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): February 20, 1998
HOSPITALITY PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-11527 04-3262075
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
400 Centre Street, Newton, MA 02158
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-964-8389
<PAGE>
CERTAIN IMPORTANT FACTORS
This Current Report contains statements which constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Those statements appear in a number of places in this Current Report and
include statements regarding the intent, belief or expectations of Hospitality
Properties Trust (the "Company"), its Trustees or its officers with respect to
the declaration or payment of dividends, the consummation of additional
acquisitions, policies and plans of the Company regarding investments,
dispositions, financings, conflicts of interest or other matters, the Company's
qualification and continued qualification as a real estate investment trust or
trends affecting the Company's or any hotel's financial condition or results of
operations. Readers are cautioned that any such forward looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those contained in the forward
looking statement as a result of various factors. Such factors include without
limitation changes in financing terms, the Company's ability or inability to
complete acquisitions and financing transactions, results of operations of the
Company's hotels and general changes in economic conditions not presently
contemplated. The information contained in the Company's Form 8-K dated February
11, 1998, including the information under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations", and in the
Company's Annual Report on Form 10-K for its fiscal year ended December 31,
1996, including under the captions "Item 5 Business and Properties" and in
Exhibit 99 thereof, identifies other important factors that could cause such
differences.
THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COMPANY, DATED AUGUST 21,
1995 A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"),
IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE
STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS
TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE TRUST. ALL PERSONS
DEALING WITH THE TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE TRUST
FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
2
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Index to Pro Forma Financial Data (see index on page P-1).
(c) Exhibits.
1 Underwriting Agreement dated February 20, 1998, between the
Company and Donaldson, Lufkin & Jenrette Securities
Corporation
4 Form of Supplemental Indenture No. 1 to be dated as of
February 25, 1998, between the Company and State Street Bank
and Trust Company.
12 Pro Forma Ratio of Earnings to Fixed Charges and Other Data.
3
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INDEX OF UNAUDITED PRO FORMA
FINANCIAL STATEMENTS AND OTHER DATA
Introduction to Unaudited Pro Forma Financial Statements
and Other Data....................................................... P-2
Unaudited Pro Forma Balance Sheet and Other Data..................... P-3
Unaudited Pro Forma Income Statement and Other Data.................. P-4
Notes to Unaudited Pro Forma Financial Statements and
Other Data........................................................... P-5
P-1
<PAGE>
HOSPITALITY PROPERTIES TRUST
Unaudited Pro Forma Financial Statements and Other Data
The following unaudited adjusted pro forma balance sheet at December 31,
1997 is intended to present the financial position of the Company as if the
transactions described in the notes hereto (the "Transactions") were consummated
at December 31, 1997. The following unaudited adjusted pro forma statement of
income for the year ended December 31, 1997 is intended to present the results
of operations of the Company as if the Transactions were consummated on January
1, 1997. 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 included elsewhere herein or in the Company's Current Reports on
Form 8-K dated November 21, 1997, December 9, 1997 and February 11, 1998.
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
statement 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 other 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 information 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 December 31, 1997 are likewise not reflected in the pro forma balance sheet.
Rather, the effect of completion of construction of these properties is
presented separately from the pro forma information 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.
P-2
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<TABLE>
<CAPTION>
HOSPITALITY PROPERTIES TRUST
UNAUDITED PRO FORMA BALANCE SHEET AND OTHER DATA
As of December 31, 1997
---------------------------------------------------------------------------------------------
Pro Forma Other Data
------------------------------------- -----------------------------------
Pro Forma Other Adjusted
Historical [A] Adjustments Pro Forma Adjustments Pro Forma
--------------- ----------------- ---------------- ---------------- ---------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Assets
Real estate properties $ 1,266,035 $ 56,915 [B] $ 1,322,950 $ 99,018 [G] $ 1,421,968
Accumulated depreciation (58,167) - (58,167) - (58,167)
----------- -------- ----------- -------- -----------
1,207,868 56,915 1,264,783 99,018 1,363,801
Cash and cash equivalents 81,728 (27,938)[C] 53,790 (52,599)[H] 1,191
FF&E reserve (restricted cash) 11,165 - 11,165 - 11,165
Rent Receivable 1,623 - 1,623 - 1,623
Other assets 10,872 (2,633)[D] 8,239 184 [I] 8,423
----------- -------- ----------- -------- -----------
$ 1,313,256 $ 26,344 $ 1,339,600 $ 46,603 $ 1,386,203
=========== ======== =========== ======== ===========
Liabilities and
Shareholders' Equity
Term Debt $125,000 $149,730 [E] $ 149,730 $ - $ 149,730
(125,000)[F]
Revolving Debt - - - 36,701 [I] 36,701
Security deposits 146,662 5,614 [B] 152,276 9,902 [J] 162,178
Other liabilities 33,701 - 33,701 - 33,701
Shareholders' equity
Common shares of beneficial
interest 389 - 389 - 389
Additional paid-in capital 1,033,073 - 1,033,073 - 1,033,073
Cumulative net income 122,166 (4,000)[D] 118,166 - 118,166
Dividends (147,735) - (147,735) - (147,735)
----------- -------- ----------- -------- -----------
Total shareholders' equity 1,007,893 (4,000) 1,003,893 - 1,003,893
----------- -------- ----------- -------- -----------
$ 1,313,256 $ 26,344 $ 1,339,600 $ 46,603 $ 1,386,203
=========== ======== =========== ======== ===========
</TABLE>
P-3
<PAGE>
<TABLE>
<CAPTION>
HOSPITALITY PROPERTIES TRUST
UNAUDITED PRO FORMA INCOME STATEMENT AND OTHER DATA
As of December 31, 1997
-----------------------------------------------------------------------------------------
Pro Forma Other Data
---------------------------------- -----------------------------------
Pro Forma Other Adjusted
Historical [A] Adjustments Pro Forma Adjustments Pro Forma
--------------- -------------- ---------------- ---------------- ---------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues
Rental Revenue $ 98,561 $ 19,616 [L] $118,177 $ 20,096 [Q] $138,273
FF&E Reserve Income 14,643 - 14,643 - 14,643
Other Income 928 - 928 - 928
-------- -------- -------- -------- --------
Total Revenue 114,132 19,616 133,748 20,096 153,844
-------- -------- -------- -------- --------
Expenses
Depreciation and Amortization 31,949 8,083 [M] 40,032 6,198 [R] 46,230
Interest 15,534 (12,058)[N] 3,476 9,975 [S] 13,451
Terminated acquisition costs 713 - 713 - 713
General and Administrative 6,783 498 [O] 7,281 1,806 [T] 9,087
-------- -------- -------- -------- --------
Total Expenses 54,979 (3,477) 51,502 17,979 69,481
-------- -------- -------- -------- --------
Net Income $ 59,153 $ 23,093 $ 82,246 $ 2,117 $ 84,363
======== ======== ======== ======== ========
Weighted Average Shares Outstanding 27,530 11,348 [P] 38,878 - 38,878
======== ======== ======== ======== ========
Net Income Per Share $2.15 $2.12 $2.17
======== ======== ========
Ratio of Earnings to Fixed Charges 4.8x 24.7x 7.3x
</TABLE>
P-4
<PAGE>
Hospitality Properties Trust
Notes to Unaudited Pro Forma Financial Statements and Other Data
(in thousands)
Pro Forma Balance Sheet Adjustments
A. Represents the historical balance sheet of the Company at December 31,
1997.
B. Represents the purchase of the 9 Candlewood[RegTM] hotels open but not
acquired as of December 31, 1997 for a cash price of $50,525, net of
purchase price withheld for security deposits of $5,614, plus closing
costs.
C. Represents the net effect of the pro forma adjustments on cash.
D. Represents the write off of deferred financing costs related to the secured
term debt and the recording of the deferred finance costs in connection
with the offering of $150,000 of senior notes (the "Offering"). The
accompanying pro forma income statement excludes the extraordinary loss and
other non-recurring charges of $4,000 related to the expected early
extinguishment of secured term debt.
E. Represents prepayment of the $125,000 of secured term debt.
F. Represents issuance of the senior notes expected to be issued in the
Offering.
Other Data
Balance Sheet Adjustments
G. Represents the purchase of the 7 hotels to be acquired but not open as of
December 31, 1997:
Cash purchase prices:
4 Courtyard by Marriott[RegTM] hotels $ 42,647
2 Residence Inn by Marriott[RegTM] hotels 39,357
One Candlewood[RegTM] hotel 7,112
Purchase price withheld as security deposits 9,902
----------
Total $ 99,018
==========
The above hotels are properties the Company expects to purchase from
sellers upon completion of construction.
H. Represents net effect of the pro forma adjustments on cash.
I. Represents pro forma net borrowings by the Company under its credit
facility to complete planned hotel acquisitions, including $184 of draw
fees.
P-5
<PAGE>
Hospitality Properties Trust
Notes to Unaudited Pro Forma Financial Statements and Other Data
(in thousands)
J. Represents security deposits held by the Company as a result of purchasing
and leasing the following hotels:
4 Courtyard by Marriott[RegTM] hotels $ 4,739
2 Residence Inn by Marriott[RegTM] hotels 4,373
One Candlewood[RegTM] hotel 790
-------
Total $ 9,902
=======
Pro Forma Income Statement Adjustments
K. Represents the historical income statement of the Company for the year
ended December 31, 1997.
L. 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:
Year Ended
December 31,
1997
Pro forma Minimum Rent $ 115,649
Pro forma Percentage Rent 2,528
Amounts included in historical
Minimum Rent (96,033)
Amounts included in historical
Percentage Rent (2,528)
----------
$ 19,616
==========
Certain of the hotels owned by the Company as of December 31, 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 statement assumes the hotels, which were completed prior to December
31, 1997 were acquired as of their completion date.
M. Represents the impact of the pro forma transactions on depreciation expense
for the entire period presented.
N. Represents the elimination of interest on the secured term debt ($125,000)
at LIBOR plus the contractual spreads for the entire period presented, plus
amortization of deferred financing costs offset by the pro forma interest
expense of the issuance of the senior notes at 7.0% plus amortization of
related finance costs and discount. The average applicable LIBOR rate was
5.60% for the year ended December 31, 1997.
O. Represents the estimated impact of the pro forma transactions on general
and administrative expenses of the Company for the period presented.
P. Represents the impact of additional Shares issued in 1997.
P-6
<PAGE>
Hospitality Properties Trust
Notes to Unaudited Pro Forma Financial Statements and Other Data
(in thousands)
Other Data
Income Statement Adjustments
Q. Represents the adjusted pro forma effect of leases entered and to be
entered for the transactions described in Note G, above, since January 1,
1997. This adjusted pro forma effect is derived as follows:
Year Ended
December 31,
1997
Adjusted Pro forma Minimum Rent $ 135,745
Adjusted Pro forma Percentage Rent 2,528
Amounts included in pro forma Minimum Rent (115,649)
Amounts included in pro forma Percentage Rent (2,528)
-----------
$ 20,096
===========
R. Represents the impact of the transactions described in Note G, above, on
depreciation expense for the entire period presented.
S. Represents interest on the credit line borrowings to be made in connection
with the transactions described in Note G, above, at LIBOR plus
contractual spreads for the entire period presented. The average
applicable LIBOR rate was 5.60% for the year ended December 31, 1997.
T. Represents the estimated impact of the transactions described in Note G,
above, on general and administrative expenses of the Company.
P-7
<PAGE>
SIGNATURE
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: February 20, 1998
P-8
EXHIBIT 1
$150,000,000
Hospitality Properties Trust
7.00% Senior Notes due 2008
UNDERWRITING AGREEMENT
February 20, 1998
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 $150,000,000 principal amount of its
7.00% Senior Notes due 2008 (the "Securities"), to Donaldson, Lufkin & Jenrette
Securities Corporation (the "Underwriter"). The Securities are to be issued
pursuant to the provisions of an Indenture to be dated as of February 25, 1998
between the Company and State Street Bank and Trust Company, as Trustee (the
"Trustee") and a Supplemental Indenture to be dated as of February 25, 1998
between the Company and the Trustee (collectively, the "Indenture").
The 124 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 11 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
<PAGE>
to finance the pending acquisitions, borrow funds under (A) the $200 million
aggregate principal amount credit facility that the Company currently maintains
with DLJ Mortgage Capital, Inc. (as more fully described in the Prospectus, the
"DLJMC Credit Facility") or a successor credit facility.
The Current Hotels and the Additional Hotels are collectively referred
to herein as the "Hotels". The Acquisition Agreements and the DLJMC Credit
Facility (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. 333-43573) including a
preliminary prospectus relating to the registration of the Securities 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 applicable) was declared effective by the Commission on January 15, 1998.
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 Securities provided to the Underwriter by the
Company in the form first used to confirm sales of Securities (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
2
<PAGE>
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 the Underwriter agrees to
purchase from the Company, $150,000,000 aggregate principal amount of Securities
at 99.17% of the principal amount thereof (the "Purchase Price").
3. Terms of Public Offering. The Company is advised by the Underwriter
that the Underwriter proposes (i) to make a public offering of the Securities as
soon after execution and delivery of this Agreement (and, if necessary, any
post-effective amendment to the Registration Statement) as in the Underwriter's
judgment is advisable and (ii) initially to offer the Securities upon the terms
set forth in the Prospectus.
4. Delivery and Payment. The Securities shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as the Underwriter shall request not later than two
business days prior to the Closing Date (as defined below). The Company shall
deliver the Securities to the Underwriter through the facilities of The
Depository Trust Company ("DTC"), for the account of the Underwriter, against
payment to the Company of the Purchase Price therefor by wire transfer of
Federal or other funds immediately available in New York City. The certificates
representing the Securities shall be made available for inspection not later
than 9:30 A.M., New York City time, on the business day prior to the Closing
Date at the office of DTC or its designated custodian (the "Designated Office").
The time and date of delivery and payment for the Securities shall be 9:00 A.M.,
New York City time, on February 25, 1998 or such other time on the same or such
other date as the Underwriter and the Company shall agree in writing. The time
and date of such delivery and payment are hereinafter referred to as the
"Closing Date").
The documents to be delivered on the Closing Date on behalf of the
parties hereto pursuant to Section 8 of this Agreement shall be delivered at
such place as the Underwriter shall designate and the Securities shall be
delivered at the Designated Office, all on the Closing Date.
3
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5. Agreements of the Company. The Company agrees with you:
(a) In respect of the offering of the Securities contemplated
hereby, to (i) prepare a Prospectus Supplement setting forth the
principal amount and terms of the Securities covered thereby and the
name of the Underwriter participating in the offering of the Securities
and such other information as the Underwriter and the Company deem
appropriate in connection with the offering of the Securities, (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 Underwriter 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.
(b) At any time when the Prospectus is required to be
delivered under the Act or the Exchange Act in connection with sales of
Securities, 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 Securities, 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 Securities 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.
4
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(c) To furnish to you, without charge, one signed copy 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 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
Underwriter 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
Securities, 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 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 Securities 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
Underwriter 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 the
Underwriter or a dealer, to furnish to the Underwriter and any dealer
as many copies of the Prospectus (and of any amendment or supplement to
the Prospectus) and any documents incorporated therein by reference as
the Underwriter or such dealer may reasonably request.
(f) If, during the period specified in paragraph (e) above,
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
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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 the Underwriter and to such dealers as you shall
specify, such number of copies thereof as the Underwriter or such
dealers may reasonably request.
(g) Prior to any public offering of the Securities, (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 Securities for offer and sale by
the Underwriter 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 Securities, (iii) to file such consents to service
of process or other documents as may be necessary in 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 Securities contemplated hereby by the National Association of
Securities Dealers, Inc. ("NASD").
(h) To make generally available to the Company's security
holders 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 the Securities 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
6
<PAGE>
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 its security holders or
filed with the Commission and such other publicly available information
concerning the Company and its subsidiaries, if any, as you may
reasonably request.
(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 Securities, 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 Securities to the Underwriter, including
any transfer or other taxes payable thereon, (iv) all expenses in
connection with the registration or qualification of the Securities 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
Underwriter 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
Securities contemplated hereby, (vi) 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
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offering or sale of the Securities by the Underwriter or by dealers to
whom Securities may be sold, (vii) the costs and charges of any
transfer agent, registrar and or depositary, including DTC, (viii) any
fees charged by rating agencies for the rating of the Securities and
(ix) the fees and expenses of the Trustee and the Trustee's counsel in
connection with the Indenture and the Securities.
(m) To use its best efforts to qualify for the year ended
December 31, 1998 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").
(n) To apply the net proceeds of the offering of Securities
contemplated hereby substantially in accordance with the description
set forth under the caption "Use of Proceeds" in the Prospectus.
(o) 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 and to satisfy all conditions
precedent to the delivery of the Securities.
(p) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell,
contract to sell or otherwise transfer or dispose of any debt
securities of the Company or any warrants, rights or options to
purchase or otherwise acquire debt securities of the Company
substantially similar to the Securities (other than (i) the Securities
and (ii) commercial paper issued in the ordinary course of business),
without the prior written consent of the Underwriter.
(q) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of
the Securities.
6. Representations and Warranties. The Company represents and warrants
to the 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
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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 will 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 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 the Underwriter furnished to the Company in
writing by the Underwriter 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
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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, except for the failure
of HPTCW Properties Trust, a Maryland real estate investment trust, to
be qualified in the states of Alabama, Kansas, Utah and Virginia, which
failures to be qualified, singly or in the aggregate, would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole. 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, except for a pledge of shares of capital stock of
certain of the Company's subsidiaries in favor of DLJMC to secure the
Company's obligations under the DLJMC Credit Facility, are owned by the
Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(g) Except for 500 common shares of beneficial interest, par
value $0.01 per share (the "Common Shares"), 250 of which are held by
John A. Mannix and 250 of which are held by David M. Lepore, all of 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. 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 Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and has
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been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company, enforceable in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability.
(i) The Securities have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by the
Company. When the Securities have been executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Underwriter in accordance with the terms of this
Agreement, the Securities will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability.
(j) The Securities conform as to legal matters to the
description thereof contained in the Prospectus.
(k) 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).
(l) 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.
(m) 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.
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(n) The execution by the Company or any of its subsidiaries of
this Agreement, the Indenture, the Securities and 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 such 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 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.
(o) 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 this Agreement, the Indenture, the Securities and
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 Securities and, in the case of the performance thereof,
except as are contemplated by the express terms of such documents 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.
(p) 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.
(q) 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
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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.
(r) 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 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.
(s) 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.
(t) The Company has received and reviewed certain
environmental reports on each Current 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
Current Hotel's 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
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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.
(u) 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
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.
(v) 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)
except as disclosed in the Prospectus, 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; (iv) and 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.
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(w) 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 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.
(x) (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 Facility 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 the 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.
(y) 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.
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(z) 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.
(aa) 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, 1998.
(bb) 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 the
Underwriter for a brokerage commission, finders fee or other like
payment with respect to the consummation of the transactions
contemplated by this Agreement.
(cc) 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 Reports on Form 8-K (the "Forms 8-K") dated December
9, 1997 and February 13, 1998 fairly present, on the basis stated in
the Prospectus or the Forms 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.
(dd) The Company and/or its subsidiaries, as applicable, has
obtained an ALTA Extended Coverage Owner's Policy of Title Insurance
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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.
(ee) On the Closing Date after giving effect to repayment of
amounts then outstanding under the DLJMC Credit Facility 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
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.
(ff) Arthur Andersen LLP and Reznick Fedder & Silverman are
each independent public accountants with respect to the Company as
required by the Act.
(gg) 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.
(hh) No holder of any security of the Company has any right to
require registration of Common Shares or any other security of the
Company.
(ii) 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.
(jj) 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.
(kk) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2)
under the Act has indicated to the Company that it is considering (i)
the downgrading, suspension or withdrawal of, or any review for a
possible change that does not indicate the direction of the possible
change in, any rating assigned to the Company or any securities of the
Company or (ii) any change in the outlook for any rating of the Company
or (ii) any securities of the Company.
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7. Indemnification. (a) The Company agrees to indemnify and hold
harmless the Underwriter and each person, if any, who controls the 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
information relating to the Underwriter furnished in writing to the Company by
or on behalf of the Underwriter expressly for use therein; provided that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of the Underwriter (or to the benefit of any person controlling
the Underwriter) from whom the person asserting any such losses, claims,
damages, liabilities or judgments purchased the Securities 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 Securities to such person.
(b) In case any action shall be brought against the Underwriter or any
person controlling the 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, the
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. The
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 the 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 the
Underwriter or such controlling person and the Company and the 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 the
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in
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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 the
Underwriter 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 the 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 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) The Underwriter agrees 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 the Underwriter but only with reference
to information relating to the Underwriter furnished in writing by or on behalf
of the Underwriter 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 the Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, the 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 the Underwriter), and the
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<PAGE>
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
Underwriter on the other hand from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriter 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 Underwriter 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
Underwriter, bear to the total price to the public of the Securities, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Underwriter 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 Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation 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, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which the
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
20
<PAGE>
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.
8. Conditions of Underwriter's Obligations. The obligation of the
Underwriter to purchase the Securities under this Agreement is subject to the
satisfaction of each of the following conditions:
(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
21
<PAGE>
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
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), (c) and (k) 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 Underwriter), dated the
Closing Date, of Sullivan & Worcester LLP, counsel for the Company, to
the effect that:
(i) the Company is a real estate investment trust
duly formed and validly existing under and by virtue of the
laws of the State of Maryland and is in good standing with the
State Department of Assessments and Taxation of Maryland, with
trust power to acquire and own the Hotels owned by it and to
lease such Hotels to others and to conduct its business, in
all material respects as described in the Prospectus;
(ii) each of the Company's subsidiaries has been duly
organized or formed 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 and by virtue of the laws of the State of
Maryland, as the case may be, and has the corporate power and
authority or trust power, as the case may be, to own the
Hotels owned by it and to lease such Hotels to others and to
conduct its business, in all material respects 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 other than a pledge of shares of
capital stock of certain of the
22
<PAGE>
Company's subsidiaries in favor of DLJMC to secure the
Company's obligations under the DLJMC Credit Facility;
(iv) the Securities have been duly authorized, and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Underwriter in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company,
enforceable in accordance with their terms;
(v) except for 500 Common Shares, 250 of which are
held by John A. Mannix and 250 of which are held by David M.
Lepore, all of 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;
(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 Indenture has been duly qualified under
the Trust Indenture Act and has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company, enforceable in accordance with its
terms;
(ix) the authorized shares of beneficial interest of
the Company, including the Common Shares, conform as to legal
matters in all material respects to the description thereof
contained in the Prospectus (or the documents incorporated
therein by reference);
(x) the statements under the captions (A) "Summary",
"Recent Developments", "The Company-- Leases", "Management",
"Description of the Notes" and "Underwriting" in the
Prospectus Supplement and (B) "Description of Debt
Securities", "Limitation of Liability; Shareholder Liability",
"Redemption; Trustees; Business Combinations and Control Share
Acquisitions" in the Prospectus, as of the date of the
Prospectus;
23
<PAGE>
and "Item 5. Other Events" in the Company's Current Report on
Form 8-K dated February 11, 1998; and paragraph (b) of "Item
5. Other Events" in the Company's Current Report on Form 8-K
dated November 21, 1997; "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;
(xi) the statements under the captions "Certain
Federal Income Tax Consequences" in the Prospectus Supplement,
as of the date of 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, as of the date of filing of 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;
(xii) 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
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<PAGE>
by Rule 424 and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
are, to the knowledge of such counsel, pending before or
contemplated by the Commission;
(xiii) the Company and each of its subsidiaries is
not in violation of its Declaration of Trust or Certificate of
Incorporation, as applicable, or its 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;
(xiv) 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;
(xv) 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;
(xvi) 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) which has not been
obtained is required for the execution, delivery or
performance by the Company or any of its subsidiaries of any
Transaction Document to which it is a party or the
consummation of the transactions contemplated thereby;
(xvii) 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,
25
<PAGE>
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;
(xviii) 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;
(xix) 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;
(xx) such counsel confirms as of the Closing Date its
opinions filed as Exhibit 5.1 to the Registration Statement
and Exhibit 8.1 to the Company's Current Report on Form 8-K
dated February 12, 1998;
(xxi) the Securities conform as to legal matters to
the description thereof contained in the Prospectus; and
(xxii) (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 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 (A) that (except for financial statements
and other financial and statistical data and schedules, as
aforesaid, and that part of the Registration Statement that
constitutes the Statement of Eligibility (Form T-1) under the
Trust Indenture Act) 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
26
<PAGE>
therein or necessary to make the statements therein not
misleading or (B) 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
Underwriter for use in connection with the offering of the
Securities 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
(xxii), 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 Ballard Spahr Andrews & Ingersoll, LLP, 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 Ballard Spahr Andrews &
Ingersoll, LLP, 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 Underwriter, as to the matters referred to in
clauses (iv), (viii), (x) (but only with respect to the
statements under the caption "Underwriting" in the Prospectus
Supplement), (xiv) (but only as to due authorization,
execution and delivery) and clause (xxii) of the foregoing
paragraph (d) (but only with respect to clauses (2), (3)(A)(y)
and (3)(B) thereof).
In giving such opinion with respect to the matters covered by clause
(xix), 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.
27
<PAGE>
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of Ballard Spahr Andrews & Ingersoll, LLP, 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) As soon as practicable after the issuance and sale of the
Securities hereunder, the Company shall prepay all amounts then
outstanding under the Mortgage Notes.
(h) The Securities shall have been rated "BBB--" by Standard &
Poor's Ratings Services and "Baa3" by Moody's Investors Service, Inc.
(i) The Underwriter shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered
into by the Company and the Trustee.
(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.
(k) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any
notice have been given of any potential or intended downgrading,
suspension or withdrawal of, or of any review (or of any potential or
intended review) for a possible change that does not indicate the
direction of the possible change in, any rating of the Company or any
securities of the Company (including, without limitation, the placing
of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by
any "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act,(ii) there
shall not have occurred any change, nor shall any notice have been
given of any potential or intended change, in the outlook for any
rating of the Company or any securities of the Company by any such
rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a lower
rating to the Securities than that on which the Securities were
marketed.
28
<PAGE>
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 Securities 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 Securities 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
29
<PAGE>
(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.
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 the Underwriter, to 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 the
Underwriter furnished to the Company in writing by the 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
Underwriter included in the Prospectus, (i) in the legend relating to
stabilization on the inside front cover page, (ii) listing the name of the
Underwriter under the caption "Underwriting" and (iii) in the third, sixth,
seventh and eighth paragraphs and the third sentence of the fifth paragraph
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 Underwriter 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 Securities, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Underwriter or by or on behalf of
the Company, or its officers or trustees, (ii) acceptance of the Securities and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriter 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 Underwriter for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriter, 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
30
<PAGE>
"successors and assigns" shall not include a purchaser of any of the Securities
from the Underwriter 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
between the Company and you.
Very truly yours,
HOSPITALITY PROPERTIES TRUST
By /s/ Thomas M. O'Brien
-----------------------------
Name: Thomas M. O'Brien
Title: Treasurer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Eric A. Anderson
---------------------------
Name: Eric A. Anderson
Title: Managing Director
32
EXHIBIT 4
SUPPLEMENTAL INDENTURE NO. 1
by and between
HOSPITALITY PROPERTIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
as of February 25, 1998
SUPPLEMENTAL TO THE INDENTURE DATED AS OF FEBRUARY 25, 1998
------------------------------------
HOSPITALITY PROPERTIES TRUST
$150,000,000 of
7.00% Senior Notes due 2008
<PAGE>
This SUPPLEMENTAL INDENTURE NO. 1 (this "Supplemental Indenture") made
and entered into as of February 25, 1998 between HOSPITALITY PROPERTIES TRUST, a
Maryland real estate investment trust (the "Company"), and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, as Trustee (the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture, dated as of February 25, 1998 (the "Indenture"), relating to the
Company's issuance, from time to time, of various series of debt securities; and
WHEREAS, the Company has determined to issue debt securities known as
its 7.00 % Senior Notes due 2008 in an aggregate principal amount of
$150,000,000; and
WHEREAS, the Indenture provides that certain terms and conditions for
each series of debt securities issued by the Company thereunder may be set forth
in an indenture supplemental to the Indenture;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE 1
DEFINED TERMS
Section 1.1 The following definitions supplement, and, to the extent
inconsistent with, replace the definitions in Section 101 of the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person's, in each case, other than Debt incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary or
such acquisition. Acquired Debt shall be deemed to be incurred on the date of
the related acquisition of assets from any Person or the date the acquired
Person becomes a Subsidiary.
"Annual Debt Service" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York or in the city in which
the Corporate Trust Office of the Trustee is located, are required or authorized
to close.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Company and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest on Debt of the Company and its Subsidiaries,
(ii) cash reserves made by lessees as required by the Company's leases for
periodic replacement and refurbishment of the Company's assets, (iii) provision
for taxes of the Company and its Subsidiaries based on income, (iv) amortization
of debt discount and deferred financing costs, (v) provisions for gains and
losses on properties and property depreciation and amortization, (vi) the effect
of any noncash charge resulting from a change in accounting principles in
determining Earnings from Operations for such period and (vii) amortization of
deferred charges.
"Debt" of the Company or any Subsidiary means, without duplication, any
indebtedness of the Company or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary, to the
extent of the lesser of (x) the amount of indebtedness so secured and (y) the
fair market value of the property subject to such Encumbrance, (iii) the
reimbursement obligations, contingent or
<PAGE>
otherwise, in connection with any letters of credit actually issued (other than
letters of credit issued to provide credit enhancement or support with respect
to other indebtedness of the Company or any Subsidiary otherwise reflected as
Debt hereunder) or amounts representing the balance deferred and unpaid of the
purchase price of any property or services, except any such balance that
constitutes an accrued expense or trade payable, or all conditional sale
obligations or obligations under any title retention agreement, (iv) the
principal amount of all obligations of the Company or any Subsidiary with
respect to redemption, repayment or other repurchase of any Disqualified Stock,
or (v) any lease of property by the Company or any Subsidiary as lessee which is
reflected on the Company's consolidated balance sheet as a capitalized lease in
accordance with GAAP, to the extent, in the case of items of indebtedness under
(i) through (iii) above, that any such items (other than letters of credit)
would appear as a liability on the Company's consolidated balance sheet in
accordance with GAAP, and also includes, to the extent not otherwise included,
any obligation by the Company or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), Debt of another Person (other than the Company or
any Subsidiary) (it being understood that Debt shall be deemed to be incurred by
the Company or any Subsidiary whenever the Company or such Subsidiary shall
create, assume, guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or shares), (ii) is convertible into or exchangeable or exercisable for
Debt or Disqualified Stock, or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
stated maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of the Company and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed or paid. For purposes of this Supplemental Indenture and the
Notes, references in the Indenture to the payment of the principal (and premium,
if any) and interest on the Notes shall be deemed to include the payment of the
Make-Whole Amount, if any, due upon redemption with respect to the Notes.
"Notes" means the Company's 7.00% Senior Notes, due 2008, issued under
this Supplemental Indenture and the Indenture, as amended or supplemented from
time to time.
"Reinvestment Rate" means a rate per annum equal to the sum of 0.25%
(twenty-five one hundredths of one percent) plus the yield on treasury
securities at constant maturity under the heading "Week Ending" published in the
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For purposes of
calculating the Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Amount shall be used.
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<PAGE>
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge
or security interest of any kind.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under this
Supplemental Indenture, then any publicly available source of similar market
data which shall be designated by the Company.
"Subsidiary" means any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
one or more other Subsidiaries of the Company. For the purposes of this
definition, "voting equity securities" means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization
determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the
properties of the Company or any Subsidiary.
ARTICLE 2
TERMS OF THE NOTES
Section 2.1 Pursuant to Section 301 of the Indenture, the Notes shall
have the following terms and conditions:
(a) Title; Limitation on Aggregate Principal Amount; Form of Notes. The
Notes shall be Registered Securities under the Indenture and shall be known as
the Company's "7.00% Senior Notes due 2008." The Notes will be limited to an
aggregate principal amount of $150,000,000, and except as provided in this
Section and in Section 306 of the Indenture, the Company shall not execute and
the Trustee shall not authenticate or deliver Notes in excess of such principal
amount. The Notes (together with the Trustee's certificate of authentication)
shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated in and made a part of this Supplemental Indenture.
The Notes will be issued in the form of one or more registered global
security without coupons ("Global Notes") which will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), and registered in the name of
DTC's nominee, Cede & Co. Except under the circumstance described below, the
Notes will not be issuable in definitive form. Unless and until it is exchanged
in whole or in part for the individual notes represented thereby, a Global Note
may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee of DTC
to a successor depository or any nominee of such successor.
So long as DTC or its nominee is the registered owner of a Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by such Global Note for all purposes under this
Supplemental Indenture. Except as described below, owners of beneficial interest
in Notes evidenced by a Global Note will not be entitled to have any of the
individual Notes represented by such Global Note registered in their names, will
not receive or be entitled to receive physical delivery of any such Notes in
definitive form and will not be considered the owners or holders thereof under
the Indenture or this Supplemental Indenture.
-3-
<PAGE>
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global Note or
Global Notes representing such Notes. In addition, the Company may at any time
and in its sole discretion, subject to certain limitations set forth in the
Indenture, determine not to have any of such Notes represented by one or more
Global Notes and, in such event, will issue individual Notes in exchange for the
Global Note or Global Notes representing the Notes. Individual Notes so issued
will be issued in denominations of $1,000 and integral multiples thereof.
(b) Interest and Interest Rate. The Notes will bear interest at a rate
of 7.00% per annum, from February 25, 1998 or from the immediately preceding
Interest Payment Date to which interest has been paid or duly provided for,
payable semi-annually in arrears on March 1 and September 1 of each year,
commencing September 1, 1998 (each of which shall be an "Interest Payment
Date"), to the Persons in whose names the Notes are registered in the Security
Register at the close of business on the February 15 or August 15 (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date (each, a "Record Date").
(c) Principal Repayment; Currency. The stated maturity of the Notes is
March 1, 2008, provided, however, the Notes may be earlier redeemed at the
option of the Company as provided in paragraph (c) below. The principal of each
Note payable on its maturity date shall be paid against presentation and
surrender thereof at the Corporate Trust Office of the Trustee, located
initially at Two International Place, Boston, Massachusetts 02110, in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public or private debts. The Company will not pay
Additional Amounts (as defined in the Indenture) on the Notes.
(d) Redemption at the Option of the Company; Acceleration. The Notes
will be subject to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice to each Holder
of Notes to be redeemed at its address appearing in the Security Register, at a
price equal to the sum of (i) the principal amount of the Notes being redeemed,
plus accrued and unpaid interest to but excluding the applicable Redemption Date
and (ii) the Make-Whole Amount. Upon the acceleration of the Notes in accordance
with Section 502 of the Indenture, the principal amount of the Notes, plus
accrued and unpaid interest thereon and the Make-Whole Amount, shall become due
and payable immediately.
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Company shall be directed
to it at 400 Centre Street, Newton, Massachusetts 02158, Attention: President;
notices to the Trustee shall be directed to it at Two International Place,
Boston, Massachusetts 02110, Attention: Corporate Trust Department, Re:
Hospitality Properties Trust 7.00% Senior Notes due 2008.
(f) Global Note Legend. Each Global Note shall bear the following
legend on the face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
(g) Applicability of Discharge, Defeasance and Covenant Defeasance
Provisions. The Discharge, Defeasance and Covenant Defeasance provisions in
Article Fourteen of the Indenture will apply to the Notes.
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<PAGE>
ARTICLE 3
ADDITIONAL COVENANTS
Section 3.1 In addition to the covenants of the Company set forth in
Article Ten of the Indenture, for the benefit of the holders of the Notes:
(a) Limitations on Incurrence of Debt.
(i) The Company will not, and will not permit any Subsidiary
to, incur any Debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum ("Adjusted Total
Assets") of (without duplication) (i) the Total Assets of the Company
and its Subsidiaries as of the end of the calendar quarter covered in
the Company's Annual Report on Form 10-K, or the Quarterly Report on
Form 10-Q, as the case may be, most recently filed with the Securities
and Exchange Commission (or, if such filing is not permitted under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
the Trustee) prior to the incurrence of such additional Debt and (ii)
the purchase price of any real estate assets or mortgages receivable
acquired, and the amount of any securities offering proceeds received
(to the extent that such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Debt), by the Company
or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such
additional Debt.
(ii) In addition to the foregoing limitations on the
incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Secured Debt if, immediately after giving
effect to the incurrence of such additional Secured Debt and the
application of the proceeds thereof, the aggregate principal amount of
all outstanding Secured Debt of the Company and its Subsidiaries on a
consolidated basis is greater than 40% of Adjusted Total Assets.
(iii) In addition to the foregoing limitations on the
incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Debt if the ratio of Consolidated Income
Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than
1.5x, on a pro forma basis after giving effect thereto and to the
application of the proceeds therefrom, and calculated on the assumption
that (i) such Debt and any other Debt incurred by the Company and its
Subsidiaries since the first day of such four-quarter period and the
application of the proceeds therefrom, including to refinance other
Debt, had occurred at the beginning of such period; (ii) the repayment
or retirement of any other Debt by the Company and its Subsidiaries
since the first date of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility
shall be computed based upon the average daily balance of such Debt
during such period); (iii) in the case of Acquired Debt or Debt
incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the
first day of such period with appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (iv)
in the case of any acquisition or disposition by the Company or its
Subsidiaries of any asset or group of assets since the first day of
such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period with
the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation. If the Debt
giving rise to the need to make the foregoing calculation or any other
Debt incurred after the first day of the relevant four-quarter period
bears interest at a floating rate then, for purposes of calculating the
Annual Debt Service, the interest rate on such Debt shall be computed
on a pro forma basis as if the average interest rate which would have
been in effect during the entire such four-quarter period had been the
applicable rate for the entire such period.
-5-
<PAGE>
(b) Maintenance of Total Unencumbered Assets. The Company and its
Subsidiaries will maintain at all times Total Unencumbered Assets of not less
than 200% of the aggregate outstanding principal amount of the Unsecured Debt of
the Company and its Subsidiaries on a consolidated basis.
ARTICLE 4
ADDITIONAL EVENTS OF DEFAULT
For purposes of this Supplemental Indenture and the Notes, in addition
to the Events of Default set forth in Section 501 of the Indenture, it shall
also constitute an "Event of Default" if a default under any bond, debenture,
note or other evidence of indebtedness of the Company (including a default with
respect to any other series of securities), or under any mortgage, indenture or
other instrument of the Company under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company (or by any Subsidiary, the repayment of which the Company has guaranteed
or for which the Company is directly responsible or liable as obligor or
guarantor) having an aggregate principal amount outstanding of at least
$20,000,000 , whether such indebtedness now exists or shall hereafter be
incurred or created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged or such acceleration having been rescinded or annulled within a
period of ten days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the outstanding Notes, a written
notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder.
ARTICLE 5
EFFECTIVENESS
This Supplemental Indenture shall be effective for all purposes as of
the date and time this Supplemental Indenture has been executed and delivered by
the Company and the Trustee in accordance with Article Nine of the Indenture. As
supplemented hereby, the Indenture is hereby confirmed as being in full force
and effect.
ARTICLE 6
MISCELLANEOUS
Section 6.1 In the event any provision of this Supplemental Indenture
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof or any provision of the Indenture.
Section 6.2 To the extent that any terms of this Supplemental Indenture
or the Notes are inconsistent with the terms of the Indenture, the terms of this
Supplemental or the Notes shall govern and supersede such inconsistent terms.
Section 6.3 This Supplemental Indenture shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
Section 6.4 This Supplemental Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be executed as an instrument under seal in their
respective corporate names as of the date first above written.
HOSPITALITY PROPERTIES TRUST
By:______________________________
Name: John G. Murray
Title: President
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:______________________________
Name:
Title:
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<PAGE>
EXHIBIT A
(Face of Note)
7.00% Senior Notes due 2008
No. $__________
HOSPITALITY PROPERTIES TRUST
promises to pay to _______________________________________ or registered
assigns, the principal sum of _____________________________________ Dollars on
March 1, 2008.
Interest Payment Dates: March 1 and September 1.
Record Dates: February 15 and August 15.
CUSIP No: 44106MAA0
HOSPITALITY PROPERTIES TRUST
By:______________________________
Name:
Title:
Dated:
This is one of the Notes referred to in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By:______________________________
Authorized Officer
A - 1
<PAGE>
(Back of Note)
HOSPITALITY PROPERTIES TRUST
7.00% Senior Notes due 2008
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. Hospitality Properties Trust, a Maryland real estate
investment trust (the "Company"), promises to pay interest on the principal
amount of this Note at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of this
Note at the rate per annum of 7.00%. The Company will pay interest semi-annually
in arrears on March 1 and September 1 of each year, commencing on August 25,
1998 or if any such day is not a Business Day (as defined in the Indenture), on
the next succeeding Business Day (each an "Interest Payment Date"), to Holders
of record on the immediately preceding February 15 and August 15.
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay principal, premium, if
any, and interest by check payable in such money. It may mail an interest check
to a Holder's registered address.
3. Indenture. The Company issued the Notes under an Indenture and
Supplemental Indenture No. 1 thereto, each dated as of February 25, 1998
(collectively, the "Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture. The Notes are subject
to all such terms, and Holders of the Notes are referred to the Indenture and
such Act for a statement of such terms. The terms of the Indenture shall govern
any inconsistencies between the Indenture and the Notes. The Notes are unsecured
general obligations of the Company limited to $150,000,000 in aggregate
principal amount.
4. Optional Redemption. The Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed, plus accrued and unpaid interest
to but excluding the applicable Redemption Date and (ii) the Make-Whole Amount.
As used herein the term "Make-Whole Amount" means, in connection with
any optional redemption or accelerated payment of any Notes, the excess, if any,
of (i) the aggregate present value as of the date of such redemption or
accelerated payment of each dollar of principal being redeemed or paid and the
amount of interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had not been made, determined by
discounting, on a semiannual basis, such principal and interest at the
Reinvestment Rate (as defined herein) (determined on the third Business Day
preceding the date such notice of redemption is given or declaration of
acceleration is made) from the respective dates on which such principal and
interest would have been payable if such redemption or accelerated payment had
not been made, over (ii) the aggregate principal amount of the Notes being
redeemed or paid.
As used herein the term "Reinvestment Rate" means a rate per annum
equal to the sum of 0.25% (twenty-five one hundredths of one percent) plus the
yield on treasury securities at constant maturity under the heading "Week
Ending" published in the Statistical Release (as defined herein) under the
caption "Treasury Constant Maturities" for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity, as of the payment date
of the principal being redeemed or paid. If no maturity exactly corresponds to
such maturity, yields for the two published maturities most closely
corresponding to such maturity shall be calculated pursuant to the immediately
preceding
A - 2
<PAGE>
sentence and the Reinvestment Rate shall be interpolated or extrapolated from
such yields on a straight-line basis, rounding in each of such relevant periods
to the nearest month. For purposes of calculating the Reinvestment Rate, the
most recent Statistical Release published prior to the date of determination of
the Make-Whole Amount shall be used.
As used herein the term "Statistical Release" means the statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Federal Reserve System and which establishes yields on actively
traded United States government securities adjusted to constant maturities or,
if such statistical release is not published at the time of any determination
under the Supplemental Indenture, then any publicly available source of similar
market data which shall be designated by the Company.
5. Mandatory Redemption. The Company shall not be required to make
sinking fund or redemption payments with respect to the Notes.
6. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at its registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date, interest ceases to accrue
on Notes or portions of them called for redemption.
7. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Security Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Security Registrar need not exchange or register
the transfer of any Note or portion of a Note selected for redemption. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before the mailing of a notice of redemption of Notes, or during the period
between a record date and the corresponding Interest Payment Date.
8. Defaults and Remedies. In case an Event of Default (as defined in
the Indenture) with respect to the Notes shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the provisions
provided in the Indenture.
9. Actions of Holders. The Indenture contains provisions permitting the
holders of not less than a majority of the aggregate principal amount of the
outstanding Notes, subject to certain exceptions as provided in the Indenture,
on behalf of the holders of all such Notes at a meeting duly called and held as
provided in the Indenture, to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
the Indenture to be made, given or taken by the holders of the Notes, including
without limitation, waiving (a) compliance by the Company with certain
provisions of the Indenture, and (b) certain past defaults under the Indenture
and their consequences. Any resolution passed or decision taken at any meeting
of the holders of the Notes in accordance with the provisions of the Indenture
shall be conclusive and binding upon such holders and upon all future holders of
this Note and other Notes issued upon the registration of transfer hereof or in
exchange heretofore or in lieu hereof
10. Persons Deemed Owners. The Company, the Trustee, and any agent of
the Company or the Trustee may deem and treat the Person in whose name this Note
is registered on the Security Register as its absolute owner for all purposes.
11. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
12. Governing Law. THE INTERNAL LAW OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
13. No Personal Liability. THE DECLARATION OF TRUST OF THE COMPANY,
AMENDED AND RESTATED ON AUGUST 21, 1995, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE
DECLARATION
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<PAGE>
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO
ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Hospitality Properties Trust
400 Centre Street
Newton, MA 02158
Telecopier No.: (617) 969-5730
Attention: President
A - 4
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
Exhibit 12
Hospitality Properties Trust
Computation of Pro Forma Ratio to Fixed Charges and Other Data
(in thousands, except ratio amounts)
For the Year
ended
December 31, 1997
Adjusted
Historical Pro Forma Pro Forma
Income $59,153 $82,246 $84,363
Fixed Charges 15,534 3,476 13,451
------- ------- -------
Adjusted Earnings $74,687 $85,722 $97,814
======= ======= =======
Fixed Charges:
Interest on indebtedness and
amortization of
deferred finance cost $15,534 $ 3,476 $13,451
------- ------- -------
Total Fixed Charges $15,534 $ 3,476 $13,451
======= ======= =======
Ratio of Earnings to Fixed Charges 4.8x 24.7x 7.3x
======= ======= =======
This computation should be read in conjunction with the Unaudited Pro Forma
Financial Statements and Other Data contained elsewhere in this Form 8-K.
