SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 9, 1997
HOSPITALITY PROPERTIES TRUST
(Exact name of registrant as specified in charter)
Maryland
(State or other 1-11527 04-3262075
jurisdiction of (Commission file (IRS employer
incorporation) number) identification no.)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-964-8389
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information.
Introduction to Unaudited Pro Forma Financial Statements and Other Data
Pro Forma Income Statements and Other Data for the Year Ended December
31, 1996 and the Nine Months Ended September 30, 1997
Pro Forma Balance Sheet and Other Data as of September 30, 1997
Notes to Unaudited Pro Forma Financial Statements and Other Data
(c) Exhibits.
1.1 Form of Underwriting Agreement among the Company and the Underwriters
named in Schedule I thereto.
8.1 Opinion of Sullivan & Worcester LLP re: tax matters.
23.1 Consent of Sullivan & Worcester LLP (contained in Exhibit 8.1).
-2-
<PAGE>
HOSPITALITY PROPERTIES TRUST
Unaudited Pro Forma Financial Statements and Other Data
The following unaudited adjusted pro forma balance sheet at September 30,
1997 is intended to present the financial position of the Company as if the
transactions described in the Notes (the "Transactions") were consummated at
September 30, 1997. The following unaudited adjusted pro forma statements of
income are intended to present the results of operations of the Company as if
the Transactions were consummated on January 1, 1996. These unaudited adjusted
pro forma financial statements should be read in conjunction with, and are
qualified in their entirety by reference to, the separate financial statements
of the Company and certain of the acquired hotel properties, each as of and for
the year ended December 31, 1996 and for the nine months ended September 30,
1997, incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1997, Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1997, and Current Report on Form 8-K dated
November 21, 1997.
These unaudited adjusted pro forma financial statements are not necessarily
indicative of the expected financial position or results of operations of the
Company for any future period. Differences would result from, among other
considerations, future changes in the Company's portfolio of investments,
changes in interest rates, changes in the capital structure of the Company,
delays in the acquisition of certain properties and changes in the Company's
operating expenses.
The following unaudited pro forma balance sheet and unaudited pro forma
statements of income were prepared pursuant to the Securities and Exchange
Commission's rules for the presentation of pro forma data. The pro forma and
adjusted pro forma data give effect to the consummation by the Company of the
Transactions. Certain properties expected to be acquired by the Company are
currently under construction or development by the sellers. Other properties
were under construction during the periods presented when they were owned or
under development by the sellers. The accompanying pro forma operating data does
not give further effect to the completion of construction or the related lease
commencement for any period prior thereto. Construction projects not completed
by September 30, 1997 are likewise not reflected in the pro forma balance sheet
data. Rather, the effect of completion of construction of these properties is
presented separately from the pro forma data as described in the accompanying
notes. The Company believes that a display of such adjusted pro forma data is
meaningful and relevant to the understanding of the Transactions and,
accordingly has presented such data in the final two columns, labeled "Other
Data," on the accompanying pages.
F-1
<PAGE>
HOSPITALITY PROPERTIES TRUST
PRO FORMA INCOME STATEMENTS AND OTHER DATA
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Proforma Other Data
---------------------------------------- --------------- --------------
Historical Pro Forma Other Adjusted
1996 [M] Adjustments Pro Forma Adjustments Pro Forma
---------------- ----------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues
Rental Revenue $69,514 $23,443 [N] $92,957 $43,160 [U] $136,117
FF&E Reserve Income 12,169 1,174 [O] 13,343 - 13,343
Other Income 946 (538) [P] 408 - 408
---------------- ----------------- ---------------- --------------- --------------
Total Revenue 82,629 24,079 106,708 43,160 149,868
---------------- ----------------- ---------------- --------------- --------------
Expenses
Depreciation and Amortization 20,398 8,076 [Q] 28,474 13,608 [V] 42,082
Interest 5,646 3,133 [R] 8,779 5,738 [W] 14,517
General and Administrative 4,921 927 [S] 5,848 2,970 [X] 8,818
---------------- ----------------- ---------------- --------------- --------------
Total Expenses 30,965 12,136 43,101 22,316 65,417
---------------- ----------------- ---------------- --------------- --------------
Net Income $51,664 $11,943 $63,607 $20,844 $84,451
================ ================= ================ =============== ==============
Weighted Average Shares Outstanding 23,170 15,687 [T] 38,857 - 38,857
================ ================= ================ =============== ==============
Earnings Per Share $2.23 $1.64 $2.17
================ ================ ==============
</TABLE>
<TABLE>
<CAPTION>
Proforma Other Data
-------------------------------------- ---------------------------------
Historical
Nine Months
Ended
September 30, Pro Forma Other Adjusted
1997 [O] Adjustments Pro Forma Adjustments Pro Forma
------------------------------------ ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues
Rental Revenue $71,158 $9,322 [N] $80,480 $22,823 [U] $103,303
FF&E Reserve Income 11,138 - 11,138 - 11,138
Other Income 474 - 474 - 474
---------------- ----------------- ---------------- --------------- --------------
Total Revenue 82,770 9,322 92,092 22,823 114,915
Expenses
Depreciation and Amortization 22,528 3,480 [Q] 26,008 7,098 [V] 33,106
Interest 10,602 (3,906) [R] 6,696 4,394 [W] 11,090
General and Administrative 4,787 109 [S] 4,896 1,718 [X] 6,614
---------------- ----------------- ---------------- --------------- --------------
Total Expenses 37,917 (317) 37,600 13,210 50,810
---------------- ----------------- ---------------- --------------- --------------
Net Income $44,853 $9,639 $54,492 $9,613 $64,105
================ ================= ================ =============== ==============
Weighted Average Shares Outstanding 26,871 12,000 [T] 38,871 - 38,871
================ ================= ================ =============== ==============
Earnings Per Share $1.67 $1.40 $1.65
================ ================ ==============
</TABLE>
F-2
<PAGE>
HOSPITALITY PROPERTIES TRUST
PRO FORMA BALANCE SHEET AND OTHER DATA
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Other Data
------------------------------------- -------------------------------------
Historical
September 30, Pro Forma Pro Forma Adjustments Adjusted Pro
1997 [A] Adjustments Forma
------------------------------------------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>>
Assets
Real estate properties $1,006,740 $201,876 [B] $1,208,616 $208,368 [I] $1,416,984
Accumulated depreciation (48,746) - (48,746) - (48,746)
--------------- ----------------- ---------------- ---------------- ----------------
957,994 201,876 1,159,870 208,368 1,368,238
Cash and cash equivalents 13,955 104,530 [C] 118,485 (104,530) [J] 13,955
FF&E reserve (restricted cash) 11,759 1,294 [D] 13,053 - 13,053
Rent Receivable 782 - 782 - 782
Other assets 8,290 - 8,290 - 8,290
--------------- ----------------- ---------------- ---------------- ----------------
$ 992,780 $ 307,700 $ 1,300,480 $ 103,838 $ 1,404,318
=============== ================= ================ ================ ================
Liabilities and
Shareholders' Equity
Term debt $125,000 $ - $ 125,000 $ - $125,000
Revolving debt 104,000 (104,000) [E] - 79,808 [K] 79,808
Security deposits 102,359 35,790 [F] 138,149 24,030 [L] 162,179
Other liabilities 2,957 - 2,957 - 2,957
Shareholder's equity
Common shares of beneficial
interest 269 120 [G] 389 - 389
Additional paid-in capital 656,906 375,790 [H] 1,032,696 - 1,032,696
Cumulative net income 107,866 - 107,866 - 107,866
Dividends (106,577) - (106,577) - (106,577)
--------------- ----------------- ---------------- ---------------- ----------------
Total shareholders' equity 658,464 375,910 1,034,374 - 1,034,374
--------------- ----------------- ---------------- ---------------- ----------------
$ 992,780 $ 307,700 $ 1,300,480 $ 103,838 $ 1,404,318
=============== ================= ================ ================ ================
</TABLE>
F-3
<PAGE>
Hospitality Properties Trust
Notes to Unaudited Pro Forma Financial Statements and Other Data
(dollars in thousands, except per share data)
Pro Forma Balance Sheet Adjustments
A. Represents the historical balance sheet of the Company at September 30, 1997.
B. Represents the purchase of the 22 hotels open but not acquired as of
September 30, 1997:
Cash purchase prices
2 Courtyard by Marriott(R) hotels $ 24,130
14 Sumner Suites(R) hotels 112,000
6 Candlewood(R) hotels 28,952
Purchase price withheld as Security and Guarantee deposits 35,790
Closing Cost 1,004
----------
Total $ 201,876
==========
C. Represents the net effect of the pro forma adjustments on cash.
D. Represents FF&E Reserve cash acquired by the Company in connection with
the purchase of six Courtyard by Marriott(R) and three Residence Inn by
Marriott(R) hotels. Title to the FF&E Reserves for other hotels to be
acquired will be held by the tenant; the Company will have security and
remainder interests in FF&E Reserve escrows owned by its tenants.
E. Represents pro forma net repayments by the Company on its credit
facilities from the proceeds of the offering of Shares.
F. Represents security deposits and other deposits held by the Company as a
result of purchasing and leasing the following hotels:
2 Courtyard by Marriott(R) hotels $ 2,680
14 Sumner Suites(R) hotels 28,000
6 Candlewood(R) hotels 5,110
---------
Total $35,790
=========
G. Represents the par value ($0.01) of Shares expected to be issued in the
Offering.
H. Represents the following:
Gross proceeds expected from the Offering
(12,000,000 shares at $33.0625/share) $ 396,750
Estimated expenses of the Offering (20,840)
----------
Net Proceeds of the Offering 375,910
Par value of Shares (120)
----------
Additional Paid-In Capital $ 375,790
==========
F-4
<PAGE>
Other Data
Balance Sheet Adjustments
I. Represents the purchase of the 20 hotels acquired but not open as of
September 30, 1997:
Cash purchase prices
6 Courtyard by Marriott(R) hotels $ 59,021
5 Residence Inn by Marriott(R) hotels 68,231
9 Candlewood(R) hotels 56,049
Purchase price withheld as Security and Guarantee deposits 24,030
Closing Costs 1,037
----------
Total $ 208,368
==========
The above hotels are properties the Company expects to purchase from
sellers upon completion of construction, of which 5 were completed and
purchased by the Company between September 30 and December 9, 1997 for an
aggregate purchase price of $56,479.
J. Represents use of pro forma cash raised by the Company in connection with
the offering for the purchase of hotels described in Note I.
K. Represents adjusted net borrowing by the Company on its credit facilities.
L. Represents security deposits and other deposits held by the Company as a
result of purchasing and leasing the following hotels:
6 Courtyard by Marriott(R) hotels $ 6,558
5 Residence Inn by Marriott(R) hotels 7,582
9 Candlewood(R) hotels 9,890
--------
Total $ 24,030
========
F-5
<PAGE>
Notes to Unaudited Adjusted Pro Forma Financial Statements
(dollars in thousands, except per share data)
Pro Forma Income Statement Adjustments
M. Represents the historical income statement of the Company for the period
presented.
N. Represents the pro forma effect of leases entered and to be entered for
hotels open during the period presented. This pro forma effect is
derived as follows:
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
Pro forma Minimum Rent $ 91,834 $ 78,422
Pro forma Percentage Rent 1,123 2,058
Amounts included in historical
Minimum Rent (68,419) (69,100)
Amounts included in historical
Percentage Rent (1,095) (2,058)
---------- ------------
$ 23,443 $ 9,322
========== ============
Certain of the hotels owned by the Company as of September 30, 1997 were
under development and others are currently under development by the
sellers of these properties. The Company is not contractually obligated to
acquire these hotels until they are substantially completed. The foregoing
pro forma income statements assume the hotels, which were completed prior
to September 30, 1997 were acquired as of their completion date; however,
pro forma percentage rent is limited to those hotels which were in actual
operation since January 1, 1996. Percentage rent which is based upon a
percentage or gross revenue increases cannot be calculated for unopened
hotels under development.
O. Represents the effect of the Company's 1996 acquisition of 16 Courtyard
by Marriott(R) and 18 Residence Inns by Marriott(R)on FF&E Reserve income.
FF&E Reserve escrow accounts for all of the Company's Courtyard by
Marriott(R) and Residence Inn by Marriott(R) hotels are owned by the Company
and periodic payments into these escrow accounts are recorded as
additional rent under generally accepted accounting principles ("GAAP").
Pro forma escrowed amounts represent 5% of total hotel revenues at such
hotels prior to the purchase date by the Company for the period presented.
No pro forma adjustment for the FF&E Reserve income related to the newly
constructed hotels purchased and to be purchased by the Company from
Marriott has been made, as these amounts cannot be calculated.
The FF&E Reserve for the renovation and refurbishment of the Company's
Wyndham(R), Sumner Suites(R) and Candlewood(R) hotels remains the property
of these respective tenants during the lease term. The Company has a
security interest in these escrow accounts and at the end of the lease
term, any remaining funds in these FF&E Reserves must be paid to
F-6
<PAGE>
the Company. Under GAAP the FF&E Reserve for the Leases relating to these
hotels is not recorded as income by the Company.
P. Represents the pro forma reduction in interest income during 1996 from
the effect of cash investments between the time of capital raising
activities and acquisitions by the Company.
Q. Represents the impact of the purchases and proposed purchases of hotels
from their date of completion to the end of the period presented on
depreciation expense.
R. Represents interest on pro forma Term Debt ($125,000) at LIBOR plus the
contractual spreads for the entire period presented, plus amortization of
deferred financing costs. The average applicable LIBOR rate was 5.45% for
the year ended December 31, 1996 and 5.60% for the nine months ended
September 30, 1997. The pro forma annual impact on interest expense of a
1/8% change in LIBOR is $156.
S. Represents estimated impact of the transactions described in Note N on
general and administrative expenses of the Company.
T. Represents the impact of additional Shares issued in the Offering, plus,
for the year ended December 31, 1996 the impact of additional Shares
issued by the Company in April 1996.
F-7
<PAGE>
Other Data
Income Statement Adjustments
U. Represents the adjusted pro forma effect of leases entered and to be
entered since January 1, 1996. This adjusted pro forma effect is derived
as follows:
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
Adjusted Pro forma Minimum Rent $ 134,994 $ 101,245
Adjusted Pro forma Percentage Rent 1,123 2,058
Amounts included in pro forma Minimum Rent (91,862) (78,422)
Amounts included in pro forma Percentage Rent (1,095) (2,058)
----------- -------------
$ 43,160 $ 22,823
=========== =============
V. Represents the full period's impact of the purchases and proposed
purchases of hotels on depreciation expense.
W. Represents interest on adjusted pro forma borrowings under the Company's
credit facilities ($79,808) at LIBOR plus contractual spreads for the
entire period presented, plus amortization of deferred financing costs.
The average applicable LIBOR rate was 5.45% for the year ended December
31, 1996 and 5.60% for the nine months ended September 30, 1997. The
adjusted pro forma impact on interest expense of a 1/8% change in LIBOR
is $100.
X. Represents estimated impact of the transactions on general and
administrative expenses of the Company.
F-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOSPITALITY PROPERTIES TRUST
By: /s/ Thomas M. O'Brien
--------------------------------
Thomas M. O'Brien, Treasurer and
Chief Financial Officer
Date: December 9, 1997
<PAGE>
LIST OF EXHIBITS
1.1 Form of Underwriting Agreement among the Company and the Underwriters named
in Schedule I thereto.
8.1 Opinion of Sullivan & Worcester LLP re: tax matters.
23.1 Consent of Sullivan & Worcester LLP (contained in Exhibit 8.1).
12,000,000 Shares
Hospitality Properties Trust
Common Shares of Beneficial Interest
UNDERWRITING AGREEMENT
December __, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER, INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Hospitality Properties Trust, a Maryland real estate investment trust
(the "Company"), proposes to issue and sell 12,000,000 common shares of
beneficial interest, par value $0.01 per share (the "Firm Shares"), to the
several underwriters named in Schedule I hereto (the "Underwriters"), for whom
you are acting as Representatives (the "Representatives"). The Company also
proposes to issue and sell to the several Underwriters not more than 1,800,000
additional common shares of beneficial interest, par value $0.01 per share (the
"Additional
<PAGE>
Shares"), if requested by the Underwriters as provided in Section 2 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares". The common shares of beneficial interest, par value $0.01 per
share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Shares". All
references herein to the "Shares," the "Firm Shares," the "Additional Shares" or
the "Common Shares" shall include the Rights (as defined in the Company's
Current Report on Form 8-K, including the exhibits thereto, dated May 20, 1997
(filed on May 30, 1997)) attached thereto.
The 112 hotels described in the Prospectus referred to below as being
currently owned by the Company as of the date hereof are collectively referred
to herein as the "Current Hotels". The 23 hotels described in the Prospectus
referred to below as being proposed to be acquired by the Company as of the date
hereof are collectively referred to herein as the "Additional Hotels". It is
understood that in connection with the proposed acquisition of the Additional
Hotels, the Company has entered into purchase and sale agreements and agreements
to lease (the "Acquisition Agreements") contemplating consummation of a series
of related transactions (the "Acquisition Transactions") generally described in
the Prospectus Supplement referred to below under the captions "Summary",
"Recent Developments", "Use of Proceeds" and "The Company", pursuant to which
the Company shall (i) acquire the Additional Hotels, (ii) lease the Additional
Hotels to hotel operating companies pursuant to separate operating leases and
(iii) to the extent necessary to finance the pending acquisitions, borrow funds
under the $455 million aggregate principal amount credit facilities that the
Company currently maintains with DLJ Mortgage Capital, Inc. (as more fully
described in the Prospectus, the "DLJMC Credit Facilities").
The Current Hotels and the Additional Hotels are collectively referred
to herein as the "Hotels". The Acquisition Agreements and the DLJMC Credit
Facilities and any amendments required thereto) are hereinafter collectively
referred to as the "Transaction Documents" and each singly as a "Transaction
Document". Each Transaction Document constituting an agreement is hereinafter
referred to as a "Transaction Agreement".
1. Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-3 (File No. 333-17983) including a
preliminary prospectus relating to the registration of the Shares and such other
securities which may be offered from time to time by the Company, in accordance
with Rule 415 under the Act. Such registration statement (as amended, if
2
<PAGE>
applicable) was declared effective by the Commission on December 24, 1996. Such
registration statement (as amended as of the date hereof) on the one hand, and
the prospectus constituting a part thereof and the prospectus supplement
relating to the offering of the Shares provided to the Underwriters by the
Company in the form first used to confirm sales of Shares (the "Prospectus
Supplement"), on the other hand, including, in each case, all documents
incorporated therein by reference pursuant to Item 12 of Form S-3 under the Act,
as from time to time amended or supplemented pursuant to the Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively called the "Exchange Act"), are referred
to herein as the "Registration Statement" and the "Prospectus," respectively.
Any registration statement (including any amendment or supplement thereto or
information which is deemed a part thereof) filed by the Company under Rule
462(b) of the Act (a "Rule 462(b) Registration Statement") shall be deemed to be
part of the "Registration Statement" as defined herein and any prospectus
delivered in connection therewith (including any amendment or supplement thereto
or information which is deemed part thereof) included in such registration
statement shall be deemed to be part of the "Prospectus," as defined herein. All
references in this Agreement to financial statements and schedules and other
information which is "contained," "included," "described" or "stated" in the
Registration Statement or the Prospectus (and all other similar references)
shall be deemed to mean and include all such financial statements and schedules
and other information which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement or the Prospectus shall be deemed to mean and include, without
limitation, even though not specifically stated, any document filed under the
Exchange Act which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be. Capitalized terms
used but not otherwise defined herein shall have the meanings given to those
terms in the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the Company at a price per
share of $______ (the "Purchase Price") the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number of
Firm Shares increased as set forth in Section 9 hereof).
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to 1,800,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for
3
<PAGE>
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof, which date shall be
a business day (i) no earlier than two business days after such notice has been
given (and, in any event, no earlier than the Closing Date (as hereinafter
defined)) and (ii) no later than ten business days after such notice has been
given. If any Additional Shares are to be purchased, each Underwriter, severally
and not jointly, agrees to purchase from the Company the number of Additional
Shares (subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares (or such number of Additional Shares increased as set forth in
Section 9 hereof).
The Company hereby agrees not to, and agrees to cause its affiliates,
trustees and officers not to, directly or indirectly, (i) offer, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares or (ii) enter into any swap or
other arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Common Shares (regardless of whether any of
the transactions described in clause (i) or (ii) is to be settled by the
delivery of Common Shares, or such other securities, in cash or otherwise),
except to the Underwriters pursuant to this Agreement, for a period of 90 days
after the date of the Prospectus without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation. Notwithstanding the foregoing, during
such period the Company may issue Common Shares pursuant to its Incentive Share
Award Plan in accordance with the terms and conditions of, and for the number of
Common Shares authorized under, such Plan on the date hereof.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after execution and delivery of this Agreement (and, if
necessary, any post-effective amendment to the Registration Statement) as in
your judgment is advisable and (ii) initially to offer the Shares upon the terms
set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and payment
for the Firm Shares shall be made at 10:00 A.M., New York City time, on
4
<PAGE>
December __, 1997 (the "Closing Date"), at such place as you shall designate.
The Closing Date and the location of delivery of and the form of payment for the
Firm Shares may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between you and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the applicable Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or the applicable Option Closing Date, as the case may be,
with any transfer taxes thereon duly paid by the Company, for the respective
accounts of the several Underwriters, against payment to the Company of the
Purchase Price therefor by wire transfer of Federal or other funds immediately
available in New York City.
5. Agreements of the Company. The Company agrees with you:
(a) In respect of the offering of the Shares contemplated
hereby, to (i) prepare a Prospectus Supplement setting forth the number
of Shares covered thereby, the names of the Underwriters participating
in the offering of the Shares and the number of Shares which each
severally has agreed to purchase, the names of the Underwriters acting
as Representatives in connection with the offering of the Shares, the
price at which the Shares are to be purchased by the Underwriters from
the Company, the public offering price, the selling concession and
reallowance if any, and such other information as the Underwriters and
the Company deem appropriate in connection with the offering of the
Shares, (ii) file the Prospectus (as defined herein to include such
Prospectus Supplement) in a form approved by you pursuant to Rule 424
under the Act no later than the Commission's close of business on the
second business day following the date hereof and (iii) furnish copies
of the Prospectus to the Underwriters and to such dealers as you shall
specify as soon as practicable after the date of this Agreement in such
quantities as you may reasonably request.
5
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(b) At any time when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
Shares, to advise you promptly and, if requested by you, to confirm
such advice in writing, of (i) the effectiveness of any amendment to
the Registration Statement, (ii) the transmittal to the Commission for
filing of the Prospectus or any other supplement or amendment to the
Prospectus required to be filed pursuant to the Act, (iii) the receipt
of any comments from the Commission relating to the Registration
Statement, the Prospectus, any preliminary prospectus supplement
relating to the Shares, the Prospectus Supplement or any of the
transactions contemplated by this Agreement, (iv) any request by the
Commission for post-effective amendments to the Registration Statement
or amendments or supplements to the Prospectus or for additional
information, (v) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes,
and (vi) the happening of any event during the period referred to in
paragraph (e) below which makes any statement of a material fact made
in the Registration Statement or the Prospectus untrue or which
requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading. The Company will make every reasonable effort to prevent
the issuance of any stop order and if at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal or lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, seven signed copies of
the Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits and documents incorporated
therein by reference, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits but
including documents incorporated therein by reference, as you may
reasonably request. If applicable, the copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will
be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T, as promulgated by the Commission.
(d) At any time when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
Shares, not to file any amendment to the Registration Statement or any
Rule 462(b) Registration Statement or to make any amendment or
supplement to the
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Prospectus of which you shall not previously have been advised or to
which you or Davis Polk & Wardwell shall reasonably object; and to
prepare and file with the Commission, promptly upon your reasonable
request, any amendment to the Registration Statement, any Rule 462(b)
Registration Statement or any amendment or supplement to the Prospectus
which may be necessary or advisable in connection with the distribution
of the Shares by you, and to use its best efforts to cause the same to
become promptly effective. If applicable, the Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T, as promulgated by the Commission.
(e) Prior to 10:00 A.M., New York City time, on the first
business day after the date hereof and from time to time thereafter for
such period as in the opinion of Davis Polk & Wardwell a prospectus is
required by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each Underwriter and dealer as
many copies of the Prospectus (and of any amendment or supplement to
the Prospectus) and any documents incorporated therein by reference as
such Underwriter or dealer may reasonably request.
(f) If, during the period specified in paragraph (e), any
event shall occur as a result of which, in the opinion of Davis Polk &
Wardwell, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
existing when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus
to comply with any law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented,
will not in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with applicable law,
and to furnish to each Underwriter and to such dealers as you shall
specify, such number of copies thereof as such Underwriter or dealers
may reasonably request.
(g) Prior to any public offering of the Shares, (i) to
cooperate with you and Davis Polk & Wardwell (or such other local
counsel as may be designated by you) in connection with the
registration or qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the state securities, Blue
Sky or real estate syndication laws of such jurisdictions as you may
request, (ii) to continue such qualification in effect so long as
required for distribution of the Shares, (iii) to file such consents to
service of process or other documents as may be necessary in
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order to effect such registration or qualification and (iv) to
cooperate with you and Davis Polk & Wardwell in connection with the
review of the offering of the Shares contemplated hereby by the
National Association of Securities Dealers, Inc. ("NASD").
(h) To make generally available to the Company's shareholders
as soon as reasonably practicable but not later than sixty (60) days
after the close of the period covered thereby (or ninety (90) days in
the event the close of such period is the close of the Company's fiscal
year), an earnings statement (in form complying with the provisions of
Rule 158 under the Act) covering a period of at least twelve (12)
months after the effective date of the Registration Statement (but in
no event commencing later than ninety (90) days after such date) which
shall satisfy the provisions of Section 11(a) of the Act, and, if
required by Rule 158 of the Act, to file such statement as an exhibit
to the next periodic report required to be filed by the Company under
the Exchange Act covering the period when such earnings statement is
released.
(i) During the period of five years after the date of this
Agreement, (i) to mail as soon as reasonably practicable after the end
of each fiscal year to the record holders of its Common Shares a
financial report of the Company and its subsidiaries, if any, on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to
include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal
year, together with comparable information as of the end of and for the
preceding year, certified by independent certified public accountants,
and (ii) to make generally available as soon as practicable after the
end of each quarterly period (except for the last quarterly period of
each fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement of
cash flows (and similar financial reports of all unconsolidated
subsidiaries, if any) as of the end of and for such period, and for the
period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding
periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the holders of Common
Shares or filed with the Commission and such other publicly available
information concerning the Company and its subsidiaries, if any, as you
may reasonably request.
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(k) During the period when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
the Shares, to file all documents required to be filed by it with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act within
the time periods required by the Exchange Act.
(l) To pay (i) all costs, expenses, fees and taxes incident to
the preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits),
the Prospectus, the preliminary prospectus relating to the offering
contemplated hereby (the "Preliminary Prospectus"), all documents
incorporated or to be incorporated by reference therein, and all
amendments and supplements to any of them prior to or during the period
specified in paragraph (e), (ii) all costs and expenses in connection
with the printing and delivery of the Prospectus, the Preliminary
Prospectus and all amendments or supplements thereto during the period
specified in paragraph (e), (iii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iv) all expenses in
connection with the registration or qualification of the Shares for
offer and sale under the securities, Blue Sky or real estate
syndication laws of the several states (including in each case the fees
and disbursements of counsel for the Company or counsel for the
Underwriters relating to such registration or qualification and
memoranda relating thereto), (v) all filing fees paid to the NASD in
connection with the review and clearance of the offering of the Shares
contemplated hereby, (vi) all costs and expenses incidental to the
listing of the Shares on the NYSE, (vii) the cost of furnishing such
copies of the Registration Statement, the Prospectus and all amendments
and supplements thereto as may be requested for use in connection with
the offering or sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold and (viii) the cost of the preparation,
issuance and delivery of certificates representing the Shares,
including the charges of any transfer agent or registrar.
(m) To use its best efforts to list the Shares on the NYSE and
to maintain the listing of the Common Shares on the NYSE for a period
of five years after the Closing Date hereunder.
(n) To use its best efforts to qualify for the year ended
December 31, 1997 and to continue to meet the requirements to qualify
as a real estate investment trust ("REIT") under the Internal Revenue
Code of 1986, as amended (the "Code").
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(o) To apply the net proceeds of the offering of Shares
contemplated hereby substantially in accordance with the description
set forth under the caption "Use of Proceeds" in the Prospectus.
(p) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or any Option Closing Date, as
the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
6. Representations and Warranties. The Company represents and warrants
to each Underwriter that:
(a) The Company meets the requirement for use of Form S-3 and
the Registration Statement has been prepared by the Company under the
provisions of the Act and has been filed with and declared effective by
the Commission.
(b) The Registration Statement has become effective (other
than any Rule 462(b) Registration Statement to be filed by the Company
after the effectiveness of this Agreement); any Rule 462(b)
Registration Statement filed after the effectiveness of this Agreement
will become effective no later than 10:00 P.M., New York City time, on
the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the
Commission.
(c) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus,
complied or will comply when so filed in all material respects with the
Exchange Act, (ii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement ), when it initially became effective
and as of the date hereof, respectively, did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statement therein not
misleading, (iii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Act, (iv) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this
Agreement, such Rule 462(b) Registration Statement and any amendments
thereto, when they become effective (A) will not contain any untrue
statement of a material fact or omit to state a material
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<PAGE>
fact required to be stated therein or necessary to make the statements
therein not misleading and (B) will comply in all material respects
with the Act and (v) the Prospectus does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph (c) do not apply to
statements or omissions in the Registration Statement or the Prospectus
based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use
therein.
(d) Each Preliminary Prospectus filed pursuant to Rule 424
under the Act, complied when so filed in all material respects with the
Act, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(e) The Company has been duly organized and is validly
existing as a real estate investment trust in good standing under the
laws of the State of Maryland and has the power and authority to own
the Current Hotels owned by it and to lease such Current Hotels to
others and to conduct its business, all as described in the Prospectus,
and is duly qualified and in good standing as a foreign trust
authorized to do business in each jurisdiction in which such Current
Hotels are located and such qualification and authorization is
required.
(f) Each of the Company's subsidiaries has been duly
incorporated, is validly existing as a corporation or a real estate
investment trust, as the case may be, in good standing under the laws
of its jurisdiction of incorporation or formation, as the case may be,
and has the power and authority to own the Current Hotels owned by it
and to lease such Current Hotels to others and to conduct its business
as it is currently being conducted, and each is duly qualified and is
in good standing as a foreign corporation or a real estate investment
trust, as the case may be, authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification. All of the outstanding
shares of capital stock of, or other ownership interests in, each of
the Company's subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned by the Company,
free and clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature.
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(g) All the outstanding Common Shares of the Company have been
duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights; and the Shares
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and the issuance
of such Shares will not be subject to any preemptive or similar rights.
The Company has no outstanding Preferred Shares of Beneficial Interest.
There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to
or entitling any person to purchase or otherwise to acquire any Common
Shares of, or other ownership interest in, the Company except as
otherwise disclosed in the Registration Statement.
(h) The authorized capital of the Company, including the
Common Shares, conforms as to legal matters to the description thereof
contained in the Prospectus (or the documents incorporated therein by
reference).
(i) The Company and each of its subsidiaries is not in
violation of its Declaration of Trust, Certificate of Incorporation or
Bylaws, as the case may be, or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the Company or
any of its subsidiaries is a party or by which any of them or their
respective property is bound.
(j) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws affecting the enforceability of creditor's
rights and general principles of equity.
(k) The execution by the Company or any of its subsidiaries of
each Transaction Document to which it is a party and the delivery by
the Company or any of its subsidiaries of, and the performance by the
Company or any of its subsidiaries of its obligations under, each
Transaction Document to which it is a party, as the case may be, and
the consummation of the transactions contemplated hereby and thereby
will not contravene any provision of applicable law or (i) the
Declaration of
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Trust, Certificate of Incorporation or Bylaws of the Company or any of
its subsidiaries, (ii) any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or (iii) any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any of its subsidiaries, except such as would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(l) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency and no consent,
approval or authorization of any person other than the Company or any
of its subsidiaries is required for the execution, delivery or
performance by the Company or any of its subsidiaries of its
obligations under each Transaction Document to which it is a party or
the consummation of the transactions contemplated hereby and thereby,
except such as may be required and will be obtained on or prior to the
Closing Date and such as may be required by the securities or Blue Sky
laws or real estate syndication laws of the various states in
connection with the offer and sale of the Shares and, in the case of
the performance thereof, except as are contemplated by the express
terms of such Transaction Document to occur after the Closing Date and
except (x) such as are otherwise described in the Prospectus and (y)
such that the failure to obtain would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(m) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or
business prospects of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus.
(n) There are no legal or governmental proceedings pending or,
to the knowledge of the Company after due inquiry, threatened to which
the Company or any of its subsidiaries is a party or to which any of
the Hotels is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(o) The Company and each of its subsidiaries has, and as of
the Closing Date will have, all necessary consents, authorizations,
approvals, orders, certificates, licenses, franchises and permits of
and from, and has
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made, or as of the Closing Date will have made, all declarations and
filings with all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals having jurisdiction over the Company or its properties,
necessary to own, lease, license and use its properties and assets, and
to conduct its business in the manner described in the Prospectus,
except to the extent that the failure to obtain or file would not have
a material adverse effect on the Company and its subsidiaries, taken as
a whole.
(p) To the best knowledge of the Company, each lessee of the
Current Hotels has, and as of the Closing Date will have, all permits,
licenses, approvals, certificates, franchises and authorizations of
governmental or regulatory authorities ("Approvals") as may be
necessary to lease, operate or manage the Current Hotels in the manner
described in or contemplated by the Prospectus, except for those
Approvals the absence of which would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(q) The Company has received and reviewed certain
environmental reports on each Hotel's property, has obtained certain
representations and warranties relating to environmental matters from
the sellers of the Current Hotels set forth in purchase agreements
therefor and has conducted physical inspections of each Current Hotel's
property. Except as described in the Prospectus, (i) the Company, and,
to its knowledge, each Current Hotel's property, is, and as of the
Closing Date will be, in compliance with all applicable federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment, hazardous toxic substances and
wastes, pollutants and contaminants ("Environmental Laws"), (ii) the
Company, or, to its knowledge, its lessees have received, or as of the
Closing Date will receive, all permits, licenses or other approvals
required under applicable Environmental Laws to conduct the respective
hotel businesses presently conducted at each such property and (iii)
the Company or, to its knowledge, its lessees are, or as of the Closing
Date will be, in compliance with all terms and conditions of any such
permit, license or approval, except, in respect of clauses (i), (ii)
and (iii), as otherwise disclosed in the Prospectus or as would not,
singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(r) To the best knowledge of the Company, except as described
in the Prospectus, there are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, remediation or closure of
properties or compliance with Environmental Laws and any potential
14
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liabilities to third parties) that, as of the date hereof, would, or as
of the Closing Date will, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(s) The Company has received and reviewed engineering reports
on each Current Hotel's property, has obtained certain representations
and warranties from the sellers of the Current Hotels set forth in
purchase agreements therefor and has conducted physical inspections of
each Current Hotel's property. In respect of each Current Hotel, (i)
each Current Hotel is not in violation of any applicable building code,
zoning ordinance or other law or regulation, except where such
violation of any applicable building code, zoning ordinance or other
law or regulation would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; (ii) the Company has not received notice of any proposed
material special assessment or any proposed change in any property tax,
zoning or land use laws or availability of water affecting any Current
Hotel that would have, singly or in the aggregate, a material adverse
effect on the Company and its subsidiaries, taken as a whole; (iii)
there does not exist any material violation of any declaration of
covenants, conditions and restrictions with respect to any Current
Hotel that would have, singly or in the aggregate, a material adverse
effect on the Company and its subsidiaries, taken as a whole, or any
state of facts or circumstances or condition or event which could, with
the giving of notice or passage of time, or both, constitute such a
violation; and (iv) the improvements comprising any portion of each
Current Hotel (the "Improvements") are free of any and all material
physical, mechanical, structural, design and construction defects that
would have, singly or in the aggregate, a material adverse effect on
the Company and its subsidiaries, taken as a whole and the mechanical,
electrical and utility systems servicing the Improvements (including,
without limitation, all water, electric, sewer, plumbing, heating,
ventilation, gas and air conditioning) are in good condition and proper
working order and are free of defects that would have, singly or in the
aggregate, a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(t) Subsequent to the respective dates as of which financial
information is given in the Registration Statement and the Prospectus,
(i) the Company and each subsidiary of the Company has not incurred any
material liability or obligation, direct or contingent, nor entered
into any material transaction not in the ordinary course of business;
(ii) the Company has not purchased any of its outstanding Common
Shares, nor has it declared, paid or otherwise made any dividend or
distribution of any kind on its Common Shares; and (iii) there has not
been any material
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change in the capital, short-term debt or long-term debt of the
Company, except, in respect of clauses (i), (ii) or (iii) above, as
described in or contemplated by the Prospectus.
(u) (i) As of the Closing Date, the Company and each of its
subsidiaries will have good and marketable title in fee simple to all
real property (or good and marketable leasehold interests with respect
to the real property ground leased by the Company or its subsidiaries)
and good and marketable title to all personal property then owned by
them, in each case free and clear of all liens, encumbrances and
defects, except (w) liens or other security interests arising under the
DLJMC Credit Facilities or the first mortgages on hotels owned by
certain subsidiaries of the Company pursuant to the $125,000,000
aggregate principal amount of Hospitality Properties Mortgage
Acceptance Corp., Series 1996-C1, Notes due December 1, 2001 (the
"Mortgage Notes"), (x) leases providing for the lease by the Company of
its current hotels to various tenants as described in the Prospectus,
(y) such as would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole or (z) in the case of personal
property located at certain Hotels, such as are subject to equipment
lease financing arrangements which have been entered into in the
ordinary course of business and have an aggregate outstanding balance
not in excess of $1 million; and (ii) real property held under ground
lease by the Company or any subsidiary is, and as of the Closing Date
will be, held by it under valid, subsisting and enforceable ground
leases with such exceptions as would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(v) The Company and its Current Hotels are, and as of the
Closing Date will be, insured in the manner described in the Prospectus
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are customary in the businesses in
which the Company is engaged and proposes to engage and the Company has
no reason to believe that it will not be able to renew such insurance
coverage as and when such coverage expires or to obtain similar
coverage as may be necessary to continue its business at economically
viable rates.
(w) The assets of the Company do not constitute, and as of the
Closing Date will not constitute, "plan assets" under the Employee
Retirement Income Security Act of 1974, as amended.
(x) The Company is, and as of the Closing Date will be,
organized to operate in a manner so as to qualify as a REIT under
Sections 856 through 860 of the Code, and the Company will elect to be
taxed as a REIT under the Code effective for the year ending December
31, 1997.
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(y) Except as provided by this Agreement, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finders fee or other like
payment with respect to the consummation of the transactions
contemplated by this Agreement.
(z) The financial statements of the Company and, to the
Company's knowledge, the financial statements and schedules of
portfolios of certain Hotels and lessees (consisting of separate
financial statements for HMH HPT Courtyard, Inc., HMH HPT Residence
Inn, Inc., Limited Service I Hotels, Limited Service II Hotels and
Renthotel Utah, L.C.), included in the Registration Statement and the
Prospectus fairly present the financial position of the Company and the
applicable Hotels or lessees (as set forth in such separate financial
statements), respectively, and their results of operations and changes
in financial condition, respectively, as of the dates and periods
therein specified. Such financial statements of the Company and, to the
Company's knowledge, such financial statements and schedules of such
Hotels and lessees, have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein). The selected
financial and other data set forth under the caption "Unaudited
Adjusted Pro Forma Financial Statements" in the Prospectus and under
the caption "Unaudited Adjusted Pro Forma Financial Statements" in the
Company's Current Report on Form 8-K (the "Form 8-K") dated November
21, 1997 (filed on November 24, 1997) fairly present, on the basis
stated in the Prospectus or the Form 8-K, as applicable, the
information included therein. The unaudited pro forma financial
statements included in the Registration Statement and the Prospectus
comply in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X promulgated by the
Commission and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of that data.
(aa) The Company and/or its subsidiaries, as applicable, has
obtained an ALTA Extended Coverage Owner's Policy of Title Insurance or
its local equivalent (or an irrevocable commitment to issue such a
policy) on all of the Current Hotels owned by the Company or its
subsidiaries and such title insurance is in full force and effect.
(bb) On the Closing Date after giving effect to repayment of
amounts then outstanding under the DLJMC Credit Facilities on or prior
to such date, the Company will have no indebtedness for money borrowed
except (i) the Mortgage Notes and (ii) equipment financing arrangements
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in respect of personal property located at certain Hotels which have
been entered into in the ordinary course of business and have an
aggregate outstanding balance not in excess of $1 million.
(cc) The Shares have been approved for listing on the NYSE,
subject to official notice of issuance.
(dd) Arthur Andersen LLP and Reznick Fedder & Silverman are
each independent public accountants with respect to the Company as
required by the Act.
(ee) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ff) No holder of any security of the Company has any right to
require registration of Common Shares or any other security of the
Company.
(gg) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K promulgated by the
Commission.
(hh) The Acquisition Agreements pursuant to which the Company
expects to acquire the Additional Hotels (including any Additional
Hotels which the Company may determine to acquire after the Closing
Date) are in full force and effect. The Company intends and reasonably
expects to consummate the acquisition and lease of all Additional
Hotels not owned or acquired by it as of the Closing Date as
expeditiously as possible after the Closing Date, including as and when
the construction of certain of such properties is completed.
7. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
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information relating to any Underwriters furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use therein; provided
that the foregoing indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages, liabilities or judgments purchased the Shares if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus and a copy of
the Prospectus shall not have been furnished to such person at or prior to the
written confirmation of the sale of such Shares to such person.
(b) In case any action shall be brought against any Underwriter or any
person controlling such Underwriter, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company, such
Underwriter shall promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses. Any
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any impleaded parties) include both
such Underwriter or such controlling person and the Company and such Underwriter
or such controlling person shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such Underwriters and controlling persons, which firm shall be
designated in writing by Donaldson, Lufkin & Jenrette Securities Corporation and
that all such fees and expenses shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless any Underwriter and
any such controlling person from and against any loss or liability by reason of
such settlement. Notwithstanding the immediately preceding sentence, if in any
case where the fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party
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shall have requested the indemnifying party to reimburse the indemnified party
for such fees and expenses of counsel as incurred, such indemnifying party
agrees that it shall be liable for any settlement of any action effected without
its written consent if (i) such settlement is entered into more than ten
business days after the receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall have failed to reimburse the
indemnified party in accordance with such request for reimbursement prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and its trustees or officers who sign the
Registration Statement (or any person named in the Registration Statement as
having agreed to become a trustee of the Company) and any person controlling the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Underwriter but only with reference to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through you
expressly for use in the Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be brought against the Company,
its trustees (or a named proposed trustee) or officers or persons controlling
the Company based on the Registration Statement, the Prospectus or any
preliminary prospectus and in respect of which indemnity may be sought against
any Underwriter, the Underwriter shall have the rights and duties given to the
Company (except that if the Company shall have assumed the defense thereof, such
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), and the Company, its
trustees (or a named proposed trustee) or officers and persons controlling the
Company shall have the rights and duties given to the Underwriter, by Section
7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is
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appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company,
and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7(d) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares under this Agreement are subject to
the satisfaction of each of the following conditions:
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(a) All the representations and warranties set forth in
Section 6 of this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) At the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission; and the Prospectus
and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rule
424(b) under the Act.
(c) (i) Since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, there shall not have been any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of
business, of the Company; (ii) since the date of the latest balance
sheet included or incorporated by reference in the Registration
Statement and the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), there
shall not have been any change, or any development involving a
prospective material adverse change, in the capital or in the long-term
debt of the Company from that set forth in the Registration Statement
and Prospectus (other than in connection with Acquisition Transactions
described in and contemplated by the Registration Statement and the
Prospectus); (iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to the
Company and its subsidiaries, taken as a whole, other than those
reflected in the Registration Statement and the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement); (iv) since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, none of the Hotels owned by the Company as of the Closing
Date shall have sustained any material loss or casualty due to fire,
flood, earthquake, hurricane, tornado, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree; (v) all Acquisition Agreements
relating to Additional Hotels which have been executed and delivered by
the Company on or before the Closing Date shall be in full force and
effect as of such date and the Company shall not be aware of any event,
development or circumstance which it reasonably expects will materially
delay or prevent its acquisition of the Additional Hotels in the manner
contemplated in the Prospectus; and (vi) on the Closing Date you shall
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have received a certificate dated the Closing Date, signed by the
President and Chief Financial Officer of the Company, confirming the
matters set forth in paragraphs (a), (b) and (c) of this Section 8 and
that the Company has complied with all of the agreements and satisfied
all of the conditions herein contained and required to be complied with
or satisfied by the Company on or prior to the Closing Date.
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Sullivan & Worcester LLP, counsel for the Company, to
the effect that:
(i) the Company has been duly organized and is
validly existing as a real estate investment trust in good
standing under the laws of the State of Maryland and has the
power and authority to acquire and own the Hotels owned by it
and to lease such Hotels to others and to conduct its
business, all as described in the Prospectus;
(ii) each of the Company's subsidiaries has been duly
organized and is validly existing (x) as a corporation in good
standing under the laws of the State of Delaware or (y) as a
real estate investment trust in good standing under the laws
of the State of Maryland, as the case may be, and has the
power and authority to own the Hotels owned by it and to lease
such Hotels to others and to conduct its business, all as
described in the Prospectus;
(iii) all of the outstanding shares of capital stock
of each of the Company's subsidiaries have been duly and
validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company, free and clear
of any security interest, claim, lien, encumbrance or adverse
interest of any nature;
(iv) all the outstanding Common Shares have been duly
authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar
rights;
(v) the Shares have been duly authorized, and, when
issued and delivered to the Underwriters against payment
therefor as provided by this Agreement, will have been validly
issued and will be fully paid and non-assessable, and the
issuance of such Shares is not subject to any preemptive or
similar rights;
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(vi) the Company has no outstanding Preferred Shares
of Beneficial Interest;
(vii) to the best of such counsel's knowledge, there
are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to
acquire any Common Shares of, or other ownership interest in,
the Company except as otherwise disclosed in the Registration
Statement;
(viii) the authorized capital of the Company,
including the Common Shares, conforms as to legal matters to
the description thereof contained in the Prospectus;
(ix) the statements under the captions (i) "Summary",
"Recent Developments", "The Company-- Leases", "Management",
"Description of Common Shares" and "Underwriting" in the
Prospectus Supplement and (ii) "Limitation of Liability;
Shareholder Liability", "Redemption; Trustees; Business
Combinations and Control Share Acquisitions" in the
Prospectus, as of the date of the Prospectus; and "Item 5.
Other Events" in the Form 8-K; "Part I. Item 2. Management's
Discussion and Analysis of Results of Operations and Financial
Condition -- Overview" and "-- Liquidity and Capital
Resources" in the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997; "Part II. Item 2.
Changes in Securities" in the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997; "Item 5. Other
Events" in the Company's Current Report on Form 8-K dated May
20, 1997; "Other Information--Incentive Share Award Plan" and
"Certain Relationships and Related Transactions" in the
Company's Proxy Statement relating to the May 20, 1997 Annual
Meeting of Shareholders (incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (the "Form 10-K")); and "Item 1. Business",
"Item 2. Properties", "Item 5. Market For Registrant's Common
Equity and Related Stockholder Matters", "Item 7. Management's
Discussion and Analysis of Results of Operations and Financial
Condition Overview" and " -- Liquidity and Capital Resources"
in the Form 10-K, in each case as of the date of filing of
such document, insofar as such statements constitute a summary
of legal matters, documents or proceedings referred to
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings;
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(x) the statements under the captions "Federal Income
Tax and ERISA Consequences" in the Prospectus Supplement and
"Item 1. Business--Taxation of the Company", "--Taxation of
Shareholders", "-- Other Tax Considerations", "-- Certain
United States Tax Considerations Non-U.S. Shareholders", "--
Federal Estate Tax", "-- Backup Withholding and Information
Reporting Requirements", "-- Other Tax Consequences" and
"--ERISA Plans, Keogh Plans and Individual Retirement
Accounts" in the Form 10-K, insofar as such statements
constitute a summary of legal matters or documents referred to
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings;
(xi) the Registration Statement has become effective
under the Act, the Prospectus was filed with the Commission
pursuant to Rule 424 within the applicable time period
prescribed by Rule 424 and, to the best of such counsel's
knowledge, no stop order suspending its effectiveness has been
issued and no proceedings for that purpose are, to the
knowledge of such counsel, pending before or contemplated by
the Commission;
(xii) the Company and each of its subsidiaries is not
in violation of its Declaration of Trust, Certificate of
Incorporation or Bylaws and, to such counsel's knowledge, the
Company and each of its subsidiaries is not in default in the
performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence
of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which any
of them or their respective property is bound;
(xiii) this Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable against it in
accordance with its terms, except as enforceability of any
indemnification or contribution provisions contained therein
may be limited under federal or state securities laws or
public policy;
(xiv) each Transaction Document executed by the
Company or any of its subsidiaries as of the date of such
opinion has been duly authorized, executed and delivered by
it;
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(xv) no consent, approval, authorization or order of,
or qualification with, any United States federal,
Massachusetts, Delaware or Maryland governmental body or
agency (other than any Massachusetts, Delaware or Maryland
body or agency dealing with securities laws, as to which such
counsel need not express an opinion) is required for the
execution, delivery or performance by the Company or any of
its subsidiaries of its obligations under each Transaction
Document to which it is a party or the consummation of the
transactions contemplated thereby;
(xvi) to the best of such counsel's knowledge, there
are no legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is a party or
to which any of the Hotels is subject that are required to be
described in the Registration Statement or the Prospectus and
are not so described, nor any statutes, regulations, contracts
or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(xvii) to such counsel's knowledge, the Company or
its subsidiaries, as owners of the Current Hotels, have all
Approvals as may be necessary to own the Current Hotels in the
manner described in or contemplated by the Prospectus, except
for any such Approvals the absence of which would not, singly
or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(xviii) the Company is not an "investment company" or
a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xix) such counsel confirms as of the Closing Date
its opinions filed as Exhibits 5.1 and 8 to the Registration
Statement; and
(xx) (1) each document, if any, filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus
(except for financial statements and other financial and
statistical data and schedules as to which no opinion need be
expressed) complied as to form in all material respects with
the Exchange Act when so filed with the Commission, (2) the
Registration Statement and the Prospectus and any supplement
or amendment thereto (except for financial statements and
other financial and statistical
26
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data and schedules as to which no opinion need be expressed)
comply as to form in all material respects with the Act, and
(3) no facts have come to such counsel's attention that would
lead such counsel to believe (i) that (except for financial
statements and other financial and statistical data and
schedules, as aforesaid) the Registration Statement and the
prospectus included therein (x) at the time the Registration
Statement became effective and (y) on the date hereof,
respectively, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or (ii) that the Prospectus, as amended or
supplemented, if applicable (except for financial statements
and other financial and statistical data and schedules, as
aforesaid) at the time it was first provided to the
Underwriters for use in connection with the offering of the
Shares and as of the Closing Date contained or contains any
untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
In giving such opinion with respect to the matters covered by clause
(xx), such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and documents incorporated therein by
reference, and review and discussion of the contents thereof, but are without
independent check or verification except as specified.
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of Piper & Marbury L.L.P. as to matters governed by the laws of
the State of Maryland. In addition, in rendering their opinion, such counsel may
state that their opinion as to laws of the State of Delaware is limited to the
Delaware General Corporation Law.
The opinions of Sullivan & Worcester LLP and Piper & Marbury L.L.P.
described in paragraph (d) above shall be rendered to you at the request of the
Company and shall so state therein.
(e) You shall have received on the Closing Date an opinion,
dated the Closing Date, of Davis Polk & Wardwell, counsel for the
Underwriters, as to the matters referred to in clauses (v), (ix) (but
only with respect to the statements under the caption "Underwriting" in
the Prospectus Supplement), (xiii) (but only as to due authorization,
execution and delivery) and clause (xx) of the foregoing paragraph (d)
(but only with respect to clauses (2), (3)(i)(y) and (3)(ii) thereof).
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In giving such opinion with respect to the matters covered by clause
(xx), such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto (other than the documents incorporated
therein by reference) and review and discussion of the contents thereof
(including the documents incorporated therein by reference), but are without
independent check or verification except as specified.
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of Piper & Marbury L.L.P. as to matters governed by the laws of
the State of Maryland.
(f) You shall have received a letter dated on and as of the
Closing Date, in form and substance satisfactory to you, from Arthur
Andersen LLP, independent public accountants, with respect to certain
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus, in substantially the form and substance of the letter
delivered to you by Arthur Andersen LLP on the date of this Agreement.
(g) Substantially contemporaneously with the issuance and sale
of the Firm Shares hereunder, the Company shall repay all amounts then
outstanding under the DLJMC Credit Facilities.
(h) The Shares shall have been duly listed, subject to notice
of issuance, on the NYSE.
(i) The "lock-up" agreements, each substantially in the form
previously delivered and described under the caption "Underwriting" in
the Prospectus, between you and each of Health and Retirement
Properties Trust and HRPT Advisors, Inc. relating to sales and certain
other dispositions of Common Shares or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
(j) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company
at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Shares
hereunder are subject to the delivery to you on the Closing Date or the Option
Closing Date, as the case may be, of such documents as you may reasonably
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request with respect to the good standing and qualification to do business in
applicable jurisdictions of the Company and its subsidiaries, the due
authorization and issuance of the Shares and other matters related to the
issuance of the Shares.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution of this Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company or the earnings, affairs, or business
prospects of the Company, whether or not arising in the ordinary course of
business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities or other instruments
on the NYSE, the American Stock Exchange, The Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market or limitation on prices for securities on any such
exchange or the Nasdaq National Market, (iv) the suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market, (v)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company, (vi) the
declaration of a banking moratorium by either federal or New York State
authorities or (vii) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in
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the proportion which the number of Firm Shares set forth opposite its name in
Schedule I bears to the total number of Firm Shares which all the non-defaulting
Underwriters, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Firm Shares or Additional Shares,
as the case may be, which such defaulting Underwriter or Underwriters, as the
case may be, agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Firm Shares or Additional Shares, as the
case may be, which any Underwriter has agreed to purchase pursuant to Section 2
hereof be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such number of Firm Shares or Additional Shares, as the case may
be, without the written consent of such Underwriter. If on the Closing Date or
on an Option Closing Date, as the case may be, any Underwriter or Underwriters
shall fail or refuse to purchase Firm Shares, or Additional Shares, as the case
may be, and the aggregate number of Firm Shares or Additional Shares, as the
case may be, with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares to be purchased on such date by all Underwriters
and arrangements satisfactory to you and the Company for purchase of such Shares
are not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the Company.
In any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date or the
applicable Option Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Hospitality
Properties Trust, 400 Centre Street, Newton, MA 02158, Attention: President, and
(b) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The parties hereto agree, for purposes of Section 6(b), Section 7 and
any other provision of this Agreement, that the only information relating to any
Underwriter furnished to the Company in writing by such Underwriter expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto is the information furnished
by the Representatives included in the Prospectus, (i) in the legend relating to
stabilization on the inside front cover page, (ii) listing the names of each
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Underwriter under the caption "Underwriting" and (iii) in the third, seventh and
eighth paragraphs under the caption "Underwriting" in the Prospectus.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and trustees and of
the several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter or by or on behalf
of the Company, or its officers or trustees, (ii) acceptance of the Shares and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
31
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
HOSPITALITY PROPERTIES TRUST
By
-------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER, INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
----------------------------
Name:
Title:
32
<PAGE>
SCHEDULE I
Number of
Firm Shares
Underwriters to be Purchased
- ------------ ---------------
Donaldson, Lufkin & Jenrette Securities Corporation............
A.G. Edwards & Sons, Inc.......................................
Legg Mason Wood Walker, Incorporated...........................
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............
Prudential Securities Incorporated.............................
Smith Barney Inc...............................................
----------------
Total 12,000,000
================
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
December 9, 1997
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Ladies and Gentlemen:
The following opinion is furnished to you to be filed with the
Securities and Exchange Commission (the "SEC") as Exhibit 8.1 to the Current
Report on Form 8-K of Hospitality Properties Trust (the "Company"), to be filed
within one week of the date hereof, under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
We have acted as counsel for the Company in connection with its
Registration Statement on Form S-3, File No. 333-17983 (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"), and we
have examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement, corporate records, certificates and
statements of officers and accountants of the Company and of public officials,
and such other documents as we have considered relevant and necessary in order
to furnish the opinion hereinafter set forth. Specifically, and without limiting
the generality of the foregoing, we have reviewed the Company's declaration of
trust, as amended and restated, the by-laws of the Company, the preliminary
prospectus supplement dated November 24, 1997 (the "Prospectus Supplement") to
the final prospectus dated December 24, 1996 (the "Base Prospectus", and as
supplemented by the Prospectus Supplement, the "Prospectus") which forms a part
of the Registration Statement, and the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 filed under the Exchange Act (the "Annual
Report"). We have reviewed the sections of the Annual Report captioned "Taxation
of the Company" and "ERISA Plans, Keogh Plans and Individual Retirement
Accounts," as supplemented by the section in the Prospectus Supplement captioned
"Federal Income Tax and ERISA Consequences." With respect to all questions of
fact on which the opinion set forth below is based, we have assumed the accuracy
and completeness of and have relied on the information set forth in the
Prospectus and the Annual Report, and in the documents incorporated therein by
reference, and on representations made to us by the officers of the Company. We
have not independently
<PAGE>
Hospitality Properties Trust
December 9, 1997
Page 2
verified such information; nothing has come to our attention, however, which
would lead us to believe that we are not entitled to rely on such information.
The opinion set forth below is based upon the Internal Revenue Code of
1986, as amended, the Treasury Regulations issued thereunder, published
administrative interpretations thereof, and judicial decisions with respect
thereto, all as of the date hereof (collectively, the "Tax Laws"), and upon the
Employee Retirement Income Security Act of 1974, as amended, the Department of
Labor regulations issued thereunder, published administrative interpretations
thereof, and judicial decisions with respect thereto, all as of the date hereof
(collectively, the "ERISA Laws"). No assurance can be given that the Tax Laws or
the ERISA Laws will not change. In preparing the discussions with respect to Tax
Laws and ERISA Laws matters in the sections of the Annual Report captioned
"Taxation of the Company" and "ERISA Plans, Keogh Plans and Individual
Retirement Accounts," and in the section of the Prospectus Supplement captioned
"Federal Income Tax and ERISA Consequences," we have made certain assumptions
and expressed certain conditions and qualifications therein, all of which
assumptions, conditions and qualifications are incorporated herein by reference.
Based upon and subject to the foregoing, we are of the opinion that the
discussions with respect to Tax Laws and ERISA Laws matters in the sections of
the Annual Report captioned "Taxation of the Company" and "ERISA Plans, Keogh
Plans and Individual Retirement Accounts," as supplemented by the discussion in
the Prospectus Supplement captioned "Federal Income Tax and ERISA Consequences,"
in all material respects are accurate and fairly summarize the Tax Laws issues
and ERISA Laws issues addressed therein, and hereby confirm that the opinions of
counsel referred to in said sections represent our opinions on the subject
matter thereof.
We hereby consent to the incorporation of this opinion by reference as
an exhibit to the Registration Statement and to the reference to our firm in the
Prospectus. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the Act or
under the rules and regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
