii) become effective under the Securities Act.
Copies of such registration statement have been delivered by the Company
to you as the representatives (the "Representatives") of the
Underwriters. As used in this Agreement, "Effective Time" means the date
and the time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time;
"Registration Statement" means such registration statement, as amended at
the Effective Time, including any documents incorporated by reference
therein at such time and all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations in accordance with Section 5(a) hereof and deemed to be a
part of the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations; "Base
Prospectus" means the prospectus dated April 11, 1997 included in the
Registration Statement at the Effective Time; "Preliminary Prospectus"
means the Preliminary Prospectus Supplement subject to completion dated
July 11, 1997, together with the Base Prospectus, as filed with the
Commission pursuant to Rule 424(b)(5) of the Rules and Regulations; and
"Prospectus" means the Prospectus Supplement dated July 24, 1997,
together with the Base Prospectus, as filed with the Commission pursuant
to Rule 424(b)(5) of the Rules and Regulations. Reference made herein to
any Preliminary Prospectus or to the Prospectus shall be deemed to refer
to and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any document filed
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of such Preliminary Prospectus or the Prospectus,
as the case may be, and incorporated by reference in such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference to
any amendment to the Registration Statement shall be deemed to include
any annual report of the Company filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective Time that
is incorporated by reference in the Registration Statement. The
Commission has not issued any order preventing or suspending the use of
any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the
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Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and do
not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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; provided that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the Company
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become
effective or are filed with Commission, as the case may be, will conform
in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and 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.
(d) The Company and each of its subsidiaries, the Lessee (as
defined in Section 15 hereof) the Partnership, the General Partner (as
defined in Section 15 hereof) and, to the Company's knowledge, the
Summerfield Suites Lessee (as defined in Section 15 hereof) have been
duly formed and are validly existing as real estate investment trusts,
partnerships or corporations, as applicable, in good standing under the
laws of their respective jurisdictions of formation, are duly qualified
to do business and are in good standing as foreign real estate investment
trusts, partnerships or corporations, as applicable, in each jurisdiction
in which their respective ownership or lease of property or the conduct
of their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties
and to conduct the businesses in which they are engaged, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect upon the Company, the Lessee, the Summerfield
Suites Lessee or the Partnership, as the case may be, and no proceeding
has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
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(e) Innkeepers Financial Corporation (the "First General
Partner") is and will on each Delivery Date be the sole general partner
of Innkeepers USA Limited Partnership, and upon the consummation of the
transactions contemplated hereby and the application of the proceeds
therefrom as described in the Prospectus, will be the holder of
partnership units in the Partnership (the "Units") (assuming no Option
Stock is sold) representing an approximate 81% interest in the
Partnership. Upon the consummation of the transactions contemplated
hereby, the First General Partner will own the Units it holds free and
clear of all liens, encumbrances, equities, claims, security interests,
voting trusts or charges.
(f) Except as set forth in the Prospectus, each of the Company,
the Partnership, the Lessee, each property to be owned by the Partnership
as of the First Delivery Date (as defined below), and, to the Company's
knowledge, the Summerfield Suites Lessee is, and after the consummation
of the transactions contemplated hereby will be, in possession of and
operating in compliance with all authorizations, licenses, permits,
consents, certificates and orders material to the conduct of its
business, all of which are valid and in full force and effect.
(g) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of beneficial interest of
the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof contained
in the Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(h) The unissued shares of the Stock to be issued and sold by
the Company to the Underwriters hereunder 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 the Stock will conform to the description thereof
contained in the Prospectus.
(i) The execution, delivery and performance of this Agreement
by the Company and the Partnership and the consummation of the
transactions contemplated hereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or the Partnership or
any of their respective subsidiaries is a party or by which the Company
or the Partnership or any of their respective subsidiaries is bound or to
which any of the property or assets of the Company or the Partnership or
any of their respective subsidiaries is subject, nor will such actions
result in any violation of the provisions of the organizational documents
of the Company or the Partnership or any of their respective subsidiaries
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the
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Partnership or any of their respective subsidiaries or any of their
properties or assets; and except for the registration of the Stock under
the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery
and performance of this Agreement by the Company and the Partnership and
the consummation of the transactions contemplated hereby.
(j) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and the
Partnership and any person granting such person the right (other than
rights which have been waived or satisfied) to require the Company to
include any securities in the securities registered pursuant to the
Registration Statement.
(k) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus; and, since such date,
there has not been any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(l) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus present fairly
the financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved.
(m) Coopers & Lybrand L.L.P., who have certified certain
financial statements of the Company, whose report appears in the
Prospectus or is incorporated by reference therein and who have delivered
the initial letter referred to in Section 7(g) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(n) The Company or the Partnership and each of their respective
subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects
except such as are
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described in the Prospectus or such as do not materially affect the value
of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Partnership
and their respective subsidiaries; and all real property and buildings
held under lease by the Company or the Partnership and their respective
subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings
by the Company and the Partnership and their respective subsidiaries.
(o) The Company, the Partnership and each of their respective
subsidiaries or the applicable lessees carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar
businesses in similar industries.
(p) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property or assets of the Company, the Partnership or any of their
respective subsidiaries is the subject, which, if determined adversely to
the Company, the Partnerships or any of their respective subsidiaries,
might have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations, business or
prospects of the Company; and to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) The conditions for use of Form S-3 for the registrant, as
set forth in the General Instructions thereto, have been satisfied.
(r) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(s) No labor disturbance by the employees of the Company or the
Lessee exists or, to the knowledge of the Company, is imminent and, to
the Company's knowledge, no labor disturbance by the employees of the
Summerfield Suites Lessee exists or is imminent which, in any case, might
be expected to have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business
or prospects of the Company or the Lessee or their respective
subsidiaries or the Summerfield Suites Lessee.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined
in
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ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has
not incurred and does not expect to incur material liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code
of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for
which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(u) The Company and the Partnership have filed all federal,
state and local income and franchise tax returns required to be filed
through the date hereof and have paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company, the Partnership
or any of their respective subsidiaries which has had (nor does the
Company have any knowledge of any tax deficiency which, if determined
adversely to the Company, the Partnership or any of their respective
subsidiaries, might have) a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business
or prospects of the Company and its subsidiaries.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, neither the Company nor the Partnership has
(i) issued any securities, (ii) incurred any liability or obligation,
direct or contingent, other than liabilities and obligations which were
incurred in the ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or (iv) declared or
paid any distribution on its capital stock or partnership interests.
(w) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(x) Neither the Company, the Partnership nor any of their
respective subsidiaries (i) is in violation of its charter or by-laws or
other organizational documents or (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties or assets is subject.
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(y) Neither the Company, the Partnership nor any of their
respective subsidiaries, nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Company or the
Partnership or any of their respective subsidiaries, has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(z) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company, the Partnership or any of their respective subsidiaries (or, to
the knowledge of the Company, any of their predecessors in interest) at,
upon or from the property now or previously owned or leased by the
Company or the Partnership or their respective subsidiaries in violation
of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have,
or could not be reasonably likely to have, singularly or in the aggregate
with all such violations and remedial actions, a material adverse effect
on the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries or
the Partnership; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company, the Partnership or any of
their respective subsidiaries or with respect to which the Company, the
Partnership or any of their respective subsidiaries have knowledge,
except for any such spill, discharge, leak, emission, injection, escape,
dumping or release which would not have or would not be reasonably likely
to have, singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings and releases, a material
adverse effect on the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, the
Partnership and their respective subsidiaries. As used herein, the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and "medical
wastes" shall have the meanings specified in any applicable local, state,
federal and foreign laws or regulations with respect to environmental
protection.
(aa) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act
of 1940 and the rules and regulations of the Commission thereunder.
(ab) The issuance of Units by the Partnership in exchange for
the Company's contribution to the Partnership through the General Partner
of the
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net proceeds from the sale of the Stock to the Underwriters hereunder has
been duly authorized and, when issued in the manner set forth in the
Prospectus, such Units will be validly issued. The Units will be issued
in compliance with all federal and state securities laws, are not, or
will not be, issued in violation of or subject to any preemptive rights
or other rights to subscribe for or purchase securities and conform in
all material respects to the description thereof contained in the
Prospectus. The offer, issue, sale and delivery of the Units in
connection with the transactions referenced herein (i) constitute
exempted transactions under the registration provisions of the Act and
(ii) will comply with all federal securities, real estate syndication and
Blue Sky laws. All issuances of securities in connection with the
acquisition of the Summerfield Hotels complied with all applicable state
and federal laws and regulations.
(ac) To the knowledge of the Company (i) no lessee, licensee,
concessionaire or vendor of any portion of any of the Hotels (as defined
in the Prospectus) is in default under any of the leases, licenses or
franchise agreements governing such properties and there is no event
which, but for the passage of time or the giving of notice, or both,
would constitute a default under any of such leases, licenses or
franchise agreements, except such defaults that would not, upon
consummation of the transactions contemplated hereby, have a material
adverse effect on the condition (financial or otherwise) or on the
earnings, business affairs or business prospects of the Company, the
Partnership, the Lessee or the Summerfield Suites Lessee; (ii) the
current and intended use and occupancy of each of the Hotels complies
with all applicable codes and zoning laws and regulations, if any, except
for such failures to comply which would not, upon consummation of the
transactions contemplated hereby, individually or in the aggregate, have
a material adverse effect on the condition (financial or otherwise) or on
the earnings, business affairs or business prospects of the Company, the
Partnership or the Lessee; and (iii) there is no pending or threatened
condemnation, zoning change, environmental or other proceeding or action
that will in any material respect affect the size of, use of,
improvements on, construction on, or access to any of the Hotels except
such proceedings or actions that would not after consummation of the
transactions contemplated hereby have a material adverse effect on the
condition (financial or otherwise) or on the earnings, business affairs
or business prospects of the Company or the Partnership.
(ad) In connection with the Partnership's acquisition of each
Hotel, the Partnership obtained title insurance in favor of the
Partnership with respect to each of the Hotels in an amount at least
equal to the purchase price of each such Hotel.
(ae) The mortgages and deeds of trust encumbering the Hotels are
not convertible nor, upon the consummation of the transactions
contemplated hereby, will the Company or the Partnership hold a
participating interest therein and such mortgages and deeds of trust are
not cross-defaulted or
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cross-collateralized to any property not to be owned directly or
indirectly by the Company or the Partnership.
(af) The Company is organized and operated in a manner so as to
qualify as a "real estate investment trust" ("REIT") under Sections 856
through 860 of the Code, and has elected to, is qualified to and intends
to remain qualified to, be taxed as a REIT under the Code and pursuant to
any applicable state tax laws. As of the First Delivery Date, less than
15 percent of the aggregate adjusted tax bases of both the personal
property and the real property (the "Total Bases") to be leased pursuant
to any Percentage Lease (as defined in Section 15) shall consist of the
adjusted tax bases of the personal property (the "Personal Property
Bases"), except in each instance where the failure to maintain such
ratios will not disqualify the Company's election as a REIT or otherwise
have a material adverse effect on the business and operations of the
Company; in each succeeding year the Personal Property Bases in
connection with each Percentage Lease will not exceed 15 percent of the
Total Bases for such lease, except in each instance where the failure to
maintain such ratios will not cause the Company to fail to qualify as a
REIT or otherwise have a material adverse effect on the business and
operations of the Company; and the Company has received a segmentation
study from the Company's tax accountant substantially to the same effect
as such studies previously delivered. The Company does not know of any
event which would cause or is likely to cause the Company to fail to
qualify as a REIT at any time. All of the assets, liabilities and items
of income, deduction and credit of the Partnership are, and following the
consummation of the transactions contemplated hereby, will be, treated as
assets, liabilities and items of income, deduction and credit of the
Company under the provisions of the Code and the Partnership is not, nor
will it be, treated as a separate corporation under the provisions of the
Code. The Partnership is, and upon the consummation of the transactions
contemplated hereby will be, treated for federal income tax purposes as a
partnership and not as an association taxable as a corporation.
(ag) No environmental engineering firm which prepared Phase I
environmental assessment reports with respect to the Hotels as set forth
in the Registration Statement was employed for such purpose on a
contingent basis or has any substantial interest in the Company, the
Partnership or the Lessee.
(ah) The leasing and operation of the Hotels by the Lessee, by a
management company engaged by the Lessee, or by the Summerfield Suites
Lessee, as applicable, have been consented to by each of the franchisors
under which such Hotels are operated, including, without limitation,
Summerfield Hotel Corporation (each a "Franchisor" and collectively the
"Franchisors"), to the extent applicable, and the consummation of the
transactions contemplated hereby will not result in a breach of any
franchise agreement (individually a "Franchise Agreement" and
collectively the "Franchise Agreements"). There are no franchise
agreements and/or franchise licenses in connection with the Hotels except
for the franchise agreements and/or licenses with the Franchisors.
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(ai) The personal property (including, but not limited to,
furniture, equipment, bedding and towels) held by the Partnership
immediately prior to the First Delivery Date as part of the Hotels will
be adequate to enable the Partnership and the Lessee to continue to
conduct the operations of the Hotels in the manner in which such
operations have normally been conducted by the prior owners and the
Partnership.
(aj) None of the Company, the Partnership, the Lessee, any of
their affiliates nor, to the Company's knowledge, the Summerfield Suites
Lessee, does business with the government of Cuba or with any person or
affiliate located in Cuba in violation of Section 517.075 of the Florida
Statutes.
(ak) The Company is not and will not upon consummation of the
transactions contemplated hereby be in default of its obligations,
covenants and agreements contained in the Term Loan and/or the Line of
Credit (each as defined in the Prospectus).
2. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 9,500,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to purchase
up to 1,425,000 shares of Option Stock. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Stock shall be adjusted by the Representatives so that no Underwriter
shall be obligated to purchase Option Stock other than in 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $13.23 per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as defined
below), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters. Upon authorization by the
Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
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<PAGE> 12
4. Delivery of and Payment for the Stock. Delivery of and payment for
the Firm Stock shall be made at the office of O'Melveny & Myers LLP, 153 East
53rd Street, 54th floor, New York, New York, at 10:00 A.M., New York City time,
on the third full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in such
names and in such denominations as the Representatives shall request in writing
not less than two full business days prior to the First Delivery Date. For the
purpose of expediting the checking and packaging of the certificates for the
Firm Stock, the Company shall make the certificates representing the Firm Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to the First
Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement the option granted in Section 2 may be exercised by written notice
being given to the Company by the Representatives. Such notice shall set forth
the aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date.
On the Second Delivery Date, the Company shall deliver or cause to be delivered
the certificates representing the Option Stock to the Representatives for the
account of each Underwriter against payment to or upon the order of the Company
of the purchase price by wire transfer in immediately available funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names and
in such denominations as the Representatives shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the Second Delivery Date.
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<PAGE> 13
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than Commission's close of business on the
second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus prior to
the last Delivery Date except as permitted herein; to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Stock; to advise the Representatives, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of
the Stock for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement), (ii) each Preliminary Prospectus,
the Prospectus and any amended or supplemented Prospectus, and (iii) any
document incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of the
Stock or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
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<PAGE> 14
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary to amend or supplement
the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, to notify the Representatives and,
upon their request, to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as
many copies as the Representatives may from time to time reasonably
request of an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) From the date hereof through the First Delivery Date, prior
to filing with the Commission any amendment to the Registration Statement
or supplement to the Prospectus, any document incorporated by reference
in the Prospectus or any Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Representatives and counsel
for the Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to
the Representatives an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(g) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Stock;
provided that in connection therewith the Company shall not be required
to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(h) For a period of 90 days from the date of the Prospectus,
not to, directly or indirectly, offer for sale, sell or otherwise dispose
of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time
in the future of) any shares of Common Stock (other than the Stock and
shares issued pursuant to employee benefit plans, qualified stock option
plans or other employee compensation plans existing on the date hereof or
pursuant to currently outstanding options, warrants or rights), or sell
or grant options, rights or warrants with respect to any shares of Common
Stock other than the grant of options pursuant to option plans existing
on the date hereof, including redemption of Units), without the
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<PAGE> 15
prior written consent of Lehman Brothers Inc. and to cause each officer
of the Company to furnish to the Representatives, prior to the First
Delivery Date, a letter or letters, in form and substance satisfactory to
counsel for the Underwriters, pursuant to which each such person shall
agree not to, directly or indirectly, offer for sale, sell or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock for a period of 90 days
from the date of the Prospectus, without the prior written consent of
Lehman Brothers Inc.;
(i) Prior to the Effective Date, to apply for the inclusion of
the Stock on the New York Stock Exchange, Inc. and to use its best
efforts to complete that listing, subject only to official notice of
issuance, prior to the First Delivery Date;
(j) To apply the net proceeds from the sale of the Stock as set
forth in the Prospectus;
(k) To take such steps as shall be necessary to ensure that
neither the Company, the Partnership nor any of their respective
subsidiaries shall become an "investment company" within the meaning of
such term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder;
(l) Unless otherwise determined by the Company's Board of
Trustees, the Company will continue to meet the requirements to qualify
as a REIT, effective for the year ending December 31, 1994 and
thereafter;
(m) The Company and the Partnership in good faith will enforce
the terms of any agreements with the Lessee and any parties affiliated
with the Lessee, including, without limitation, the Share Purchase
Agreement by and among Jeffrey H. Fisher, Frederic M. Shaw and the
Company;
(n) The Company or the Partnership, as applicable, has made
available to you or your counsel, and you acknowledge receipt of by you
or your counsel, each of the following with respect to each Hotel owned
by the Partnership:
(i) A copy of the deed therefor, naming the Partnership
as the grantee thereunder;
(ii) A standard ALTA Owner's Title Insurance Policy
naming the Partnership as named insured and insuring (or committing to
insure) that the Partnership thereof owns fee title to the real property
and fixtures comprising such Hotel in an amount not less than the amount
of the purchase price of such Hotel, and contain as exceptions to title
only the exceptions described in the Prospectus, and such exceptions
which do not materially adversely affect the current or potential use to
be made of the Hotel
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<PAGE> 16
by the Partnership or the Lessee or the market value of the Property to
the Partnership (the "Permitted Exceptions");
(iii) An ALTA survey of each Hotel;
(iv) Policies or certificates of insurance relating to
such Hotel evidencing coverages and in amounts customarily obtained by
owners of similar properties;
(v) UCC, judgment and tax lien searches confirming that
the personal property comprising a part of the Hotel is subject to no
Liens other than Permitted Exceptions; and
(vi) An engineering (structural) report from an engineer
or engineers;
(vii) A Phase I environmental report from an environmental
engineer or engineers.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of producing and distributing this Agreement and any other related
documents in connection with the offering, purchase, sale and delivery of the
Stock; (f) the filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. ("NASD") of the terms of sale
of the Stock; (g) any applicable listing or other fees; (h) the fees and
expenses of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section 5 (h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); and (i) all other costs and expenses incident to
the performance of the obligations of the Company; provided that, except as
provided in this Section 6 and in Section 11 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
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<PAGE> 17
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of O'Melveny & Myers
LLP, counsel for the Underwriters, is material or omits to state a fact
which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Hunton & Williams, counsel to the Company, the Partnership
and the Lessee, shall have furnished to the Representatives their written
opinion, as counsel to the Company, Partnership and the Lessee, addressed
to the Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(i) The Company, the Partnership and the Lessee have
been duly formed and are validly existing as real estate
investment trusts, partnerships or corporations, as applicable, in
good standing under the laws of their respective jurisdictions of
formation and have the corporate or partnership authority, as
applicable, to own or hold their respective properties and conduct
their businesses as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the shares of Stock being
delivered on such Delivery Date) have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus;
(iii) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or
transfer of, any shares of the Stock pursuant to the Company's
declaration of trust
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<PAGE> 18
(except as transferability may be specifically restricted in the
Company's declaration of trust) or by-laws or any agreement or
other instrument known to such counsel;
(iv) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, the Partnership or the
Lessee is a party or of which any property or assets of the
Company or the Partnership is the subject which, if determined
adversely to the Company, the Partnership or the Lessee might have
a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects
of the Company or the Lessee; and, to such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) The Registration Statement was declared effective
under the Securities Act as of the date and time specified in such
opinion, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and, to
such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose is pending or threatened by the
Commission;
(vi) The Registration Statement and the Prospectus and
any further amendments or supplements thereto made by the Company
prior to such Delivery Date (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations; and the documents incorporated by reference in the
Prospectus and any further amendment or supplement to any such
incorporated document made by the Company prior to such Delivery
Date (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the
case may be, complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder;
(vii) To such counsel's knowledge, there are no contracts
or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations which have not
been described or filed as exhibits to the Registration Statement
or incorporated therein by reference as permitted by the Rules and
Regulations;
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<PAGE> 19
(viii) The execution and delivery of this Agreement have
been duly authorized by the Company and the Partnership and this
Agreement has been executed and delivered by the Company and the
Partnership and, assuming due authorization, execution and
delivery by the Underwriters, constitutes a valid and binding
agreement of each of the Company and the Partnership enforceable
against the Company and the Partnership in accordance with its
terms, except as may be limited or otherwise affected by general
equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors
generally and by principles of equity, whether considered at law
or in equity, and except as to those provisions relating to
indemnity or contribution for liabilities arising under the Act as
to which no opinion need be expressed; and no approval,
authorization, order, consent, registration, filing,
qualification, license or permit of or with any court, regulatory,
administrative or other governmental body is required for the
execution and delivery of this Agreement by each of the Company
and the Partnership or the issuance and sale of the Stock, except
such as have been obtained and are in full force and effect under
the Act and such as may be required under applicable Blue Sky or
Canadian securities laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the
clearance of such offering with the NASD;
(ix) The issuance and sale of the shares of Stock being
delivered on such Delivery Date by the Company and the issuance
and sale of the Units to the Company by the Partnership and the
compliance by the Company and the Partnership with all of the
provisions of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries or
the Partnership is a party or by which the Company or any of its
subsidiaries or the Partnership is bound or to which any of the
property or assets of the Company or any of its subsidiaries or
the Partnership is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any statute or any order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties or assets.
(x) To such counsel's knowledge, except as set forth in
the Prospectus, there are no contracts, agreements or
understandings between the Company or the Partnership and any
person granting such person the right to require the Company to
file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by
such person or to require the Company to
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<PAGE> 20
include such securities in the securities registered pursuant to
the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Securities Act;
(xi) No transfer taxes are required to be paid to the
states of Maryland and New York in connection with the sale and
delivery of the Stock to the Underwriters hereunder;
(xii) The information in the Prospectus (or incorporated
therein by reference) set forth under the captions "Risk Factors
-- Tax Risks," "Distribution Policy and Price Range of Common
Shares" (as it relates to distributions only), "Shares Available
for Future Sale," "Federal Income Tax Considerations" and "Certain
Federal Income Tax Considerations" to the extent that it
constitutes matters of law or legal conclusions, has been reviewed
by such counsel and is correct in all material respects.
(xiii) All necessary action on behalf of the Partnership
has been taken in order validly to authorize the Units which will
be issued in connection with the transactions contemplated hereby;
when issued and delivered against payment therefor as provided in
the Partnership Agreement all outstanding Units (including those
issued in the transactions contemplated hereby) will be duly and
validly issued, and the issuance of such Units will be exempt from
the registration requirements of the Act and applicable state
securities laws; and, to such counsel's knowledge other than as
described in the Prospectus, such Units will not be issued in
violation of or subject to any statutory, or to such counsel's
knowledge, other preemptive rights or other rights to subscribe
for or purchase any securities; and conform in all material
respects to the description thereof contained in the Registration
Statement;
(xiv) The Company is organized in conformity with the
requirements for qualification as a REIT pursuant to Sections 856
through 860 of the Code and the Company's proposed method of
operation as described under the caption "Federal Income Tax
Considerations" in the Prospectus will enable it to meet the
requirements for qualification and taxation as a REIT under the
Code; and the Partnership will be treated for federal income tax
purposes as a partnership and not as an association taxable as a
corporation.
In rendering such opinion, such counsel may (i) state that its opinion is
limited to matters governed by the Federal laws of the United States of
America, the laws of the State of Virginia and Maryland, as applicable,
and that such counsel is not admitted in other jurisdictions; (ii) rely
(to the extent such counsel deems proper and specifies in its opinion),
as to matters involving the application of laws of other jurisdictions,
upon the opinion of other counsel of
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<PAGE> 21
good standing, provided that such other counsel is satisfactory to
counsel for the Underwriters and furnishes a copy of its opinion to the
Representatives; and (iii) in respect of matters of fact, rely upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that they believe that both the
Underwriters and they are justified in relying upon such opinions and
certificates. Such counsel shall also have furnished to the
Representatives a written statement, addressed to the Underwriters and
dated such Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel has acted as counsel
to the Company in connection with the preparation of the Registration
Statement, and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead them to believe that (I) the
Registration Statement, as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein
not misleading (other than the statistical and financial data contained
therein, as to which such counsel need express no opinion or belief), or
that the Prospectus contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (other than the statistical
and financial data contained therein, as to which such counsel need
express no opinion or belief) or (II) any document incorporated by
reference in the Prospectus or any further amendment or supplement to any
such incorporated document made by the Company prior to such Delivery
Date, when they became effective or were filed with the Commission, as
the case may be, contained, in the case of a registration statement which
became effective under the Securities Act, any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading (other than the statistical and financial data contained
therein, as to which such counsel need express no opinion or belief), or,
in the case of other documents which were filed under the Exchange Act
with the Commission, an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading
(other than the statistical and financial data contained therein, as to
which such counsel need express no opinion or belief). The foregoing
opinion and statement may be qualified by a statement to the effect that
such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus except as specifically provided above.
(e) The Representatives shall have received from O'Melveny &
Myers LLP, counsel for the Underwriters, such opinion or opinions, dated
such Delivery Date, with respect to the issuance and sale of the Stock,
the Registration Statement, the Prospectus and other related matters as
the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
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(f) At the time of execution of this Agreement, the
Representatives shall have received from Coopers & Lybrand L.L.P. a
letter, in form and substance satisfactory to the Representatives,
addressed to the Underwriters and dated the date hereof (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, and (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(g) With respect to the letter of Coopers & Lybrand L.L.P.
referred to in the preceding paragraph and delivered to the
Representatives concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the
Representatives a letter (the "bring-down letter") of such accountants,
addressed to the Underwriters and dated such Delivery Date (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming in all
material respects the conclusions and findings set forth in the initial
letter.
(h) The Company and the Partnership shall have furnished to the
Representatives a certificate, dated such Delivery Date, of its Chairman
of the Board, its President or a Vice President and its Chief Financial
Officer, its Secretary or an authorized officer of its general partner,
as applicable, stating that:
(i) The representations, warranties and agreements of
the Company and the Partnership in Section 1 are true and correct
as of such Delivery Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in
Sections 7(a) and 7(i) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the
Effective Date, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit
to state a material fact required to be stated therein or
necessary to make the
22
<PAGE> 23
statements therein not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(i) (i) Neither the Company nor any of its subsidiaries nor the
Partnership shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any loss or material interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus or
(ii) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or the
Partnership or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is, in the reasonable judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities
of the Company on any exchange or in the over-the-counter market, shall
have been suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by
any other regulatory body or governmental authority having jurisdiction,
(ii) a banking moratorium shall have been declared by Federal or Florida
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) as to make it, in
the judgment of a majority in interest of the several Underwriters,
impracticable or inadvisable to proceed with the public offering or
delivery of the Stock being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(k) The New York Stock Exchange, Inc. shall have approved the
Stock for inclusion, subject only to official notice of issuance.
(l) The Company shall have delivered to the Underwriters a
segmentation study from the Company's tax accountant, as described in
Section 1(af).
23
<PAGE> 24
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company and the Partnership, jointly and
severally, shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any
Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or
any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and
sales of Stock), to which that Underwriter, officer, employee or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (B) in any
blue sky application or other document prepared or executed by the
Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of
the Stock under the securities laws of any state or other
jurisdiction (any such application, document or information being
hereinafter called a "Blue Sky Application"), (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any act or failure to
act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii)
above (provided that the Company and the Partnership shall not be
liable under this clause (iii) to the extent that it is determined
in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from
any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful
misconduct), and shall reimburse each Underwriter and each such
officer, employee or controlling person promptly upon demand for
any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company and the Partnership
shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in
24
<PAGE> 25
reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically
for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Company or Partnership may
otherwise have to any Underwriter or to any officer, employee or
controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and
employees, each of its directors, the Partnership, and each
person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to
which the Company or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (B) in
any Blue Sky Application or (ii) the omission or alleged omission
to state in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any amendment or supplement thereto, or
in any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the
Company and any such director, officer or controlling person for
any legal or other expenses reasonably incurred by the Company or
any such director, officer or controlling person in connection
with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company
or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof
is to be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure
to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the
extent it has been materially prejudiced by such failure and,
provided further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other
25
<PAGE> 26
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the
indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Representatives shall
have the right to employ counsel to represent jointly the
Representatives and those other Underwriters and their respective
officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity
may be sought by the Underwriters against the Company or the
Partnership under this Section 8 if, in the reasonable judgment of
the Representatives, it is advisable for the Representatives and
those Underwriters, officers, employees and controlling persons to
be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the
Company or the Partnership; provided, however, that the Company
and the Partnership shall only be obligated to pay the reasonable
fees and expenses of a single law firm employed by all the
indemnified parties. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim,
action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section
8 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 8(a) or 8(b) in
respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute
to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in
respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the
Partnership on the one hand and the Underwriters on the other from
the offering of the Stock 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 the
Underwriters on the other with respect to the statements or
omissions which
26
<PAGE> 27
resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company and
the Partnership on the one hand and the Underwriters on the other
with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the
Stock purchased under this Agreement (before deducting expenses)
received by the Company on the one hand, and the total
underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such statement or omission. For purposes of the preceding
two sentences, the net proceeds deemed to be received by the
Company shall be deemed to be also for the benefit of the
Partnership and information supplied by the Company shall also be
deemed to have been supplied by the Partnership. The Company and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall
be deemed to include, for purposes of this Section 8(d), any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations
to contribute as provided in this Section 8(d) are several in
proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public
offering of the Stock by the Underwriters set forth on the cover
page of, the legend concerning over-allotments on the top of the
first page of, and the third eighth, ninth and thirteenth
paragraphs appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information
concerning such
27
<PAGE> 28
Underwriters furnished in writing to the Company by or on behalf
of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
forth opposite the name of each remaining non-defaulting Underwriter in Schedule
1 hereto bears to the total number of shares of the Firm Stock set forth
opposite the names of all the remaining non-defaulting Underwriters in Schedule
1 hereto; provided, however, that the remaining non-defaulting Underwriters
shall not be obligated to purchase any of the Stock on such Delivery Date if the
total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of shares of the Stock to be purchased on such Delivery Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of shares of the Stock which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 2. If the foregoing maximums
are exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date. If
the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Stock)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company, except that the Company will continue to be liable for the
payment of expenses to the extent set forth in Sections 6 and 11. As used in
this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 9, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described
28
<PAGE> 29
in Sections 7(i) or 7(j), shall have occurred or if the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If the Company
shall fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled (other than as set forth in Section 7(j)), the Company and the
Partnership will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives(s). If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent
by mail, telex or facsimile transmission to Lehman Brothers Inc.,
Three World Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: 212-526-6588), with a copy, in the case
of any notice pursuant to Section 8(d), to the Director of
Litigation, Office of the General Counsel, Lehman Brothers Inc., 3
World Financial Center, 10th Floor, New York, NY 10285, with a
copy to O'Melveny & Myers LLP, 275 Battery Street, 26th Floor, San
Francisco, California 94111, Attn: Peter T. Healy, Esq. (Fax:
415-984-8701);
(b) if to the Company or to the Partnership, shall be
delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement,
Attention: Mr. Jeffrey H. Fisher (Fax: 561-835-0457), with a copy
to Mark A. Murphy, Esq. at the same address, and Hunton &
Williams, 2000 Riverview Tower, 900 South Gay Street, Knoxville,
Tennessee, Attn: David C. Wright, Esq. (Fax: 423-549-7704);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Partnership and
29
<PAGE> 30
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company and the
Partnership contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of Section 15 of the Securities Act, and (B) the indemnity agreement of
the Underwriters contained in Section 8(b) of this Agreement shall be deemed to
be for the benefit of trustees of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Partnership and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
15. Definition of the Terms "business day", "subsidiary",
"Partnership", "General Partner", "Lessee", "Percentage Lease" and "Summerfield
Suites Lessee". For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange, Inc. is open for trading, (b) "subsidiary"
has the meaning set forth in Rule 405 of the Rules and Regulations, (c)
"Partnership" means Innkeepers USA Limited Partnership, a Virginia limited
partnership, and each subsidiary partnership (each, a "Subsidiary Partnership"),
as the context requires, (d) "General Partner" means collectively, as the
context requires, the First General Partner and each of the general partners of
the Subsidiary Partnerships, (e) "Lessee" means JF Hotel, Inc., a Virginia
corporation, and its sister corporations which lease hotels from the
Partnership, as the context requires, which term shall also include, as the
context requires, affiliates thereof, (f) "Percentage Lease" means any lease
entered into by and between the Partnership and (i) the Lessee or (ii) the
Summerfield Suites Lessee, and (g) Summerfield Suites Lessee means Summerfield
Suites Lease Company, L.P.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall
30
<PAGE> 31
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the
Company, the Partnership and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
INNKEEPERS USA TRUST
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
INNKEEPERS USA LIMITED
PARTNERSHIP
By: INNKEEPERS FINANCIAL
CORPORATION
Its: General Partner
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
31
<PAGE> 32
Accepted:
LEHMAN BROTHERS
MONTGOMERY SECURITIES
BEAR, STEARNS & CO. INC.
ALEX. BROWN & SONS INCORPORATED
EVEREN SECURITIES, INC.
SALOMON BROTHERS INC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: LEHMAN BROTHERS
By:
---------------------------
Authorized Representative
32
<PAGE> 33
SCHEDULE 1
<TABLE>
<CAPTION>
Number of
Shares
Underwriters ---------
- ------------
<S> <C>
Lehman Brothers 1,260,875
Montgomery Securities 1,260,825
Bear, Stearns & Co. Inc. 1,260,825
Alex. Brown & Sons Incorporated 1,260,825
EVEREN Securities, Inc. 1,260,825
Salomon Brothers Inc 1,260,825
Deutsche Morgan Grenfell Inc. 150,000
A.G. Edwards & Sons, Inc. 150,000
Legg Mason Wood Walker, Incorporated 150,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 150,000
Morgan Keegan & Company, Inc. 150,000
Paine Webber Incorporated 150,000
Prudential Securities Incorporated 150,000
Smith Barney Inc. 150,000
Arnhold and S. Bleichroeder, Inc. 105,000
J.C. Bradford & Co. 105,000
Genesis Merchant Group Securities 105,000
Raymond James & Associates, Inc. 105,000
Ryan, Beck & Co. 105,000
Sands Brothers & Co., Ltd. 105,000
Tucker Anthony Incorporated 105,000
---------
Total 9,500,000
=========
</TABLE>
Schedule 1
<PAGE> 1
EXHIBIT 8.1
July 25, 1997
Innkeepers USA Trust
306 Royal Poinciana Way
Palm Beach, Florida 33480
Innkeepers USA Trust
Qualification as
Real Estate Investment Trust
Ladies and Gentlemen:
We have acted as counsel to Innkeepers USA Trust, a Maryland
real estate investment trust (the "Company"), in connection with (i) the
preparation of a Form S-3 registration statement filed with the Securities and
Exchange Commission ("SEC") on January 23, 1997 (No. 333-20309), as amended
through the date hereof (the "Registration Statement"), and the offering and
sale (the "Offering") of 8,500,000 common shares of beneficial interest, par
value $.01 per share, of the Company (the "Common Shares") pursuant to a
prospectus dated April 11, 1997 (the "Prospectus") contained as part of the
Registration Statement and a prospectus supplement, dated July 24, 1997 (the
"Prospectus Supplement"), and (ii) the Company's contribution of (A) a portion
of the net proceeds of the Offering, through Innkeepers Financial Corporation,
a Virginia corporation and wholly-owned subsidiary of the Company ("IFC"), to
Innkeepers USA Limited Partnership, a Virginia limited partnership (the
"Operating Partnership"), in exchange for an additional partnership interest in
the Operating Partnership and (B) a portion of the net proceeds of the
offering, through its wholly-owned subsidiaries and the Operating Partnership,
to certain subsidiary partnerships of the Company (the "Subsidiary
Partnerships"). You have
<PAGE> 2
Innkeepers USA Trust
July 25, 1997
Page 2
requested our opinion regarding certain U.S. federal income tax matters in
connection with the Offering.
The Company, through the Operating Partnership and the
Subsidiary Partnerships, currently owns 47 hotels and associated personal
property (the "Current Hotels"). The Company, or a wholly-owned subsidiary of
the Company, owns a 1% general partnership interest, and the Operating
Partnership owns a 99% limited partnership interest, in each Subsidiary
Partnership. The Operating Partnership and Subsidiary Partnerships lease (i) 38
of the Current Hotels to JF Hotel, Inc., a Virginia corporation, and its sister
corporations (collectively, the "JF Lessee") pursuant to substantially similar
operating leases (the "JF Leases") and (ii) nine of the Current Hotels to an
affiliate of Summerfield Hotel Corporation (the "Summerfield Lessee") pursuant
to substantially similar operating leases (the "Summerfield Leases" and,
together with the JF Leases, the "Leases"). The JF Lessee operates 24 of the
Current Hotels. A wholly-owned subsidiary of Marriott International, Inc., a
Delaware corporation, operates and manages 12 of the Current Hotels on behalf
of the JF Lessee pursuant to substantially similar management agreements (the
"Marriott Management Agreements") with the JF Lessee. TMH Hotels, Inc., a
Kansas corporation, operates and manages two of the Current Hotels on behalf of
the JF Lessee pursuant to substantially similar management agreements (the "TMH
Management Agreements") with the JF Lessee. An affiliate of Summerfield Hotel
Corporation operates and manages nine of the Current Hotels on behalf of the
Summerfield Lessee pursuant to substantially similar management agreements (the
"Summerfield Management Agreements" and, together with the Marriott Management
Agreements and the TMH Management Agreements, the "Management Agreements") with
the Summerfield Lessee.
In giving the opinions set forth herein, we have examined the
following:
1. the Company's Amended and Restated Declaration of Trust, as filed with
the Department of Assessments and Taxation of the State of Maryland on September
21, 1994, as amended on October 4, 1995 and September 18, 1996;
2. the Company's Amended and Restated By-Laws;
3. the Prospectus and the Prospectus Supplement;
<PAGE> 3
Innkeepers USA Trust
July 25, 1997
Page 3
4. the Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of November 1, 1996 (the "Operating Partnership
Agreement"), among the Company, IFC, as general partner, and several limited
partners;
5. the partnership agreements of the Subsidiary Partnerships, which are
listed on Exhibit A attached hereto;
---------
6. the Leases;
7. the Management Agreements; and
8. such other documents as we have deemed necessary or appropriate for
purposes of this opinion.
In connection with the opinions rendered below, we have
assumed, with your consent, that:
1. each of the documents referred to above has been duly authorized,
executed, and delivered; is authentic, if an original, or is accurate, if a
copy; and has not been amended;
2. during its taxable year ending December 31, 1997 and subsequent taxable
years, the Company has operated and will continue to operate in such a manner
that makes and will continue to make the representations contained in a
certificate, dated the date hereof and executed by a duly appointed officer of
the Company (the "Officer's Certificate"), true for such years;
3. the Company will not make any amendments to its organizational
documents, the Operating Partnership Agreement, or the partnership agreement of
any Subsidiary Partnership after the date of this opinion that would affect its
qualification as a real estate investment trust (a "REIT") for any taxable year;
4. each partner (each, a "Partner") of the Operating Partnership, other
than IFC, that is a corporation or other entity has a valid legal existence;
<PAGE> 4
Innkeepers USA Trust
July 25, 1997
Page 4
5. each Partner, other than IFC, has full power, authority, and legal
right to enter into and to perform the terms of the Operating Partnership
Agreement and the transactions contemplated thereby; and
6. no action will be taken by the Company, the Operating Partnership, the
Subsidiary Partnerships, or the Partners after the date hereof that would have
the effect of altering the facts upon which the opinions set forth below are
based.
In connection with the opinions rendered below, we also have
relied upon the correctness of the representations contained in the Officer's
Certificate. For purposes of our opinions, we made no independent investigation
of the facts contained in the documents and assumptions set forth above, the
representations set forth in the Officer's Certificate, or the Prospectus.
Consequently, we have relied on the Company's representations that the
information presented in such documents, or otherwise furnished to us,
accurately and completely describes all material facts relevant to our opinions.
No facts have come to our attention, however, that would cause us to question
the accuracy and completeness of such facts or documents in a material way.
Based on the documents and assumptions set forth above, the
representations set forth in the Officer's Certificate, and the discussions in
the Prospectus and in the Prospectus Supplement under the captions "Federal
Income Tax Considerations" and "Certain Federal Income Tax Considerations,"
respectively (which are incorporated herein by reference), we are of the opinion
that the Company qualified to be taxed as a REIT pursuant to sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), for
its taxable years ended December 31, 1994 through December 31, 1996, and the
Company's organization and current and proposed method of operation will enable
it to continue to qualify as a REIT for its taxable year ending December 31,
1997, and in the future. We will not review on a continuing basis the Company's
compliance with the documents or assumptions set forth above, or the
representations set forth in the Officer's Certificate. Accordingly, no
assurance can be given that the actual results of the Company's operations for
its 1997 and subsequent taxable years will satisfy the requirements for
qualification and taxation as a REIT.
The foregoing opinions are based on current provisions of the
Code and the Treasury regulations thereunder (the "Regulations"), published
administrative interpretations thereof, and published court decisions. The
Internal Revenue Service has
<PAGE> 5
Innkeepers USA Trust
July 25, 1997
Page 5
not issued Regulations or administrative interpretations with respect to various
provisions of the Code relating to REIT qualification. No assurance can be given
that the law will not change in a way that will prevent the Company from
qualifying as a REIT.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the references to Hunton &
Williams under the caption "Certain Federal Income Tax Considerations" in the
Prospectus Supplement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder by the SEC.
The foregoing opinions are limited to the U.S. federal income
tax matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
other country, or any state or locality. We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion letter
is solely for the information and use of the addressee, and it may not be
distributed, relied upon for any purpose by any other person, quoted in whole or
in part or otherwise reproduced in any document, or filed with any governmental
agency without our express written consent.
Very truly yours,
Hunton & Williams
<PAGE> 6
EXHIBIT A
SUBSIDIARY PARTNERSHIP AGREEMENTS
1. the Limited Partnership Agreement of Innkeepers Financing Partnership,
L.P., a Virginia limited partnership, dated March 20, 1995, between Innkeepers
USA Trust, as general partner, and Innkeepers USA Limited Partnership (the
"Operating Partnership"), as limited partner;
2. the Limited Partnership Agreement of Innkeepers Financing Partnership
II, L.P., a Virginia limited partnership, dated October 6, 1995, between
Innkeepers Financial Corporation II, as general partner, and the Operating
Partnership, as limited partner;
3. the Limited Partnership Agreement of Innkeepers Financing Partnership
III, L.P., a Virginia limited partnership, dated March 6, 1997, between
Innkeepers Financial Corporation III, as general partner, and the Operating
Partnership, as limited partner;
4. the Limited Partnership Agreement of Innkeepers Residence San Mateo,
L.P., a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence San Mateo, Inc., as general partner, and the Operating Partnership, as
limited partner;
5. the Limited Partnership Agreement of Innkeepers Residence Sili I, L.P.,
a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence Sili I, Inc., as general partner, and the Operating Partnership, as
limited partner;
6. the Limited Partnership Agreement of Innkeepers Residence Sili II,
L.P., a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence Sili II, Inc., as general partner, and the Operating Partnership, as
limited partner;
7. the Limited Partnership Agreement of Innkeepers Residence
Denver-Downtown, L.P., a Virginia limited partnership, dated October 25, 1996,
between Innkeepers Residence Denver-Downtown, Inc., as general partner, and the
Operating Partnership, as limited partner;
8. the Limited Partnership Agreement of Innkeepers Residence
Atlanta-Downtown, L.P., a Virginia limited partnership, dated October 25, 1996,
between Innkeepers Residence Atlanta-Downtown, Inc., as general partner, and the
Operating Partnership, as limited partner;
9. the Limited Partnership Agreement of Innkeepers Residence Wichita East,
L.P., a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence Wichita East, Inc., as general partner, and the Operating Partnership,
as limited partner;
<PAGE> 7
10. the Limited Partnership Agreement of Innkeepers Residence East Lansing,
L.P., a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence East Lansing, Inc., as general partner, and the Operating Partnership,
as limited partner;
11. the Limited Partnership Agreement of Innkeepers Residence Portland,
L.P., a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence Portland, Inc., as general partner, and the Operating Partnership, as
limited partner;
12. the Limited Partnership Agreement of Innkeepers Residence Grand Rapids,
L.P., a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Residence Grand Rapids, Inc., as general partner, and the Operating Partnership,
as limited partner;
13. the Limited Partnership Agreement of Innkeepers Hampton Norcross, L.P.,
a Virginia limited partnership, dated October 25, 1996, between Innkeepers
Hampton Norcross, Inc., as general partner, and the Operating Partnership, as
limited partner;
14. the Limited Partnership Agreement of Innkeepers Residence Eden Prairie,
L.P., a Virginia limited partnership, dated January 1, 1997, between Innkeepers
Residence Eden Prairie, Inc., as general partner, and the Operating Partnership,
as limited partner;
15. the Limited Partnership Agreement of Innkeepers Residence Arlington
(TX), L.P., a Virginia limited partnership, dated January 24, 1997, between
Innkeepers Residence Arlington, Inc., as general partner, and the Operating
Partnership, as limited partner;
16. the Limited Partnership Agreement of Innkeepers Residence Addison (TX),
L.P., a Virginia limited partnership, dated January 24, 1997, between Innkeepers
Residence Addison, Inc., as general partner, and the Operating Partnership, as
limited partner;
17. the Limited Partnership Agreement of Innkeepers Hampton Schaumburg,
L.P., dated as of June 26, 1997, between Innkeepers Hampton Schaumburg, Inc., as
general partner, and the Operating Partnership, as limited partner;
18. the Limited Partnership Agreement of Innkeepers Hampton Lombard, L.P.,
dated as of June 26, 1997, between Innkeepers Hampton Lombard, Inc., as general
partner, and the Operating Partnership, as limited partner;
<PAGE> 8
19. the Limited Partnership Agreement of Innkeepers Hampton Westchester,
L.P., dated as of June 26, 1997, between Innkeepers Hampton Westchester, Inc.,
as general partner, and the Operating Partnership, as limited partner;
20. the Limited Partnership Agreement of Innkeepers Summerfield General,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
21. the Limited Partnership Agreement of Innkeepers Sunrise Tinton Falls,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
22. the Limited Partnership Agreement of Innkeepers Summerfield Mt. Laurel,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
23. the Limited Partnership Agreement of Innkeepers Summerfield No. 1,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
24. the Limited Partnership Agreement of Innkeepers Summerfield No. 2,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
25. the Limited Partnership Agreement of Innkeepers Summerfield No. 3,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
26. the Limited Partnership Agreement of Innkeepers Summerfield No. 4,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
27. the Limited Partnership Agreement of Innkeepers Summerfield No. 5,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner;
28. the Limited Partnership Agreement of Innkeepers Summerfield No. 6,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner; and
<PAGE> 9
29. the Limited Partnership Agreement of Innkeepers Summerfield No. 7,
L.P., dated as of July 2, 1997, between Innkeepers Financial Corporation IV, as
general partner, and the Operating Partnership, as limited partner.
