UNITED STATES
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): October 19, 2009
DiamondRock Hospitality
Company
(Exact name of registrant as
specified in its charter)
| Maryland | 001-32514 | 20-1180098 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 6903 Rockledge Drive, Suite
800 Bethesda, MD |
20817 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (240) 744-1150
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 19, 2009, DiamondRock Hospitality Company (the “Company”) and DiamondRock Hospitality Limited Partnership entered into a sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. In accordance with the Sales Agreement, the Company may offer and sell shares of its common stock (the “Shares”) having an aggregate offering price of up to $75,000,000 from time to time through Cantor Fitzgerald & Co., acting as agent and/or as principal. Sales of the Shares, if any, may be made in negotiated transactions or transactions deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (including, without limitation, sales made directly on the New York Stock Exchange, or any other existing trading market for the Company’s common stock, or to or through a market maker other than on in exchange). Under the Sales Agreement, Cantor Fitzgerald & Co. will use its commercially reasonable efforts consistent with its normal trading and sales practice to sell the Shares as directed by the Company. Cantor Fitzgerald & Co. will be entitled to compensation up to 2.0% of the gross sales price per share for any Shares sold under the Sales Agreement.
The Company and Cantor Fitzgerald & Co. had previously entered into a sales agreement dated July 27, 2009 (the “July 2009 Agreement”) providing for the issuance and sale of shares (the “Original Placement Shares”) of the Company’s common stock. The July 2009 Agreement was terminated prior to the date hereof upon the issuance and sale of all of the Original Placement Shares.
The Sales Agreement is attached as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. In connection with the filing of the Sales Agreement, we are filing as Exhibit 5.1 and Exhibit 8.1 hereto opinions of our counsel, Goodwin Procter LLP.
ITEM 9.01. FINANCIAL STATEMENTS AND
EXHIBITS
(d) Exhibits
| 1.1 | Sales Agreement, dated October 19, 2009, by and among DiamondRock Hospitality Company, DiamondRock Hospitality Limited Partnership, and Cantor Fitzgerald & Co. |
|
5.1
|
Opinion of Goodwin Procter LLP with respect to legality of the shares | |
|
8.1 |
Opinion of Goodwin Procter LLP with respect to tax matters |
|
|
23.1 |
Consent of Goodwin Procter LLP (included in Exhibit 5.1 and Exhibit 8.1) |
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 hereunto duly authorized.
DIAMONDROCK HOSPITALITY COMPANY
| Date: October 19, 2009 |
By: /s/ Michael D.
Schecter
Michael D. Schecter
Executive Vice President,
General Counsel
and Corporate Secretary
EXHIBIT INDEX
| Exhibit No. | Description | |
|
1.1 |
Sales Agreement, dated October 19, 2009, by and among DiamondRock Hospitality Company, DiamondRock Hospitality Limited Partnership, and Cantor Fitzgerald & Co. |
|
|
5.1 |
Opinion of Goodwin Procter LLP with respect to legality of the shares |
|
|
8.1 |
Opinion of Goodwin Procter LLP with respect to tax matters |
|
|
23.1 |
Consent of Goodwin Procter LLP (included in Exhibit 5.1 and Exhibit 8.1) |
Exhibit 1.1
DIAMONDROCK HOSPITALITY COMPANY
$75,000,000 OF COMMON STOCK
$75,000,000 OF COMMON STOCK
CONTROLLED EQUITY OFFERINGSM
SALES AGREEMENT
October 19, 2009
CANTOR FITZGERALD & CO.
499 Park Avenue
New York, New York 10022
499 Park Avenue
New York, New York 10022
Ladies and Gentlemen:
DIAMONDROCK HOSPITALITY COMPANY, a Maryland corporation (the “Company”), DIAMONDROCK
HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited partnership (the “Partnership”) and Cantor
Fitzgerald & Co. (“CF&Co”), were each a party to that certain Sales Agreement dated July 27, 2009
(the “July 2009 Agreement”) providing for the issuance and sale of shares (the “Original Placement
Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”). The July
2009 Agreement was terminated prior to the date hereof pursuant to Section 11(d) of the July 2009
Agreement upon the issuance and sale of all of the Original Placement Shares through CF&Co.
The parties hereto now desire to enter into a new agreement providing for the issuance and
sale of Common Stock. In connection therewith, the Company and the Partnership confirm their
respective agreements (this “Agreement”) with CF&Co as follows:
1. Issuance and Sale of Shares. The Company agrees that, from time to
time during the term of this Agreement, on the terms and subject to the conditions set forth
herein, it may issue and sell through CF&Co, acting as agent and/or principal, shares of the
Company’s Common Stock having an aggregate offering price of up to $75,000,000 (the “Shares”).
Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance
with the limitation set forth in this Section 1 on the number of Shares issued and sold under this
Agreement shall be the sole responsibility of the Company, and CF&Co shall have no obligation in
connection with such compliance. The issuance and sale of Shares through CF&Co will be effected
pursuant to the Registration Statement (as defined below) filed by the Company that became
effective upon filing with the Securities and Exchange Commission (the “Commission”), although
nothing in this Agreement shall be construed as requiring the Company to use the Registration
Statement (as defined below) to issue the Shares.
The Company has filed, in accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the
Commission an automatic shelf registration statement on Form S-3 (File No. 333-161298), including a
base prospectus dated August 12, 2009, relating to certain securities, including the Shares, to be
issued from time to time by the Company, and which incorporates by reference documents that the
Company has filed or will file in accordance with the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”). The
Company has prepared a prospectus supplement specifically relating to the Shares (the “Prospectus Supplement”) to
the base prospectus included as part of such registration statement. The Company has furnished to
CF&Co, for use by CF&Co, copies of the prospectus included as part of such registration statement,
as supplemented by the Prospectus Supplement, relating to the Shares. Except where the context
otherwise requires, such registration statement, on each date and time that such registration
statement and any post-effective amendment thereto became or becomes effective, including all
documents filed as part thereof or incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to
Rule 424(b) under the Securities Act deemed to be a part of such registration statement pursuant to
Rule 430B or 462(b) of the Securities Act, is herein called the “Registration Statement.” The base
prospectus, including all documents incorporated therein by reference, included in the Registration
Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such
prospectus and/or Prospectus Supplement have most recently been filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act, together with any “issuer free writing
prospectus,” as defined in Rule 433 of the Securities Act Regulations (“Rule 433”), relating to the
Shares that (i) is required to be filed with the Commission by the Company or (ii) is exempt from
filing pursuant to Rule 433(d)(5)(i), in each case in the form filed or required to be filed with
the Commission or, if not required to be filed, in the form retained in the Company’s records
pursuant to Rule 433(g) (“Issue Free Writing Prospectus”), is herein called the “Prospectus.” Any
reference herein to the Registration Statement, the Prospectus or any amendment or supplement
thereto shall be deemed to refer to and include the documents incorporated by reference therein,
and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement or the Prospectus shall be deemed to refer to and include the filing after
the execution hereof of any document with the Commission deemed to be incorporated by reference
therein. For purposes of this Agreement, all references to the Registration Statement, the
Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to either the Electronic Data Gathering Analysis and Retrieval System or
Interactive Data Electronic Applications (collectively “IDEA”).
The Company owns 100% of the partnership interests of the Partnership and is the sole general
partner of the Partnership. The Partnership directly or indirectly owns twenty (20) hotels as
described in the Prospectus (individually a “Hotel” and collectively, the “Hotels”). The
Partnership (or one of its subsidiaries) leases each of the Hotels to a wholly-owned subsidiary (a
"Lessee”), pursuant to a separate lease (collectively, the “Leases”). All of the Hotels are
operated and managed by a manager (the “Manager”) pursuant to separate management agreements
(collectively, the “Management Agreements”), each between a Lessee and the Manager, with the
exception of the Frenchman’s Reef & Morning Star Marriott Beach Resort property (which does not
operate under a lessee structure). The Leases and the Management Agreements are referred to
herein, collectively, as the “Hotel Agreements.”
2. Placements. Each time that the Company wishes to issue and sell the
Shares hereunder (each, a “Placement”), it will notify CF&Co by email notice (or other method
mutually agreed to in writing by the parties) (a “Placement Notice”) containing the parameters in
accordance with which it desires the Shares to be sold, which shall at a minimum include the number
of Shares to be issued (the “Placement Shares”), the time period during which sales are requested
to be made, any limitation on the number of Shares that may be sold in any one Trading Day (as
defined in Section 3) and any minimum price below which sales may not be made, a form of which
containing such minimum sales parameters necessary is attached hereto as Schedule 1. The
Placement Notice shall originate from any of the individuals from the Company set forth on Schedule
2 (with a copy to each of the other individuals from the Company listed on such schedule), and
shall be addressed to each of the individuals from CF&Co set forth on Schedule 2, as such Schedule
2 may be amended from time to time. The Placement Notice shall be effective upon receipt by CF&Co
unless and until (i) in accordance with the notice requirements set forth in Section 4, CF&Co
declines to accept the terms contained therein for any reason, in its sole
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discretion, (ii) the entire amount of the Placement Shares have been sold, (iii) in accordance
with the notice requirements set forth in Section 4, the Company suspends or terminates the
Placement Notice, (iv) the Company issues a subsequent Placement Notice with parameters superseding
those on the earlier dated Placement Notice, or (v) the Agreement has been terminated under the
provisions of Section 11. The amount of any discount, commission or other compensation to be
paid by the Company to CF&Co in connection with the sale of the Placement Shares shall be
calculated in accordance with the terms set forth in Schedule 3. It is expressly acknowledged and
agreed that neither the Company nor CF&Co will have any obligation whatsoever with respect to a
Placement or any Placement Shares unless and until the Company delivers a Placement Notice to CF&Co
and CF&Co does not decline such Placement Notice pursuant to the terms set forth above, and then
only upon the terms specified therein and herein. In the event of a conflict between the terms of
this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.
3. Sale of Placement Shares by CF&Co. Subject to the terms and
conditions herein set forth, upon the Company’s issuance of a Placement Notice, and unless the sale
of the Placement Shares described therein has been declined, suspended, or otherwise terminated in
accordance with the terms of this Agreement, CF&Co., for the period specified in the Placement
Notice, will use its commercially reasonable efforts consistent with its normal trading and sales
practices and applicable state and federal laws, rules and regulations and the rules of the New
York Stock Exchange (the “NYSE”) to sell such Placement Shares up to the amount specified, and
otherwise in accordance with the terms of such Placement Notice. CF&Co will provide written
confirmation to the Company (including by email correspondence to each of the individuals of the
Company set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any
of the individuals to whom the notice is sent, other than via auto-reply) no later than the opening
of the Trading Day (as defined below) immediately following the Trading Day on which it has made
sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day,
the compensation payable by the Company to CF&Co pursuant to Section 2 with respect to such sales,
and the Net Proceeds (as defined below) payable to the Company, with an itemization of the
deductions made by CF&Co (as set forth in Section 5(a)) from the gross proceeds that it receives
from such sales. CF&Co may sell Placement Shares by any method permitted by law deemed to be an
“at the market” offering as defined in Rule 415 of the Securities Act, including without limitation
sales made directly on the NYSE, on any other existing trading market for the Common Stock or to or
through a market maker. After consultation with the Company, CF&Co may also sell Placement Shares
in privately negotiated transactions. The Company acknowledges and agrees that (i) there can be no
assurance that CF&Co will be successful in selling Placement Shares, and (ii) CF&Co will incur no
liability or obligation to the Company or any other person or entity if it does not sell Placement
Shares for any reason other than a failure by CF&Co to use its commercially reasonable efforts
consistent with its normal trading and sales practices to sell such Placement Shares as required
under this Section 3. For the purposes hereof, “Trading Day” means any day on which the Company’s
Common Stock is purchased and sold on the principal market on which the Common Stock is listed or
quoted.
4. Suspension of Sales. The Company or CF&Co may, upon notice to the
other party in writing (including by email correspondence to each of the individuals of the other
party set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any
of the individuals to whom the notice is sent, other than via auto-reply) or by telephone
(confirmed immediately by verifiable facsimile transmission or email correspondence to each of the
individuals of the other party set forth on Schedule 2), suspend any sale of Placement Shares;
provided, however, that such suspension shall not affect or impair either party’s obligations with
respect to any Placement Shares sold hereunder prior to the receipt of such notice. Each of the
Parties agrees that no such notice under this Section 4 shall be effective against the other unless
it is made to one of the individuals named on Schedule 2 hereto, as such schedule may be amended
from time to time.
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5. Settlement.
(a) Settlement of Placement Shares. Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur on the third (3rd)
Trading Day (or such earlier day as is industry practice for regular-way trading) following the
date on which such sales are made (each, a “Settlement Date”). The amount of proceeds to be
delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the
"Net Proceeds”) will be equal to the aggregate sales price received by CF&Co at which such
Placement Shares were sold, after deduction for (i) CF&Co’s commission, discount or other
compensation for such sales payable by the Company pursuant to Section 2 hereof, (ii) any other
amounts due and payable by the Company to CF&Co hereunder pursuant to Section 7(g) hereof, and
(iii) any transaction fees imposed by any governmental or self-regulatory organization in respect
of such sales.
(b) Delivery of Placement Shares. On or before each Settlement Date, the
Company will, or will cause its transfer agent to, electronically transfer the Placement Shares
being sold by crediting CF&Co’s or its designee’s account (provided CF&Co shall have given the
Company written notice of such designee prior to the Settlement Date) at The Depository Trust
Company through its Deposit and Withdrawal at Custodian System or by such other means of delivery
as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradeable,
transferable, registered shares in good deliverable form. On each Settlement Date, CF&Co will
deliver the related Net Proceeds in same day funds to an account designated by the Company on, or
prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if
applicable), defaults in its obligation to deliver Placement Shares on a Settlement Date, that in
addition to and in no way limiting the rights and obligations set forth in Section 9(a) hereto, it
will (i) hold CF&Co harmless against any loss, claim, damage, or expense (including reasonable
legal fees and expenses), as incurred, arising out of or in connection with such default by the
Company and (ii) pay to CF&Co any commission, discount, or other compensation to which it would
otherwise have been entitled absent such default.
6. Representations and Warranties of the Company and the Partnership.
The Company and the Partnership, jointly and severally, represent and warrant to, and agree with,
CF&Co that as of the date of this Agreement and as of each Representation Date (as defined in
Section 7(m) below) on which a certificate is required to be delivered pursuant to Section 7(m) of
this Agreement, and as of the time of each sale of any Shares pursuant to this Agreement (each, an
"Applicable Time”), as the case may be:
(a) Status as a Well-Known Seasoned Issuer. (A) At the time of filing the Registration
Statement on August 12, 2009 and on the date of this Agreement, (B) at the time of the most recent
amendment thereto, if any, for the purposes of complying with Section 10(a)(3) of the Securities
Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to
Section 13 or 15(d) of the Exchange Act or form of prospectus), (C) at the time the Company or any
person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) of the
Securities Act ) made any offer relating to the Shares in reliance on the exemption of Rule 163 of
the Securities Act and (D) at the date hereof, the Company was and is a “well-known seasoned
issuer” as defined in Rule 405 of the Securities Act (“Rule 405”), including not having been and
not being an “ineligible issuer” as defined in Rule 405. The Registration Statement is an
“automatic shelf registration statement,” as defined in Rule 405, and the Shares, since their
registration on the Registration Statement, have been and remain eligible for registration by the
Company on a Rule 405 “automatic shelf registration statement.” The Company has not received from
the Commission any notice pursuant to Rule 401(g)(2) of the Securities Act objecting to the use of
the automatic shelf registration statement form.
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(b) Registration Statement, Prospectus and Disclosure at Time of Sale. The
Registration Statement became effective upon filing under Rule 462(e) of the Securities Act (“Rule
462(e)”) on August 12, 2009, and any post-effective amendment thereto also became effective upon filing
under Rule 462(e). Any offer that is a written communication relating to the Shares made prior to
the filing of the original Registration Statement by the Company or any person acting on its behalf
(within the meaning, for this paragraph only, of Rule 163(c) of the Securities Act) on August 12,
2009 has been filed with the Commission in accordance with the exemption provided by Rule 163 of
the Securities Act (“Rule 163”) and otherwise complied with the requirements of Rule 163, including
without limitation the legending requirement, to qualify such offer for the exemption from Section
5(c) of the Securities Act provided by Rule 163.
At each respective time the Registration Statement became effective, at each deemed effective
date with respect to CF&Co pursuant to Rule 430B(f)(2) of the Securities Act and as of each
Settlement Date, the Registration Statement complied and will comply in all material respects with
the requirements of the Securities Act and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus
or any such amendment or supplement was issued, as of the date hereof, each Applicable Time, each
Settlement Date and each Representation Date included or will include an untrue statement of a
material fact or omitted or will omit 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.
The Prospectus complied when so filed in all material respects with the Securities Act.
Each Issuer Free Writing Prospectus, if any, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Shares or until the issuer notified or
notifies CF&Co otherwise, did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration Statement or the
Prospectus, including any document incorporated by reference therein and any preliminary or other
prospectus deemed to be a part thereof that has not been superseded or modified.
The representations and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement, the Prospectus or any amendment or supplement thereto or
any Issuer Free Writing Prospectus made in reliance upon and in conformity with written information
furnished to the Company by CF&Co expressly for use therein.
(c) [Intentionally Omitted.]
(d) Incorporated Documents. Each document incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply when filed in all material respects with
the requirements of the Exchange Act and, when read together with the other information in the in
the Prospectus, at the date of the Prospectus and as of each Settlement Date, if any, did not and
will not include an untrue statement of a material fact or omit 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; and any further documents so filed and incorporated by reference in the
Registration Statement or the Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform to the requirements of the Exchange Act, in all
material respects, and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading.
5
(e) Offering Materials Furnished to CF&Co. The Company has delivered to
CF&Co one complete copy of the Registration Statement and a copy of each consent and certificate of
experts filed as a part thereof, and conformed copies of the Registration Statement (without
exhibits) and the Prospectus, as amended or supplemented, in such quantities and at such places as
CF&Co has reasonably requested. The Prospectus delivered to CF&Co for use in connection with the
offering of the Shares was, and any amendment or supplement thereto will be, at the time of such
delivery, identical to the electronically transmitted copies thereof filed with the Commission
pursuant to IDEA, except to the extent permitted by Regulation S-T.
(f) Offering Materials. The Company has not distributed and will not distribute,
prior to the later of the final Settlement Date, if any, or the completion of CF&Co’s distribution
of the Shares, any offering material in connection with the offering and sale of the Shares other
than the Registration Statement and the Prospectus.
(g) No Stop Order. No stop order suspending the effectiveness of the Registration
Statement or any part thereof, or any Rule 462(b) Registration Statement, has been issued and no
proceedings for that purpose have been instituted or are pending or, to the knowledge of the
Company, threatened or contemplated by the Commission or by the state securities authority of any
jurisdiction. No order preventing or suspending the use of the Prospectus has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the Company, threatened or
contemplated by the Commission or by the state securities authority of any jurisdiction, and any
request on the part of the Commission or state securities authority of any jurisdiction for
additional information has been complied with.
(h) Capitalization. The shares of Common Stock conform in all material respects to
the description thereof contained in the Registration Statement and the Prospectus; immediately
prior to the execution of this Agreement, 118,264,516 shares of Common Stock will be issued and
outstanding; all of the outstanding shares of Common Stock of the Company and the outstanding
shares of capital stock or equity interests of each subsidiary of the Company, all of which are
listed on Schedule 4 attached hereto (each, including the Partnership, except where noted, a
"Subsidiary”, and collectively, the “Subsidiaries”) have been duly and validly authorized and
issued are fully paid and nonassessable, and except as disclosed in the Registration Statement and
Prospectus, all of the outstanding shares of capital stock, partnership interests and limited
liability company membership interests, as applicable, of the Subsidiaries, including the
Partnership, are directly or indirectly owned of record and beneficially by the Company; except as
disclosed in the Registration Statement and Prospectus, there are no outstanding (i) securities or
obligations of the Company or any of the Subsidiaries convertible into or exchangeable for any
equity interests of the Company or any such Subsidiary, (ii) warrants, rights or options to
subscribe for or purchase from the Company or any such Subsidiary any such equity interests or any
such convertible or exchangeable securities or obligations or (iii) obligations of the Company or
any such Subsidiary to issue any equity interests, any such convertible or exchangeable securities
or obligation, or any such warrants, rights or options.
6
(i) Good Standing of the Company. The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State of Maryland and is in good standing
with the State Department of Assessments and Taxation of the State of Maryland, with all requisite
corporate power and authority to own, lease and operate its properties, and conduct its business as
described in the Registration Statement and the Prospectus, and is duly qualified or licensed to
transact business as a foreign entity and is in good standing in each jurisdiction in which the
nature or conduct of its business requires such qualification or license and in which the failure
to be so qualified or licensed, individually or in the aggregate, (i) would reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any transactions contemplated hereby or (ii)
would reasonably be expected to have a material adverse effect on, or result in a material adverse
change in, the condition (financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth or contemplated in the Registration Statement and
the Prospectus (exclusive of any supplement thereto) (any such effect or change described in clause
(ii) hereof is hereinafter called a “Material Adverse Effect”); except for pledges of limited
liability company membership interests granted in connection with the incurrence of debt as
disclosed in the Registration Statement and the Prospectus, all of the issued and outstanding
shares of common stock, capital stock, limited liability company membership interests or
partnership interests, as applicable, of each Subsidiary are owned by the Company directly or
through its Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim; except for restrictions in loan documents entered into in connection with
indebtedness, which loan documents were provided to CF&Co or its counsel, no Subsidiary is
prohibited or restricted, directly or indirectly, from (A) paying dividends to the Company, (B)
making any other distribution with respect to such Subsidiary’s capital stock, (C) repaying to the
Company or any other Subsidiary any amounts which may from time to time become due under any loans
or advances to such Subsidiary from the Company or such other Subsidiary, or (D) transferring any
such Subsidiary’s property or assets to the Company or to any other Subsidiary; other than the
Subsidiaries, the Company does not, and upon completion of the offering of the Shares will not,
own, directly or indirectly, any capital stock or other equity securities of any corporation or any
ownership interest in any partnership, limited liability company, joint venture or other entity
other than the Subsidiaries.
(j) Ownership of the Partnership; Good Standing of the Subsidiaries. The Company is
the sole general partner of the Partnership and owns, directly or indirectly, 100% of the
partnership interests (“Units”) in the Partnership; the Subsidiaries have been duly incorporated,
formed or organized, as the case may be, and are validly existing as a corporation, limited
liability company, general partnership or limited partnership, as the case may be, in good standing
under the laws of their respective jurisdictions of incorporation, formation or organization, as
applicable, with all requisite power and authority to own, lease and operate their respective
properties and to conduct their respective business as described in the Registration Statement and
the Prospectus; each Subsidiary is duly qualified or licensed to transact business as a foreign
entity and is in good standing in each jurisdiction in which the nature or conduct of its business
requires such qualification or license, and in which the failure to be so qualified or licensed,
individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
(k) The Partnership Agreement. The Agreement of Limited Partnership of the
Partnership, as further amended and/or restated (the “Partnership Agreement”), has been duly and
validly authorized, executed and delivered by or on behalf of each of the partners of the
Partnership and constitutes a valid and binding agreement of the parties thereto, enforceable in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally or by general
principles of equity.
(l) Compliance with Laws. The Company, the Subsidiaries and the Hotels are in
compliance in all material respects with all applicable laws, rules, regulations, orders, decrees
and judgments, including those relating to transactions with affiliates, except where the failure
to be in compliance would not have a Material Adverse Effect.
7
(m) Absence of Breaches and Defaults. The Company is not in violation of its Articles
of Amendment and Restatement, as amended and/or restated (the “Articles”), or its bylaws, as
amended and/or restated (the “Bylaws”); the Partnership is not in violation of its Certificate of
Limited Partnership or the Partnership Agreement; no Subsidiary is in violation of its
organizational documents (including, without limitation, partnership and limited liability company
agreements), except for such violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; neither the Company nor any Subsidiary is
in breach of or default in, nor to the knowledge of the Company and the Partnership has any event
occurred which with notice, lapse of time, or both would constitute a breach of or default in, the
performance or observance by the Company or any Subsidiary, as the case may be, of any obligation,
agreement, contract, franchise, covenant or condition contained in any license, indenture,
mortgage, deed of trust, loan or credit agreement, lease or other agreement or instrument to which
the Company or any Subsidiary is a party or by which any of them or their respective properties is
bound, except for such breaches or defaults that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(n) Absence of Conflicts. The execution, delivery and performance of this Agreement
and the other agreements listed as exhibits to the Registration Statement by the Company and the
Partnership (to the extent a party thereto) and the issuance, sale and delivery by the Company of
the Shares and the consummation of the transactions contemplated herein do not and will not (A)
conflict with, or result in any breach or constitute a default (nor constitute any event which with
notice, lapse of time or both would constitute a breach or default) (i) by the Company of any
provisions of its Articles or Bylaws, by the Partnership of any provisions of its Certificate of
Limited Partnership or Partnership Agreement, by any Subsidiary (excluding the Partnership) of any
provision of its organizational documents, or (ii) by the Company or any Subsidiary of any
provision of any obligation, agreement, contract, franchise, license, indenture, mortgage, deed of
trust, loan or credit agreement, lease or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective properties may be bound or
affected, or (iii) by the Company or any Subsidiary under any U.S. federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable to the Company or any
Subsidiary, except in the use of clauses (A)(ii) and (A)(iii) above, for such conflicts, breaches
or defaults that, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, or (B) result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or any Subsidiary, except as disclosed in the
Registration Statement and the Prospectus.
(o) Company Authorization of Agreement and Offering. The Company has the full
corporate power and authority to enter into this Agreement and to consummate the transactions
contemplated herein; the Company has the corporate power to issue, sell and deliver the Shares as
provided herein; this Agreement has been duly authorized, executed and delivered by the Company and
is a legal, valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general
equitable principles and except as rights to indemnity and contribution thereunder may be limited
by applicable law or policies underlying such law.
(p) Partnership Authorization of Agreement and Offering. The Partnership has the full
partnership power and authority to enter into this Agreement and to consummate the transactions
contemplated herein; this Agreement has been duly authorized, executed and delivered by the
Partnership and is a legal, valid and binding agreement of the Partnership enforceable against the
Partnership in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by
general equitable principles and except as rights to indemnity and contribution thereunder may be
limited by applicable law or policies underlying such law.
8
(q) Absence of Further Requirements. No approval, authorization, consent or order of,
or registration or filing with, any U.S. federal, state or local governmental or regulatory
commission, board, body, authority or agency is required for the Company’s or the Partnership’s or
any Subsidiary’s execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated herein or therein, including the sale and delivery of the Shares, other
than (A) such approvals as have been obtained, or will have been obtained before the Closing Time
or each Date of Delivery, as the case may be, under the Securities Act and the Exchange Act, (B)
such approvals as have been obtained in connection with the approval of the listing of the Shares
on the New York Stock Exchange, and (C) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being offered by CF&Co.
(r) Possession of Licenses and Permits. Each of the Company, the Subsidiaries, and,
to the knowledge of the Company, the Manager with respect to the Hotels, has all necessary
licenses, permits, authorizations, consents and approvals, possess valid and current certificates,
has made all necessary filings required under any federal, state or local law, regulation or rule,
and has obtained all necessary authorizations, consents and approvals from other persons, required
in order to conduct their respective businesses as described in the Registration Statement and the
Prospectus, except for such licenses, permits, authorizations, consents and other approvals the
absence of which, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect; neither the Company nor any of the Subsidiaries, nor any Hotel nor, to the
knowledge of the Company, the Manager with respect to the Hotels, is in violation of, in default
under, or has received any notice regarding a possible violation, default or revocation of any such
certificate, license, permit, authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to the Company, any
Subsidiary or any Hotel the effect of which, individually or in the aggregate, would reasonably be
expected to result in a Material Adverse Effect.
(s) Absence of Proceedings. Except as disclosed in the Registration Statement and the
Prospectus, there are no actions, suits, proceedings, inquiries or investigations pending or, to
the knowledge of the Company, threatened against or affecting the Company or any of its
Subsidiaries or any Hotel or, to the knowledge of the Company, the Manager with respect to the
Hotels, or which has as the subject thereof any of the respective officers and directors of the
Company or any officers, directors, managers or partners of its Subsidiaries, or to which the
properties, assets or rights of any such entity are subject, at law or in equity, before or by any
federal, state, local or foreign governmental or regulatory commission, board, body, authority,
arbitral panel or agency, that (i) would reasonably be expected to have a material adverse effect
on the performance of this Agreement or the transactions contemplated hereby or (ii) would
reasonably be expected to have a Material Adverse Effect.
9
(t) Financial Statements. The consolidated financial statements of the Company and
the Subsidiaries, including the notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the consolidated financial position of the
respective entities to which such financial statements relate (the “Covered Entities”) as of and at
the dates indicated and the consolidated results of operations and changes in financial position
and shareholders’ equity and cash flows of the Covered Entities for the periods specified; the
supporting schedules included or incorporated by reference in the Registration Statement, if any, fairly present the information required to
be stated therein; such financial statements and supporting schedules have been prepared in
conformity with generally accepted accounting principles as applied in the United States (“GAAP”)
and on a consistent basis during the periods involved (except as may be expressly stated in the
related notes thereto) and in accordance with Regulation S-X promulgated by the Commission; the
financial data set forth or incorporated by reference in the Registration Statement and the
Prospectus fairly present the information shown therein and has been compiled on a basis consistent
with the financial statements included in the Registration Statement and the Prospectus; no other
financial statements or supporting schedules are required to be included in the Registration
Statement; all disclosures contained in the Registration Statement or the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the rules and regulations of the
Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the
Securities Act, to the extent applicable.
(u) Independent Accountants. KPMG LLP, who has audited the financial statements of
the Covered Entities and has expressed their opinion in a report with respect to the financial
statements of the Covered Entities included or incorporated by reference in the Registration
Statement and the Prospectus, is, and was during the periods covered by its report, an independent
registered public accounting firm with respect to the Covered Entities as required by the
Securities Act.
(v) No Material Adverse Change in Business. Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or the Prospectus, there has not been (A) any
Material Adverse Effect, whether or not arising in the ordinary course of business, (B) any
probable transaction or binding agreement that is material to the Company and the Subsidiaries
taken as a whole, entered into by the Company or any of the Subsidiaries, (C) any obligation,
contingent or otherwise, directly or indirectly incurred by the Company or any Subsidiary that
could reasonably be expected to result in a Material Adverse Effect or (D) any dividend or
distribution of any kind declared, paid or made by the Company on any class of its capital stock or
repurchase or redemption by the Company of any class of capital stock.
(w) Registration Rights. Except as disclosed in the Registration Statement and the
Prospectus, there are no persons with registration or other similar rights to have any equity or
debt securities, including securities which are convertible into or exchangeable for equity
securities, registered pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act; and no person has a right of participation or first refusal with
respect to the sale of the Shares by the Company.
(x) Authorization of the Shares. The issuance and sale of the Shares to CF&Co
hereunder have been duly authorized by the Company, and when issued and duly delivered against
payment therefor as contemplated by this Agreement, the Shares will be validly issued, fully paid
and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other
claim created by or known to the Company, and the issuance and sale of the Shares by the Company is
not subject to preemptive or other similar rights arising by operation of law, under the
organizational documents of the Company or under any agreement to which the Company or any
Subsidiary is a party.
10
(y) Authorization of the Units. The issuance of the Units to the Company in exchange
for contribution of proceeds from the sale of the Shares described in the Registration Statement
and the Prospectus has been duly authorized by the Partnership, and when issued and duly delivered
against payment therefor, will be validly issued, fully paid and nonassessable, free and clear of
any pledge, lien, encumbrance, security interest or other claim created by or known to the Company
or the Partnership; and the issuance of Units by the Partnership is not subject to preemptive or
other similar rights arising by operation of law under the organizational documents of the
Partnership or under any agreement to which the Partnership is a party.
(z) Transfer Taxes. Except as disclosed in the Registration Statement and the
Prospectus, there are no transfer taxes or other similar fees or charges under Federal law or the
laws of any state or any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company of the Shares.
(aa) Listing on NYSE. The Shares have been registered pursuant to Section 12(b) of
the Exchange Act and as of each Settlement Date, the Shares will be duly listed and admitted and
authorized for trading on the New York Stock Exchange, subject only to official notice of issuance.
(bb) Absence of Manipulation. The Company has not taken, and will not take, directly
or indirectly, any action which is designed to or which has constituted or which might reasonably
be expected to cause or result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(cc) FINRA. Neither the Company nor any of its affiliates (i) is required to register
as a “broker” or “dealer” in accordance with the provisions of the Exchange Act, or (ii) directly,
or indirectly through one or more intermediaries, controls or has any other association with
(within the meaning of Article I of the By-laws of the Financial Industry Regulatory Authority,
Inc. (the “FINRA”)) any member firm of the FINRA.
(dd) Legal, Tax or Accounting Advice. Neither the Company nor the Partnership has
relied upon CF&Co or legal counsel for CF&Co for any legal, tax or accounting advice in connection
with the offering and sale of the Shares.
(ee) Form of Stock Certificate. The form of certificate used to evidence the Common
Stock complies in all material respects with all applicable statutory requirements, with any
applicable requirements of the Articles and Bylaws of the Company and the requirements of the New
York Stock Exchange.
(ff) Title to Property. (A) The Company and the Subsidiaries have good and marketable
title in fee simple to, or a valid leasehold interest in, all real property owned or leased by them
that are material to the business as described in the Registration Statement and the Prospectus,
and good title to all personal property owned by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, encroachments, restrictions, mortgages and
other defects, except such as are (i) disclosed in the Registration Statement and the Prospectus or
(ii) listed as an exception to the owner’s or leasehold title insurance policies furnished by the
Company to CF&Co or its counsel or (iii) would not reasonably be expected to have a material
adverse effect on the Company’s interest in the related
11
property, the value of such property or the business conducted thereon; (B) any real property,
improvements, equipment and personal property held under lease by the Company or any Subsidiary are
held under valid, existing and enforceable leases, in each case, with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such property by the
Company or any Subsidiary; and (C) except with respect to the Company’s corporate headquarters at
6903 Rockledge Drive, Suite 800, Bethesda, MD 20817 (the “Headquarters”), the Company or a
Subsidiary has an owner’s or leasehold title insurance policy, from a title insurance company
licensed to issue such policy, on each property described in the Registration Statement and
Prospectus as being owned or leased, as the case may be, by the Company or a Subsidiary, that
insures the Company’s or the Subsidiary’s fee simple or leasehold interest, as the case may be, in
such real property, which policies include only commercially reasonable exceptions, and with
coverages in amounts at least equal to amounts that are generally deemed in the Company’s industry
to be commercially reasonable in the markets where the Company’s properties are located.
(gg) Condition of Property. To the knowledge of the Company, all real property owned
or leased by the Company or any Subsidiary (other than the Company’s corporate headquarters office
space), whether owned in fee simple or through a joint venture or other partnership, including the
Hotels (each, a “Property” and collectively, the “Properties”), is free of any material structural
defects and all building systems contained therein are in reasonable working order in all material
respects, subject to ordinary wear and tear or, in each instance, the Company or any Subsidiary, as
the case may be, has created an adequate reserve or capital budget to effect reasonably required
repairs, maintenance and capital expenditures; to the knowledge of the Company, water, storm water,
sanitary sewer, electricity and telephone service are all available at the property lines of such
property over duly dedicated streets or perpetual easements of record benefiting such property;
except as described in the Registration Statement and the Prospectus, to the knowledge of the
Company, there is no pending or threatened special assessment, tax reduction proceeding or other
action that could have a Material Adverse Effect.
(hh) Property Leases. Except with respect to the Headquarters, each of the properties
listed in the Registration Statement and the Prospectus as a property with respect to which the
Company or one of its Subsidiaries has a leasehold interest is the subject of a lease that (A) is
in the name of the relevant Subsidiary and has been duly and validly authorized, executed and
delivered by or on behalf of the relevant Subsidiary or (B) has been assigned to a Subsidiary
pursuant to an assignment of lease which has been duly and validly authorized, executed and
delivered by or on behalf of the relevant Subsidiary and to the knowledge of the Company, by each
of the other parties thereto and each such lease constitutes a valid and binding agreement of the
parties thereto, enforceable in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights
generally or by general principles of equity.
(ii) Disclosure of Legal Matters. The descriptions in the Registration Statement and
the Prospectus of the legal or governmental proceedings, contracts, leases and other legal
documents therein described present fairly in all material respects the information required to be
disclosed, and there are no legal or governmental proceedings, contracts, leases, or other
documents of a character required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement which are not described or filed as
required; all agreements between the Company or any of the Subsidiaries and third parties expressly
referenced in the Registration Statement and the Prospectus are or will be legal, valid and binding
obligations of the Company or one or more of the Subsidiaries, enforceable in accordance with their
respective terms, except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and except with respect to this Agreement to the
extent that the indemnification provisions hereof may be limited by federal or state securities
laws and public policy considerations in respect thereof; and to the best of the Company’s
knowledge, no party thereto is in, or with the passage of time or the giving of notice or both will
be in, breach or default under any of such agreements that would have a Material Adverse Effect.
12
(jj) Possession of Intellectual Property. The Company and each Subsidiary, and, to
the knowledge of the Company, the Manager with respect to the Hotels, owns or possesses adequate
and sufficient licenses or other rights to use all patents, trademarks, service marks, trade names,
copyrights, domain names, software and design licenses, approvals, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively “Intellectual Property
Rights”) necessary to entitle the Company and each Subsidiary to conduct its business as described
in the Registration Statement and Prospectus; neither the Company nor any Subsidiary has received
notice of infringement of or conflict with (and the Company knows of no such infringement of or
conflict with) asserted rights of others with respect to any Intellectual Property Rights which
would reasonably be expected to have a Material Adverse Effect; neither the Company nor any
Subsidiary is a party to or bound by any options, licenses or agreements with respect to the
Intellectual Property Rights of any other person or entity that are required to be set forth in the
Registration Statement and Prospectus and are not described as required.
(kk) Accounting and Disclosure Controls. The Company, each of the Subsidiaries and,
to the knowledge of the Company, the Manager with respect to the Hotels maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences; (v)
management is made aware of all material transactions concerning the Company or its properties; and
(vi) the Company qualifies as a REIT under the requirements of the Code. The Company, each of the
Subsidiaries and, to the knowledge of the Company, the Manager with respect to the Hotels employ
disclosure controls and procedures that are designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and
forms, and is accumulated and communicated to the Company’s management, including its principal
executive officer and principal financial officer, as appropriate, to allow timely decisions
regarding disclosure.
(ll) Payment of Taxes. Each of the Company and the Subsidiaries has filed on a timely
basis (including in accordance with any applicable extensions) all necessary U.S. federal, state,
local and foreign income and franchise tax returns required to be filed through the date hereof or
have properly requested extensions thereof (except in any case in which the failure so to file
would not reasonably be expected to have a Material Adverse Effect), and have paid all taxes shown
as due thereon, and if due and payable, any related or similar assessment, fine or penalty levied
against the Company or any of the Subsidiaries; no tax deficiency has been asserted against any
such entity, nor does the Company or any of the Subsidiaries know of any tax deficiency which is
likely to be asserted against any such entity which, if determined adversely to any such entity,
would reasonably be expected to have a Material Adverse Effect; all such tax liabilities are
adequately provided for on the respective books of such entities.
13
(mm) Insurance. Each of the Company and the Subsidiaries maintains insurance (issued
by insurers of recognized financial responsibility) of the types and with policies in such amounts
and with such deductibles and covering such risks as are in the reasonable opinion of management
prudent for their respective businesses; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and its Subsidiaries are in
compliance with the terms of such policies and instruments in all material respects; and there are
no claims by the Company or any of its Subsidiaries under any such policy or instrument as to which
any insurance company is denying liability or defending under a reservation of rights clause; the
Company has no reason to believe that it or any Subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not reasonably be expected to result in a Material Adverse
Effect.
(nn) Environmental Laws. The Company has obtained Phase I Environmental Audits with
respect to the Properties as described in the Registration Statement and the Prospectus and except
as otherwise disclosed in the Registration Statement and the Prospectus, (i) none of the Company,
the Partnership, any of the Subsidiaries nor, to the knowledge of the Company, any other owners of
the Properties, has used, handled, stored, treated, transported, manufactured, spilled, leaked,
released or discharged, dumped, transferred or otherwise disposed of or dealt with, Hazardous
Materials (as defined below) on, in, under or affecting any Property, except for the use, handling,
storage, and transportation of Hazardous Materials (a) necessary for the operation of the Hotels
and consistent with (1) the practice of comparable hotels in the industry and (2) the intended or
recommended use, handling, storage and transportation of such Hazardous Materials, and (b) in
compliance with applicable Environmental Statutes (as defined below); (ii) the Company, the
Partnership and the other Subsidiaries do not intend to use any Property or any subsequently
acquired properties for the purpose of using, handling, storing, treating, transporting,
manufacturing, spilling, leaking, discharging, dumping, transferring or otherwise disposing of or
dealing with Hazardous Materials, except for the use, handling, storage, and transportation of
Hazardous Materials (a) necessary for the operation of the Hotels and consistent with (1) the
practice of comparable hotels in the industry and (2) the intended or recommended use, handling,
storage and transportation of such Hazardous Materials, and (b) in compliance with applicable
Environmental Statutes; (iii) none of the Company, the Partnership, nor any of the other
Subsidiaries has received any notice of, or has any knowledge of, any occurrence or circumstance
which, with notice or passage of time or both, would give rise to a claim under or pursuant to any
federal, state or local environmental statute or regulation or under common law, pertaining to
Hazardous Materials on or originating from any Property or any assets described in the Registration
Statement and the Prospectus or any other real property owned or occupied by any such party or
arising out of the conduct of any such party or of an agent of any such party, including without
limitation a claim under or pursuant to any Environmental Statute; (iv) no Property is included or
proposed for inclusion on the National Priorities List issued pursuant to CERCLA (as defined below)
by the United States Environmental Protection Agency (the “EPA”) or, to the knowledge of the
Company, proposed for inclusion on any similar list or inventory issued pursuant to any other
Environmental Statute or issued by any other Governmental Authority (as defined below).
As used herein, “Hazardous Material” shall include, without limitation, any
flammable explosive, radioactive material, hazardous substance, hazardous material,
hazardous waste, toxic substance, asbestos or related material, as defined by any
federal, state or local environmental law, ordinance, rule or regulation including
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 (“CERCLA”), the
Hazardous
14
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801-1819, the
Resource Conservation and Recovery Act (Solid Waste Disposal Act), as amended, 42
U.S.C. Sections 6901-6992k, the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances Control Act, as
amended, 15 U.S.C. Sections 2601-2692, the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, 7 U.S.C. Sections 136-136y, the Clean Air Act, as
amended, 42 U.S.C. Sections 7401-7671q, the Clean Water Act (Federal Water Pollution
Control Act), as amended, 33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act,
as amended, 42 U.S.C. Sections 300f-300j-26, and the Occupational Safety and Health
Act, as amended, 29 U.S.C. Sections 651-678, as any of the above statutes may be
amended from time to time, and in the regulations promulgated pursuant to each of
the foregoing (individually, an “Environmental Statute”) or by any federal, state or
local governmental authority having or claiming jurisdiction over the properties and
assets described in the General Disclosure Package and the Prospectus (a
“Governmental Authority”).
(oo) Environmental Liabilities. To the knowledge of the Company, there are no costs
or liabilities associated with the Properties pursuant to any Environmental Statute (including,
without limitation, any capital or operating expenditures required for clean-up, closure of
properties or compliance with any Environmental Statute or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to third parties) which
would reasonably be expected to have a Material Adverse Effect.
(pp) Independent Appraisals and Environmental Reports. To the knowledge of the
Company, none of the entities that prepared appraisals of the Properties, nor the entities that
prepared Phase I or other environmental assessments with respect to any Property, was employed for
such purpose on a contingent basis or has any substantial interest in the Company or any of the
Subsidiaries, and none of their directors, officers or employees is connected with the Company or
any of the Subsidiaries as a promoter, selling agent, officer, director or employee.
(qq) Anti-Discrimination Laws. None of the Company, the Partnership or any Subsidiary
or, to the knowledge of the Company, the Manager, with respect to the Hotels, is in violation of or
has received notice of any violation with respect to any U.S. federal or state law relating to
discrimination in the hiring, termination, promotion, terms or conditions of employment or pay of
employees, nor any applicable U.S. federal or state wages and hours law, the violation of any of
which would reasonably be expected to have a Material Adverse Effect.
(rr) ERISA. Any “employee benefit plan” (as defined under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and published interpretations
thereunder (collectively, “ERISA”)) established or maintained by the Company, the Subsidiaries or
their “ERISA Affiliates” (as defined below) or to which the Company, the Subsidiaries or their
ERISA Affiliates contribute or are required to contribute are in compliance in all material
respects with ERISA; “ERISA Affiliate” means any trade or business, whether or not incorporated,
which with the Company or a Subsidiary is treated as a single employer under Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the “Code”); no such employee benefit plan is subject to Section 412 of the
Code, Section 302 of ERISA or Title IV of ERISA; all contributions required to have been made under
each such employee benefit plan have been made on a timely basis; there has been no “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 or 407 of ERISA) for which the Company, the Subsidiaries or their ERISA Affiliates
have any material liability; and each such employee benefit plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and to the knowledge of the Company, nothing has
occurred, whether by action or failure to act, which would reasonably be expected to cause the loss
of such qualification, in each case, except as disclosed in the Registration Statement and the
Prospectus.
15
(ss) Anti-Bribery Laws. Neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company any officer, director, manager or director purporting to act on behalf of
the Company or any of the Subsidiaries has at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contributions, in violation of law, (ii)
made any payment to any U.S. federal, state, local or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than payments required or
allowed by applicable law and the Company’s Code of Business Conduct provided to CF&Co or its
counsel, or (iii) engaged in any transactions, maintained any bank account or used any corporate
funds except for transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company and the Subsidiaries.
(tt) Loans to Certain Related Parties. Except as otherwise disclosed in the
Registration Statement and the Prospectus, there are no outstanding loans or advances or material
guarantees of indebtedness by the Company or any of the Subsidiaries to or for the benefit of any
of the officers, directors, managers or trustees of the Company or any of the Subsidiaries or any
of the members of the families of any of them.
(uu) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company
or any of the Company’s directors or officers, in their capacities as such, to comply with any
provision of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated
by the Commission thereunder (the “Sarbanes-Oxley Act”), including Section 402 related to loans,
Section 404 related to internal controls and Sections 302 and 906 related to certifications.
(vv) Money Laundering Laws. The operations of the Company and its Subsidiaries are
and have been conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.
(ww) Affiliations with CF&Co. Except as disclosed in the Prospectus, the Company (i)
does not have any material lending or other relationship with any bank or lending affiliate of
CF&Co and (ii) does not intend to use any of the proceeds from the sale of the Shares hereunder to
repay any outstanding debt owed to any affiliate of CF&Co.
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(xx) Compliance with Securities Laws. All securities issued by the Company have been
issued and sold in compliance with (i) all applicable federal and state securities laws and (ii)
the requirements of the New York Stock Exchange. The Company is in compliance in all material
respects with the current listing standards of the New York Stock Exchange.
(yy) Rights and Actions Affecting Properties. To the knowledge of the Company, each
of the Properties complies with all applicable zoning laws, ordinances, regulations and deed
restrictions or other covenants in all material respects; if and to the extent there is a failure
to comply, such failure, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect and will not result in a forfeiture or reversion of title; to the
knowledge of the Company, there is no pending or threatened condemnation, zoning change, or other
similar proceeding or action that will in any material respect affect the size of use of,
improvements on, construction on or access to any of the Properties, except such zoning changes,
proceedings or actions that, individually or in the aggregate, would not have a Material Adverse
Effect; all liens, charges, encumbrances, claims, or restrictions on or affecting the properties
and assets (including the Properties) of the Partnership or any of the Subsidiaries that are
required to be described in the Registration Statement and the Prospectus are disclosed therein; to
the knowledge of the Company, no lessee, licensee, concessionaire or vendor of any portion of any
of the Properties is in default under any of the leases or licenses governing such properties and
there is no event which, but for the passage of time or the giving of notice or both could
constitute a default under any of such leases or licenses, except such defaults that would not
reasonably be expected to have a Material Adverse Effect; no person has an option or right of first
refusal to purchase all or any part of any Hotel, or any interest therein, which option or right is
required to be described in the Registration Statement or the Prospectus and which option or right
is not so described.
(zz) Convertible Property Interests. The mortgages and deeds of trust encumbering the
Hotels are not convertible into equity interests in the property, nor will the Company or the
Partnership hold a participating interest therein and such mortgages and deeds of trust are not
cross-defaulted or cross-collateralized to any property not to be owned directly or indirectly by
the Company or the Partnership.
(aaa) Finder’s Fees. The Company has not incurred any liability for any finder’s fees
or similar payments in connection with the transactions herein contemplated.
(bbb) Related Party Transactions. No relationship, direct or indirect, exists between
or among the Company or any of the Subsidiaries on the one hand, and the directors, officers,
trustees, managers, shareholders, partners, customers or suppliers of the Company or any of the
Subsidiaries on the other hand, which is required to be described in the Registration Statement and
the Prospectus and which is not so described.
(ccc) Investment Company Act. Neither the Company nor any of the Subsidiaries is, and
after giving effect to the offering and sale of the Shares and the use of the proceeds as described
under the caption “Use of Proceeds” in the Prospectus, will be an “investment company” or an entity
“controlled” by an “investment company”, as such terms are defined in the Investment Company Act of
1940, as amended (the “Investment Company Act”).
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(ddd) Absence of Labor Disputes. There are no existing or, to the knowledge of the
Company, threatened labor disputes with the employees of the Company or any of the Subsidiaries or,
to the knowledge of the Company, the Manager with respect to the Hotels which would reasonably be
expected to have a Material Adverse Effect.
(eee) Statistical and Market Related Data. The industry, statistical and market
related data included in the Registration Statement and the Prospectus are based on or derived from
sources available that the Company believes are reliable and, to the knowledge of the Company, such
data are accurate.
(fff) Federal Tax Status. The Company elected to be taxed as a real estate investment
trust (a “REIT”) under the Code commencing with its taxable year ended December 31, 2005;
commencing with the Company’s taxable year ended December 31, 2005, the Company has been organized
and operated in conformity with the requirements for qualification and taxation as a REIT under the
Code, and its current and proposed ownership and operations will allow the Company to continue to
satisfy the requirements for qualification and taxation as a REIT under the Code for its taxable
year ending December 31, 2009 and in the future; as long as the Partnership has only one member for
federal income tax purposes, it will be disregarded as an entity separate from the Company and if
and when the Partnership has two or more members for federal income tax purposes, the Partnership
will be treated as a partnership within the meaning of Sections 7701(a)(2) and 761(a) of the Code
and will not be treated as a publicly traded partnership taxable as a corporation under Section
7704 of the Code; the Company intends to continue to qualify as a REIT under the Code for all
subsequent years; and the Company does not know of any event that would reasonably be expected to
cause the Company to fail to qualify as a real estate investment trust under the Code for the
taxable year ending December 31, 2009 or at any time thereafter.
(ggg) Tax Disclosures. The factual description of, and the assumptions and
representations regarding, the Company’s organization and current and proposed method of operation
set forth in the Prospectus under the headings “Federal Income Tax Considerations Related to Our
REIT Election” and “Supplement to Federal Income Tax Considerations” accurately and completely
summarize the matters referred to therein in all material respects.
(hhh) Absence of Business Interruption. Neither the Company, any of its Subsidiaries,
nor any Hotel has sustained, since September 11, 2009, any loss or interference with its business
from fire, explosion, flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or arbitrators’ or court or governmental action, order or
decree that would reasonably be expected to have a Material Adverse Effect, otherwise than as set
forth in the Prospectus.
(iii) CF&Co Purchases. The Company acknowledges and agrees that CF&Co has informed
the Company that CF&Co may, to the extent permitted under the Securities Act and the Exchange Act,
purchase and sell shares of Common Stock for its own account while this Agreement is in effect,
provided, that (i) no such purchase or sales shall take place while a Placement Notice is in effect
(except to the extent CF&Co may engage in sales of Placement Shares purchased or deemed purchased
from the Company as a “riskless principal” or in a similar capacity) and (ii) the Company shall not
be deemed to have authorized or consented to any such purchases or sales by CF&Co.
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(jjj) Ineligible Issuer. At the time of filing the Registration Statement and any
post-effective amendments thereto, at the earliest time thereafter that the Company or another
offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities
Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,”
as defined in Rule 405 of the Securities Act.
(kkk) Officer’s Certificates. Any certificate signed by any officer of the Company,
the Partnership, or any Subsidiary delivered to CF&Co or to counsel for CF&Co pursuant to or in
connection with this Agreement shall be deemed a representation and warranty by the Company and the
Partnership to CF&Co as to the matters covered thereby.
The Company acknowledges that CF&Co and, for purposes of the opinions to be delivered pursuant to
Section 7 hereof, counsel to the Company and counsel to CF&Co, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents to such reliance.
7. Covenants of the Company and the Partnership. The Company and the
Partnership, jointly and severally, covenant and agree with CF&Co that:
(a) Registration Statement Amendments. After the date of this Agreement
and during any period in which a Prospectus relating to any Placement Shares is required to be
delivered by CF&Co under the Securities Act with respect to a pending sale of the Placement Shares
(including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), (i) the Company will notify CF&Co promptly, and confirm the notice in writing, of
the time when (A) any subsequent amendment to the Registration Statement, other than documents
incorporated by reference, has been filed with the Commission and/or has become effective or any
subsequent supplement to the Prospectus has been filed, (B) of the receipt of any comments from the
Commission, (C) of any request by the Commission for any amendment or supplement to the
Registration Statement, Prospectus or any document incorporated by reference therein or for
additional information and (D) the Company becomes the subject of a proceeding under Section 8A of
the Securities Act in connection with the offering of the Shares, (ii) the Company will prepare and
file with the Commission, promptly upon CF&Co’s request, any amendments or supplements to the
Registration Statement or Prospectus that, in CF&Co’s reasonable opinion, may be necessary or
advisable in connection with the distribution of the Placement Shares by CF&Co (provided, however,
that the failure of CF&Co to make such request shall not relieve the Company of any obligation or
liability hereunder, or affect CF&Co’s right to rely on the representations and warranties made by
the Company in this Agreement); (iii) the Company will not file any amendment or supplement to the
Registration Statement or Prospectus, other than documents incorporated by reference, relating to
the offering and sale of Placement Shares under this Agreement unless a copy thereof has been
submitted to CF&Co within a reasonable period of time before the filing and CF&Co has not
reasonably objected thereto (provided, however, that the failure of CF&Co to make such objection
shall not relieve the Company of any obligation or liability hereunder, or affect CF&Co’s right to
rely on the representations and warranties made by the Company in this Agreement) and the Company
will furnish to CF&Co at the time of filing thereof a copy of any document that upon filing is
deemed to be incorporated by reference into the Registration Statement or Prospectus, except for
those documents available via IDEA; and (iv) the Company will effect the filings required under
Rule 424(b) of the Securities Act, including any amendments or supplements to the Prospectus, in
the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)
of the Securities Act).
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(b) Notice of Commission Stop Orders. The Company will advise CF&Co,
promptly after it receives notice or obtains knowledge thereof, of the issuance or threatened
issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Placement Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it
will use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain
the lifting thereof if such a stop order should be issued.
(c) Delivery of Prospectus; Subsequent Changes. During any period in which
a Prospectus relating to the Placement Shares is required to be delivered by CF&Co under the
Securities Act with respect to a pending sale of the Placement Shares, (including in circumstances
where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company
will comply with all requirements imposed upon it by the Securities Act, as from time to time in
force, and to file on or before their respective due dates all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If during such period
any event occurs as a result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not misleading, or if during
such period it is necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify CF&Co, and confirm the notice in
writing, to suspend the offering of Placement Shares during such period and the Company will
promptly amend or supplement the Registration Statement or Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance.
(d) Listing of Placement Shares. During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by CF&Co under the Securities Act with
respect to a pending sale of the Placement Shares (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will use
its commercially reasonable efforts to cause the Placement Shares to be listed on the Exchange and
to qualify the Placement Shares for sale under the securities laws of such jurisdictions as CF&Co
reasonably designates and to continue such qualifications in effect so long as required for the
distribution of the Placement Shares; provided, however, that the Company shall not be required in
connection therewith to qualify as a foreign corporation or dealer in securities or file a general
consent to service of process in any jurisdiction.
(e) Delivery of Registration Statement and Prospectus. The Company will
furnish to CF&Co and its counsel (at the expense of the Company) copies of the Registration
Statement, the Prospectus (including all documents incorporated by reference therein) and all
amendments and supplements to the Registration Statement or Prospectus that are filed with the
Commission during any period in which a Prospectus relating to the Placement Shares is required to
be delivered under the Securities Act (including all documents filed with the Commission during
such period that are deemed to be incorporated by reference therein), in each case as soon as
reasonably practicable and in such quantities as CF&Co may from time to time reasonably request
and, at CF&Co’s request, will also furnish copies of the Prospectus to each exchange or market on
which sales of the Placement Shares may be made; provided, however, that the Company shall not be
required to furnish any document (other than the Prospectus) to CF&Co to the extent such document
is available on IDEA.
(f) Earnings Statement. The Company will timely file such reports
pursuant to the Exchange Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes of, and to provide to
CF&Co the benefits contemplated by, the last paragraph of Section 11(a) of the Securities Act.
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(g) Expenses. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, in accordance with the provisions of
Section 11 hereunder, will pay the following expenses all incident to the performance of its obligations hereunder,
including, but not limited to, expenses relating to (i) the preparation, printing, filing and
delivery to CF&Co of the Registration Statement and each amendment and supplement thereto, of each
Prospectus and of each amendment and supplement thereto, and of this Agreement and such other
documents as may be required in connection with the offering, purchase, sale, issuance or delivery
of the Shares, (ii) the preparation, issuance and delivery of the Placement Shares, including any
stock or other transfer taxes and any stamp or other duties payable upon the sale, issuance or
delivery of the Shares to CF&Co, (iii) the qualification of the Placement Shares under securities
laws in accordance with the provisions of Section 7(d) of this Agreement, including filing fees
(provided, however, that any fees or disbursements of counsel for CF&Co in connection therewith
shall be paid by CF&Co), (iv) the printing and delivery to CF&Co of copies of the Prospectus and
any amendments or supplements thereto, and of this Agreement, (v) the fees and expenses incurred in
connection with the listing or qualification of the Placement Shares for trading on the Exchange,
(vi) the fees and expenses of any transfer agent or registrar for the Shares, and (vii) filing fees
incident to, and fees and expenses, if any, in connection with, the review of the Commission or the
FINRA.
(h) Use of Proceeds. The Company will apply the Net Proceeds in accordance
in all material respects with the statements under the caption “Use of Proceeds” in the Prospectus.
(i) Notice of Other Sales. During the pendency of any Placement Notice
given hereunder, the Company shall provide CF&Co notice, subject to CF&Co’s agreement to keep the
information in such notice confidential, as promptly as reasonably possible before it offers to
sell, contracts to sell, sells, grants any option to sell or otherwise disposes of any shares of
Common Stock (other than Placement Shares offered pursuant to the provisions of this Agreement) or
securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or
acquire Common Stock; provided, that such notice shall not be required in connection with the (i)
issuance, grant or sale of Common Stock, options to purchase shares of Common Stock or Common Stock
issuable upon the exercise of options or other equity awards pursuant to any stock option, stock
bonus or other stock plan or arrangement described in the Prospectus, (ii) the issuance of
securities, including Units, in connection with an acquisition, merger or sale or purchase of
assets or (iii) the issuance or sale of Common Stock pursuant to any dividend reinvestment plan
that the Company may adopt from time to time, provided the implementation of such is disclosed to
CF&Co in advance or (iv) any shares of common stock issuable upon the redemption of Units in the
Partnership.
(j) Change of Circumstances. The Company will, at any time during a
fiscal quarter in which the Company tenders a Placement Notice or sells Placement Shares, advise
CF&Co promptly after it shall have received notice or obtained knowledge thereof, of any
information or fact that would alter or affect in any material respect any opinion, certificate,
letter or other document provided to CF&Co pursuant to this Agreement.
(k) Due Diligence Cooperation. The Company will cooperate with any
reasonable due diligence review conducted by CF&Co or its agents in connection with the
transactions contemplated hereby, including, without limitation, providing information and making
available documents and senior corporate officers, during regular business hours and at the
Company’s principal offices, as CF&Co may reasonably request.
21
(l) Required Filings Relating to Placement of Placement Shares. The
Company agrees that it will (i) file and disclose in a prospectus supplement with the Commission
under the applicable paragraph of Rule 424(b) under the Securities Act (each and every filing under
Rule 424(b), a “Filing Date”) or (ii) disclose in its annual reports on Form 10-K and quarterly
reports on Form 10-Q, as applicable, the number of Shares sold through CF&Co under this Agreement,
the Net Proceeds to the Company and the compensation paid by the Company with respect to sales of Shares pursuant to
this Agreement during the relevant period; the Company agrees to deliver such number of copies of
each such prospectus supplement (if any) to each exchange or market on which such sales were
effected as may be required by the rules or regulations of such exchange or market.
(m) Representation Dates; Certificate. On or prior to the date that the
first Shares are sold pursuant to the terms of this Agreement and each time the Company (i) files
the Prospectus relating to the Placement Shares or amends or supplements the Registration Statement
or the Prospectus relating to the Placement Shares (other than a prospectus supplement filed in
accordance with Section 7(l) of this Agreement) by means of a post-effective amendment, sticker, or
supplement but not by means of incorporation of document(s) by reference to the Registration
Statement or the Prospectus relating to the Placement Shares; (ii) files an annual report on Form
10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q under the Exchange Act;
or (iv) files a report on Form 8-K containing amended financial information (other than an earnings
release, to “furnish” information pursuant to Items 2.02 or 7.01 of Form 8-K or to provide
disclosure pursuant to Item 8.01 of Form 8-K relating to the reclassifications of certain
properties as discontinued operations in accordance with Statement of Financial Accounting
Standards No. 144) under the Exchange Act (each date of filing of one or more of the documents
referred to in clauses (i) through (iv) shall be a “Representation Date”); the Company shall
furnish CF&Co with a certificate, in the form attached hereto as Exhibit 7(m) within three
(3) Trading Days of any Representation Date if requested by CF&Co. The requirement to provide a
certificate under this Section 7(m) shall be waived for any Representation Date occurring at a time
at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of
the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall
be considered a Representation Date) and the next occurring Representation Date. Notwithstanding
the foregoing, if the Company subsequently decides to sell Placement Shares following a
Representation Date when the Company relied on such waiver and did not provide CF&Co with a
certificate under this Section 7(m), then before the Company delivers the Placement Notice or CF&Co
sells any Placement Shares, the Company shall provide CF&Co with a certificate, in the form
attached hereto as Exhibit 7(m), dated the date of the Placement Notice.
(n) Legal Opinion. On or prior to the date that the first Shares are sold
pursuant to the terms of this Agreement and within three (3) Trading Days of each Representation
Date with respect to which the Company is obligated to deliver a certificate in the form attached
hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause to be
furnished to CF&Co (i) the written opinions of Goodwin Proctor LLP (“Company Counsel”), or other
counsel satisfactory to CF&Co, in form and substance satisfactory to CF&Co and its counsel, dated
the date that the opinion is required to be delivered, substantially similar to the form attached
hereto as Exhibit 7(n)(i) and Exhibit 7(n)(ii), and (ii) a written opinion of
Michael D. Schecter, Esq., General Counsel of the Company (“General Counsel”), in form and
substance satisfactory to CF&Co and its counsel, dated the date that the opinion is required to be
delivered, substantially similar to the form attached hereto as Exhibit 7(n)(iii), each
such opinion modified, as necessary, to relate to the Registration Statement and the Prospectus as
then amended or supplemented; provided, however, that in lieu of such opinions for subsequent
Representation Dates, counsel may furnish CF&Co with a letter (a “Reliance Letter”) to the effect
that CF&Co may rely on a prior opinion delivered under this Section 7(n) to the same extent as if
it were dated the date of such letter (except that statements in such prior opinion shall be deemed
to relate to the Registration Statement and the Prospectus as amended or supplemented at such
Representation Date).
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(o) Comfort Letter. On or prior to the date that the first Shares are sold
pursuant to the terms of this Agreement and within three (3) Trading Days of each Representation
Date with respect to which the Company is obligated to deliver a certificate in the form attached
hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause its
independent accountants to furnish CF&Co letters (the “Comfort Letters” ), dated the date the Comfort Letter is delivered, in form and
substance satisfactory to CF&Co, (i) confirming that they are an independent registered public
accounting firm within the meaning of the Securities Act and the PCAOB, (ii) stating, as of such
date, the conclusions and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants’ “comfort letters” to CF&Co in connection with registered
public offerings (the first such letter, the “Initial Comfort Letter” ) and (iii) updating the
Initial Comfort Letter with any information that would have been included in the Initial Comfort
Letter had it been given on such date and modified as necessary to relate to the Registration
Statement and the Prospectus, as amended and supplemented to the date of such letter.
(p) Market Activities. The Company will not, directly or indirectly, (i)
take any action designed to cause or result in, or that constitutes or might reasonably be expected
to constitute, the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (ii) sell, bid for, or purchase the Shares to be
issued and sold pursuant to this Agreement, or pay anyone any compensation for soliciting purchases
of the Shares other than CF&Co; provided, however, that the Company may bid for and purchase shares
of its common stock in accordance with Rule 10b-18 under the Exchange Act.
(q) Insurance. The Company and its Subsidiaries shall maintain, or caused
to be maintained, insurance of the types and with policies in such amounts and with such
deductibles and covering such risks as are in the reasonable opinion of management prudent for
their respective businesses.
(r) Compliance with Laws. The Company will comply in all material
respects with all applicable securities and other applicable laws, rules and regulations,
including, without limitation, the Sarbanes-Oxley Act, and use its commercially reasonable efforts
to cause the Company’s directors and officers, in their capacities as such, to comply in all
material respects with such laws, rules and regulations, including, without limitation, the
provisions of the Sarbanes-Oxley Act.
(s) REIT Qualification. The Company shall not take any action to revoke
or otherwise terminate the Company’s REIT election pursuant to Section 856(g) of the Code, except
as otherwise determined by the Board of Directors of the Company to be in the best interests of
stockholders.
(t) Investment Company Act. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Shares in such a manner as would
require the Company or any of its Subsidiaries to register as an investment company under the
Investment Company Act.
(u) No Offer to Sell. Other than a free writing prospectus (as defined in
Rule 405 under the Act) approved in advance by the Company and CF&Co in its capacity as principal
or agent hereunder, neither CF&Co nor the Company or the Partnership (including its agents and
representatives, other than CF&Co in its capacity as such) will make, use, prepare, authorize,
approve or refer to any written communication (as defined in Rule 405 under the Act), required to
be filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy
the Shares as contemplated to be sold pursuant to this Agreement.
(v) Payment of SEC Filing Fees. The Company will pay any required registration fee
for the offering of the Shares pursuant to Rule 456 under the Securities Act within the time period
required by such rule (without regard to the proviso therein relating to the four (4) Business Days
extension to the payment deadline) and in any event prior to the time that the Prospectus
Supplement covering the Shares is first filed with the Commission.
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(w) Undertakings. The Company will comply with all of the provisions of
any undertakings in the Registration Statement.
8. Conditions to CF&Co’s Obligations. The obligations of CF&Co hereunder
with respect to a Placement will be subject to the continuing accuracy and completeness of the
representations and warranties made by the Company and the Partnership herein, to the due
performance by the Company and the Partnership of their obligations hereunder, to the completion by
CF&Co of a due diligence review satisfactory to CF&Co in its reasonable judgment, and to the
continuing satisfaction (or waiver by CF&Co in its sole discretion) of the following additional
conditions:
(a) Registration Statement Effective. The Registration Statement shall be
effective and shall be available for (i) all sales of Placement Shares issued pursuant to all prior
Placement Notices and (ii) the sale of all Placement Shares contemplated to be issued by any
Placement Notice.
(b) No Material Notices. None of the following events shall have occurred
and be continuing: (i) receipt by the Company or any of its Subsidiaries of any request for
additional information from the Commission or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement, the response to which would
require any post-effective amendments or supplements to the Registration Statement or the
Prospectus; (ii) the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from qualification of any of the
Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; (iv) the occurrence of any event that makes any material statement made in the
Registration Statement or the Prospectus or any material document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related Prospectus or such documents so that, in the case of
the Registration Statement, it will not contain any materially untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, that in the case of the Prospectus, it will not contain any
materially untrue statement of a material fact or omit to state any 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.
(c) No Misstatement or Material Omission. CF&Co shall not have advised the
Company that the Registration Statement or Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact that in CF&Co’s reasonable opinion is material, or omits to
state a fact that in CF&Co’s opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) Material Changes. Except as contemplated in the Prospectus, or
disclosed in the Company’s reports filed with the Commission and incorporated by reference in the
Prospectus, there shall not have been any material adverse change, on a consolidated basis, in the
authorized capital stock of the Company or any Material Adverse Effect or any development that
could reasonably be expected to result in a Material Adverse Effect, or any downgrading in or
withdrawal of the rating assigned to any of the Company’s securities (other than asset backed
securities) by any rating organization or a public announcement by any rating organization that it
has under surveillance or review its rating of any of the Company’s securities (other than asset
backed securities), the effect of which, in the case of any such action by a rating organization
described above, in the reasonable judgment of CF&Co (without relieving the Company of any
obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms
and in the manner contemplated in the Prospectus.
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(e) Legal Opinions. CF&Co shall have received the opinions of each of
Company Counsel and General Counsel required to be delivered pursuant Section 7(n) on or before the
date on which such delivery of such opinion is required pursuant to Section 7(n).
(f) Comfort Letter. CF&Co shall have received the Comfort Letter required
to be delivered pursuant Section 7(o) on or before the date on which such delivery of such letter
is required pursuant to Section 7(o).
(g) Representation Certificate. CF&Co shall have received the certificate
required to be delivered pursuant to Section 7(m) on or before the date on which delivery of such
certificate is required pursuant to Section 7(m).
(h) No Suspension. Trading in the Shares shall not have been suspended on
the New York Stock Exchange.
(i) Other Materials. On each date on which the Company is required to
deliver a certificate pursuant to Section 7(m), the Company shall have furnished to CF&Co such
appropriate further information, certificates and documents as CF&Co may have reasonably requested.
All such opinions, certificates, letters and other documents shall have been in compliance with the
provisions hereof. The Company will furnish CF&Co with such conformed copies of such opinions,
certificates, letters and other documents as CF&Co shall have reasonably requested.
(j) Securities Act Filings Made. All filings with the Commission required
by Rule 424 under the Securities Act to have been filed prior to the issuance of any Placement
Notice hereunder shall have been made within the applicable time period prescribed for such filing
by Rule 424.
(k) Approval for Listing. The Placement Shares shall either have been (i)
approved for listing on the NYSE, subject only to notice of issuance, or (ii) the Company shall
have filed an application for listing of the Placement Shares on the NYSE at, or prior to, the
issuance of any Placement Notice.
(l) No Termination Event. There shall not have occurred any event that
would permit CF&Co to terminate this Agreement pursuant to Section 11(a) .
9. Indemnification and Contribution.
(a) Company Indemnification. The Company and the Partnership, jointly and
severally, agree to indemnify and hold harmless CF&Co, the directors, officers, partners, employees
and agents of CF&Co and each person, if any, who (i) controls CF&Co within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under
common control with CF&Co (a “CF&Co Affiliate”) from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all reasonable
investigative, legal and other expenses incurred in connection with, and any and all amounts paid
in settlement (in accordance with Section 9(c) ) of, any action, suit or proceeding between any of
the indemnified parties and any indemnifying parties or between any indemnified party and any third
party, or otherwise, or any claim asserted), as and when incurred, to which CF&Co, or any such
person, may become subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based,
25
directly or indirectly, on (x) any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or in any free writing prospectus or in any application or other
document executed by or on behalf of the Company or based on written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares under the securities
laws thereof or filed with the Commission, (y) the omission or alleged omission to state in any
such document a material fact required to be stated in it or necessary to make the statements in it
not misleading or (z) any breach by any of the indemnifying parties of any of their respective
representations, warranties and agreements contained in this Agreement; provided, however, that
this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Placement Shares pursuant to this Agreement and is caused
directly or indirectly by an untrue statement or omission made in reliance upon and in conformity
with written information relating to CF&Co and furnished to the Company by CF&Co expressly for
inclusion in any document as described in clause (x) of this Section 9(a). This indemnity agreement
will be in addition to any liability that the Company might otherwise have.
(b) CF&Co Indemnification. CF&Co agrees to indemnify and hold harmless the
Company, its directors, each officer of the Company that signed the Registration Statement, the
Partnership and each person, if any, who (i) controls the Company or the Partnership within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled
by or is under common control with the Company or the Partnership (a “Company Affiliate”) against
any and all loss, liability, claim, damage and expense described in the indemnity contained in
Section 9(a), as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any amendments thereto) or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with
written information relating to CF&Co and furnished to the Company by CF&Co expressly for inclusion
in any document as described in clause (x) of Section 9(a).
(c) Procedure. Any party that proposes to assert the right to be
indemnified under this Section 9 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an indemnifying party
or parties under this Section 9, notify each such indemnifying party of the commencement of such
action, enclosing a copy of all papers served, but the omission so to notify such indemnifying
party will not relieve the indemnifying party from (i) any liability that it might have to any
indemnified party otherwise than under this Section 9 and (ii) any liability that it may have to
any indemnified party under the foregoing provision of this Section 9 unless, and only to the
extent that, such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party and it notifies the
indemnifying party of its commencement, the indemnifying party will be entitled to participate in
and, to the extent that it elects by delivering written notice to the indemnified party promptly
after receiving notice of the commencement of the action from the indemnified party, jointly with
any other indemnifying party similarly notified, to assume the defense of the action, with counsel
reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to
the indemnified party of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as provided below and except
for the reasonable costs of investigation subsequently incurred by the indemnified party in
connection with the defense. The indemnified party will have the right to employ its own counsel in
any such action, but the fees, expenses and other charges of such counsel will be at the expense of
such indemnified party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based on advice of counsel
26
to the indemnified party) between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other charges of counsel will
be at the expense of the indemnifying party or parties. It is understood that the indemnifying
party or parties shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time for all such indemnified
party or parties. All such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An indemnifying party will not, in any event, be
liable for any settlement of any action or claim effected without its written consent. No
indemnifying party shall, without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 9 (whether or not any indemnified
party is a party thereto), unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising or that may arise out of such claim,
action or proceeding.
(d) Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in the foregoing paragraphs of this
Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable
from the Company, the Partnership or CF&Co, the Company, the Partnership and CF&Co will contribute
to the total losses, claims, liabilities, expenses and damages (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any contribution received
by the Company or the Partnership from persons other than CF&Co, such as persons who control the
Company within the meaning of the Securities Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for contribution) to
which the Company, the Partnership and CF&Co may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company and the Partnership on the one
hand and CF&Co on the other. The relative benefits received by the Company and the Partnership on
the one hand and CF&Co on the other hand shall be deemed to be in the same proportion as the total
Net Proceeds received by the Company from the sale of the Placement Shares (before deducting
expenses) bear to the total compensation received by CF&Co from the sale of Placement Shares on
behalf of the Company. If, but only if, the allocation provided by the foregoing sentence is not
permitted by applicable law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company and the Partnership, on the one hand, and CF&Co, on the
other, with respect to the statements or omission that resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information supplied by the
Company, the Partnership or CF&Co, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission. The Company, the
Partnership and CF&Co agree that it would not be just and equitable if contributions pursuant to
this Section 9(d) were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense,
or damage, or action in respect thereof, referred to above in this Section 9(d) shall be deemed to
include, for the purpose of this Section 9(d) , any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such action or claim to
the extent consistent with Section 9(c) hereof. Notwithstanding the foregoing provisions of this
Section 9(d), CF&Co shall not be
27
required to contribute any amount in excess of the commissions
received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9(d), any person who controls a party to
this Agreement within the meaning of the Securities Act, and any officers, directors, partners,
employees or agents of CF&Co, will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 9(d), will notify any such
party or parties from whom contribution may be sought, but the omission to so notify will not
relieve that party or parties from whom contribution may be sought from any other obligation it or
they may have under this Section 9(d) except to the extent that the failure to so notify such other
party materially prejudiced the substantive rights or defenses of the party from whom contribution
is sought. Except for a settlement entered into pursuant to the last sentence of Section 9(c)
hereof, no party will be liable for contribution with respect to any action or claim settled
without its written consent if such consent is required pursuant to Section 9(c) hereof.
10. Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 9 of this Agreement and all representations and
warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of
their respective dates, regardless of (i) any investigation made by or on behalf of CF&Co, any
controlling persons, or the Company (or any of their respective officers, directors or controlling
persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any
termination of this Agreement.
11. Termination.
(a) CF&Co shall have the right by giving notice as hereinafter specified at any
time to terminate this Agreement if (i) any Material Adverse Effect, or any development that has
actually occurred and that would reasonably be expected to result in a Material Adverse Effect has
occurred that, in the reasonable judgment of CF&Co, may materially impair the ability of CF&Co to
sell the Placement Shares hereunder, (ii) the Company shall have failed, refused or been unable to
perform any agreement on its part to be performed hereunder; provided, however, in the case of any
failure of the Company to deliver (or cause another person to deliver) any certification, opinion,
or letter required under Sections 7(m), 7(n), or 7(o), CF&Co’s right to terminate shall not arise
unless such failure to deliver (or cause to be delivered) continues for more than thirty (30) days
from the date such delivery was required; or (iii) any other condition of CF&Co’s obligations
hereunder is not fulfilled, or (iv), any suspension or limitation of trading in the Placement
Shares or in securities generally on the New York Stock Exchange shall have occurred. Any such
termination shall be without liability of any party to any other party except that the provisions
of Section 7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force
and effect notwithstanding such termination. If CF&Co elects to terminate this Agreement as
provided in this Section 11(a), CF&Co shall provide the required notice as specified in Section
12.
(b) The Company shall have the right, by giving ten (10) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after the date of this
Agreement. Any such termination shall be without liability of any party to any other party except
that the provisions of Section 7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall
remain in full force and effect notwithstanding such termination.
(c) CF&Co shall have the right, by giving ten (10) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after the date of this
Agreement. Any such termination shall be without liability of any party to any other party except
that the provisions of Section 7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and
effect notwithstanding such termination.
28
(d) Unless earlier terminated pursuant to this Section 11, this Agreement shall
automatically terminate upon the issuance and sale of all of the Placement Shares through CF&Co on
the terms and subject to the conditions set forth herein; provided, that the provisions of Section
7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and effect
notwithstanding such termination.
(e) This Agreement shall remain in full force and effect unless terminated pursuant
to Sections 11(a), (b), (c), or (d) above or otherwise by mutual agreement of the parties;
provided, however, that any such termination by mutual agreement shall in all cases be deemed to
provide that Section 7(g), Section 9, Section 10, Section 16 and Section 17 shall remain in full
force and effect.
(f) Any termination of this Agreement shall be effective on the date specified in
such notice of termination; provided, however, that such termination shall not be effective until
the close of business on the date of receipt of such notice by CF&Co or the Company, as the case
may be. If such termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such termination shall not become effective until the close of business on such Settlement
Date, with Placement Shares settling in accordance with the provisions of this Agreement.
12. Notices. All notices or other communications required or permitted to be given
by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless
otherwise specified in this Agreement, and if sent to CF&Co, shall be delivered to CF&Co at Cantor
Fitzgerald & Co., 499 Park Avenue, New York, New York 10022, fax no. (212) 308-3730, Attention:
Capital Markets/Jeff Lumby, with copies to Stephen Merkel, General Counsel, at the same address,
and Hunton & Williams LLP, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond Virginia
23219, fax no. (804) 788-8218, Attention: David C. Wright; or if sent to the Company or the
Partnership, shall be delivered to DiamondRock Hospitality Company, 6903 Rockledge Drive, Suite
800, Bethesda, Maryland 20817, fax no. (301) 380-6727, attention: Michael D. Schecter, with a copy
to Goodwin Proctor LLP, Exchange Place, Boston, Massachusetts 02109, fax no. (617) 523-1231,
attention: Suzanne Lecaroz. Each party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for such purpose. Each
such notice or other communication shall be deemed given (i) when delivered personally or by
verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York
City time, on a Business Day (as defined below), or, if such day is not a Business Day on the next
succeeding Business Day, (ii) on the next Business Day after timely delivery to a
nationally-recognized overnight courier and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt requested, postage
prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the NYSE and
commercial banks in the City of New York are open for business.
13. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, the Partnership and CF&Co and their respective successors and the
affiliates, controlling persons, officers and directors referred to in Section 9 hereof.
References to any of the parties contained in this Agreement shall be deemed to include the
successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or
obligations under this Agreement without the prior written consent of the other party; provided,
however, that CF&Co may assign its rights and obligations hereunder to an affiliate of CF&Co
without obtaining the Company’s consent.
29
14. Adjustments for Share Splits. The parties acknowledge and agree that
all share-related numbers contained in this Agreement shall be adjusted to take into account any
share split, share dividend or similar event effected with respect to the Shares.
15. Entire Agreement; Amendment; Severability. This Agreement (including
all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto)
constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and
undertakings, both written and oral, among the parties hereto with regard to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written
instrument executed by the Company, the Partnership and CF&Co. In the event that any one or more
of the provisions contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such
provision shall be given full force and effect to the fullest possible extent that it is valid,
legal and enforceable, and the remainder of the terms and provisions herein shall be construed as
if such invalid, illegal or unenforceable term or provision was not contained herein, but only to
the extent that giving effect to such provision and the remainder of the terms and provisions
hereof shall be in accordance with the intent of the parties as reflected in this Agreement.
16. Applicable Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of New York without
regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough
of Manhattan, for the adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof (certified or registered mail, return receipt requested) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.
17. Waiver of Jury Trial. The Company, the Partnership and CF&Co each
hereby irrevocably waives any right it may have to a trial by jury in respect of any claim based
upon or arising out of this Agreement or any transaction contemplated hereby.
18. Absence of Fiduciary Relationship. The Company and the Partnership,
jointly and severally, acknowledge and agree that:
(a) CF&Co has been retained solely to act as underwriter in connection with the
sale of the Shares and that no fiduciary, advisory or agency relationship between the Company, the
Partnership and CF&Co has been created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether CF&Co has advised or is advising the Company or the Partnership
on other matters;
(b) each of the Company and the Partnership is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement;
(c) each of the Company and the Partnership has been advised that CF&Co and its
affiliates are engaged in a broad range of transactions which may involve interests that differ
from those of the Company or the Partnership and that CF&Co has no obligation to disclose such
interests and transactions to the Company or the Partnership by virtue of any fiduciary, advisory or agency
relationship; and
30
(d) each of the Company and the Partnership waives, to the fullest extent permitted
by law, any claims it may have against CF&Co, for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that CF&Co shall have no liability (whether direct or indirect) to the
Company or the Partnership in respect of such a fiduciary claim or to any person asserting a
fiduciary duty claim on behalf of or in right of the Company or the Partnership, including
stockholders, partners, employees or creditors of the Company or the Partnership.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery of an executed Agreement by one party to the other may be
made by facsimile transmission.
[Remainder of Page Intentionally Blank]
31
If the foregoing correctly sets forth the understanding between the Company and CF&Co, please
so indicate in the space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and CF&Co.
| Very truly yours, DIAMONDROCK HOSPITALITY COMPANY |
||||
| By: | /s/ Michael D. Schecter | |||
| Name: | Michael D. Schecter | |||
| Title: | Executive Vice President, General Counsel and Corporate Secretary | |||
| DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP By DiamondRock Hospitality Company, its general partner |
||||
| By: | /s/ Michael D. Schecter | |||
| Name: | Michael D. Schecter | |||
| Title: | Executive Vice President, General Counsel and Corporate Secretary | |||
32
| ACCEPTED as of the date first-above written: CANTOR FITZGERALD & CO. |
||||
| By: | /s/ Jeffrey Lumby | |||
| Name: | Jeffrey Lumby | |||
| Title: | Managing Director | |||
33
SCHEDULE 1
FORM OF PLACEMENT NOTICE
From:
|
[ ] | |
Cc:
|
[ ] | |
To:
|
[ ] | |
Subject:
|
Controlled Equity Offering—Placement Notice |
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Controlled Equity OfferingSM
Sales Agreement between DiamondRock Hospitality Company (the “Company”), DiamondRock Hospitality
Limited Partnership, and Cantor Fitzgerald & Co. (“CF&Co”) dated October 19, 2009 (the
“Agreement”), I hereby request on behalf of the Company that CF&Co sell up to [ ] shares of the
Company’s common stock, par value $0.01 per share, at a minimum market price of $ per share
until [date]*.
* The Company shall add additional parameters, such as the bracketed text above regarding a
termination date, to the Placement Notice as it may deem necessary at any time.
SCHEDULE 1
SCHEDULE 2
CANTOR FITZGERALD & CO.
Peter Dippolito
Joshua Feldman
Jeff Lumby
DIAMONDROCK HOSPITALITY COMPANY
Mark Brugger
Sean Mahoney
Michael Schecter
SCHEDULE 2
SCHEDULE 3
Compensation
CF&Co shall be paid compensation equal to up to two percent (2%) of the gross proceeds from the
sales of Shares pursuant to the terms of this Agreement.
SCHEDULE 3
SCHEDULE 4
Subsidiaries
DiamondRock Hospitality Company
Subsidiaries
Subsidiaries
| JURISDICTION IN WHICH | ||||||||
| JURISDICTION OF | QUALIFIED TO DO | |||||||
| SUBSIDIARY | ORGANIZATION | BUSINESS | ||||||
| 1 | Bloodstone TRS, Inc.
|
Delaware | Massachusetts | |||||
| 2 | DiamondRock Alpharetta Owner, LLC
|
Delaware | Georgia | |||||
| 3 | DiamondRock Alpharetta Tenant, LLC
|
Delaware | Georgia | |||||
| 4 | DiamondRock Atlanta Perimeter Owner, LLC
|
Delaware | Georgia | |||||
| 5 | DiamondRock Atlanta Perimeter Tenant, LLC
|
Delaware | Georgia | |||||
| 6 | DiamondRock Bethesda General, LLC
|
Delaware | Maryland | |||||
| 7 | DiamondRock Bethesda Limited, LLC
|
Delaware | Maryland | |||||
| 8 | DiamondRock Bethesda Owner Limited Partnership
|
Maryland | N/A | |||||
| 9 | DiamondRock Bethesda Tenant, LLC
|
Delaware | Maryland | |||||
| 10 | DiamondRock Boston Expansion Owner, LLC
|
Delaware | Massachusetts | |||||
| 11 | DiamondRock Boston Owner, LLC
|
Delaware | Massachusetts | |||||
| 12 | DiamondRock Boston Retail Owner, LLC
|
Delaware | Massachusetts | |||||
| 13 | DiamondRock Boston Tenant, LLC
|
Delaware | Massachusetts | |||||
| 14 | DiamondRock Buckhead Owner, LLC
|
Delaware | Georgia | |||||
| 15 | DiamondRock Buckhead Tenant, LLC
|
Delaware | Georgia | |||||
| 16 | DiamondRock Cayman Islands, Inc.
|
Cayman Islands | N/A | |||||
| 17 | DiamondRock Chicago Conrad Owner, LLC
|
Delaware | Illinois | |||||
| 18 | DiamondRock Chicago Conrad Tenant, LLC
|
Delaware | Illinois | |||||
| 19 | DiamondRock Chicago Owner, LLC
|
Delaware | Illinois | |||||
| 20 | DiamondRock Chicago Tenant, LLC
|
Delaware | Illinois |
SCHEDULE 4
1
DiamondRock Hospitality Company
Subsidiaries
Subsidiaries
| JURISDICTION IN WHICH | ||||||||
| JURISDICTION OF | QUALIFIED TO DO | |||||||
| SUBSIDIARY | ORGANIZATION | BUSINESS | ||||||
| 21 | DiamondRock East 40th Street NYC Owner Holdings, LLC
|
Delaware | New York | |||||
| 22 | DiamondRock East 40th Street NYC Owner, LLC
|
Delaware | New York | |||||
| 23 | DiamondRock East 40th Street NYC Tenant, LLC
|
Delaware | New York | |||||
| 24 | DiamondRock Frenchman’s Holdings, LLC
|
Delaware | N/A | |||||
| 25 | DiamondRock Frenchman’s Owner, Inc.
|
U.S. Virgin Islands | N/A | |||||
| 26 | DiamondRock Griffin Gate Owner, LLC
|
Delaware | Kentucky | |||||
| 27 | DiamondRock Griffin Gate Tenant, LLC
|
Delaware | Kentucky | |||||
| 28 | DiamondRock Hospitality Limited Partnership
|
Delaware | Massachusetts | |||||
| 29 | DiamondRock Hospitality, LLC
|
Delaware | N/A | |||||
| 30 | DiamondRock LAX Owner, LLC
|
Delaware | California | |||||
| 31 | DiamondRock LAX Tenant, LLC
|
Delaware | California | |||||
| 32 | DiamondRock Manhattan/Midtown East Owner, LLC
|
Delaware | New York | |||||
| 33 | DiamondRock Manhattan/Midtown East Tenant, LLC
|
Delaware | New York | |||||
| 34 | DiamondRock Oak Brook Owner, LLC
|
Delaware | Illinois | |||||
| 35 | DiamondRock Oak Brook Tenant, LLC
|
Delaware | Illinois | |||||
| 36 | DiamondRock Orlando Airport Owner, LLC
|
Delaware | Florida | |||||
| 37 | DiamondRock Orlando Airport Tenant, LLC
|
Delaware | Florida | |||||
| 38 | DiamondRock Salt Lake Owner, LLC
|
Delaware | Utah | |||||
| 39 | DiamondRock Salt Lake Tenant, LLC
|
Delaware | Utah | |||||
| 40 | DiamondRock Sonoma Owner, LLC
|
Delaware | California | |||||
| 41 | DiamondRock Sonoma Tenant, LLC
|
Delaware | California | |||||
| 42 | DiamondRock Torrance Owner, LLC
|
Delaware | California |
SCHEDULE 4
2
DiamondRock Hospitality Company
Subsidiaries
Subsidiaries
| JURISDICTION IN WHICH | ||||||||
| JURISDICTION OF | QUALIFIED TO DO | |||||||
| SUBSIDIARY | ORGANIZATION | BUSINESS | ||||||
| 43 | DiamondRock Torrance Tenant, LLC
|
Delaware | California | |||||
| 44 | DiamondRock Vail Owner, LLC
|
Delaware | Colorado | |||||
| 45 | DiamondRock Vail Tenant, LLC
|
Delaware | Colorado | |||||
| 46 | DiamondRock Waverly Owner, LLC
|
Delaware | Georgia | |||||
| 47 | DiamondRock Waverly Tenant, LLC
|
Delaware | Georgia | |||||
| 48 | DRH Austin Owner General, LLC
|
Delaware | Texas | |||||
| 49 | DRH Austin Owner Limited, LLC
|
Delaware | N/A | |||||
| 50 | DRH Austin Owner Limited Partnership
|
Delaware | Texas | |||||
| 51 | DRH Austin Tenant General, LLC
|
Delaware | Texas | |||||
| 52 | DRH Austin Tenant Limited, LLC
|
Delaware | N/A | |||||
| 53 | DRH Austin Tenant Limited Partnership
|
Delaware | Texas | |||||
| 54 | DRH Worthington Owner General, LLC
|
Delaware | Texas | |||||
| 55 | DRH Worthington Owner Limited, LLC
|
Delaware | N/A | |||||
| 56 | DRH Worthington Owner Limited Partnership
|
Delaware | Texas | |||||
| 57 | DRH Worthington Tenant General, LLC
|
Delaware | Texas | |||||
| 58 | DRH Worthington Tenant Limited, LLC
|
Delaware | N/A | |||||
| 59 | DRH Worthington Tenant Limited Partnership
|
Delaware | Texas |
Note: DiamondRock Hospitality Company is qualified to do business in Massachusetts.
SCHEDULE 4
3
Exhibit 7(n)(i)
MATTERS TO BE COVERED BY INITIAL OPINION OF
GOODWIN PROCTER LLP
[Intentionally omitted.]
EXHIBIT 7(n)(i)
1
Exhibit 7(n)(ii)
FORM OF TAX OPINION OF GOODWIN PROCTER LLP
TO BE DELIVERED PURSUANT TO SECTION 7(n)(i)
TO BE DELIVERED PURSUANT TO SECTION 7(n)(i)
[Intentionally omitted.]
EXHIBIT 7(n)(i)
1
Exhibit 7(n)(iii)
FORM OF OPINION OF MICHAEL D. SCHECTER, ESQ.,
TO BE DELIVERED PURSUANT TO SECTION 7(n)(iii)
TO BE DELIVERED PURSUANT TO SECTION 7(n)(iii)
[Intentionally omitted.]
EXHIBIT 7(n)(i)
1
Exhibit 7(m)
OFFICER CERTIFICATE
The undersigned, the duly qualified and elected [Chief Executive Officer, Chief Financial Officer,
or Executive Vice President and General Counsel], of DIAMONDROCK HOSPITALITY COMPANY (“Company”), a
Maryland corporation, does hereby certify in such capacity and on behalf of the Company, for itself
and as the general partner of DiamondRock Hospitality Limited Partnership, a Delaware limited
partnership (the “Partnership”) pursuant to Section 7(m) of the Sales Agreement dated October 19,
2009 (the “Sales Agreement”) between the Company, the Partnership and Cantor Fitzgerald & Co., that
to the best of the knowledge of the undersigned:
(i) The representations and warranties of the Company in Section 6 of the Sales
Agreement (A) to the extent such representations and warranties are subject to qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect, are true and
correct on and as of the date hereof with the same force and effect as if expressly made on and as
of the date hereof, except for those representations and warranties that speak solely as of a
specific date and which were true and correct as of such date, and (B) to the extent such
representations and warranties are not subject to any qualifications or exceptions, are true and
correct in all material respects as of the date hereof as if made on and as of the date hereof with
the same force and effect as if expressly made on and as of the date hereof, except for those
representations and warranties that speak solely as of a specific date and which were true and
correct as of such date; and
(ii) The Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied pursuant to the Sales Agreement at or prior to the date
hereof.
| By: | ||||
| Name: | ||||
| Title: | ||||
Date: , 20
EXHIBIT 7(m)
Exhibit 5.1
October 19, 2009
DiamondRock Hospitality Company
6903 Rockledge Drive, Suite 800
Bethesda, Maryland 20817
Re: Legality of Securities to be Registered Under Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to DiamondRock Hospitality Company, a Maryland corporation (the “Company”), in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”), of up to $75,000,000 of shares (the “Shares”) of its common stock, par value $0.01 per share, as described in the prospectus, as supplemented, relating to the Shares contained in the Company’s registration statement on Form S-3 filed on August 12, 2009 with the Securities and Exchange Commissions under the Securities Act (as so supplemented, the “Registration Statement”) (File No. 333-161298).
We have reviewed such documents and made such examination of law as we have deemed appropriate to give the opinions expressed below. We have relied, without independent verification, on certificates of public officials and, as to matters of fact material to the opinions set forth below, on certificates of officers of the Company.
The opinion expressed below is limited to the Maryland General Corporation Law (which includes applicable provisions of the Maryland Constitution and reported judicial decisions interpreting the Maryland General Corporation Law and the Maryland Constitution).
Based on the foregoing, we are of the opinion that the Shares have been duly authorized and, upon issuance and delivery against payment therefor in accordance with the terms of the Sales Agreement, dated as of October 19, 2009, by and among the Company, DiamondRock Hospitality Limited Partnership and Cantor Fitzgerald & Co., will be validly issued, fully paid and non-assessable.
We hereby consent to the inclusion of this opinion as Exhibit 5.1 to the Registration Statement and to the references to our firm under the caption “Legal Matters” in the Registration Statement. In giving our consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
Sincerely,
/s/ GOODWIN PROCTER LLP
GOODWIN PROCTER LLP
Exhibit 8.1
As of October 19, 2009
DiamondRock Hospitality Company
6903 Rockledge Drive, Suite 800
Bethesda, MD 20817
Ladies and Gentlemen:
We have acted as counsel for DiamondRock Hospitality Company, a Maryland corporation (the “Company”), in connection with the Company’s registration statement on Form S-3 (File No. 333-161298) filed on August 12, 2009 with the Securities and Exchange Commission under the Securities Act of 1933 (as amended or supplemented, the “Registration Statement”). Pursuant to the Registration Statement, the Company proposes to issue and sell, in one or more offerings, up to $75,000,000 aggregate maximum offering price of shares of its common stock, $0.01 par value per share (the “Shares”), in accordance with the terms set forth in the prospectus supplement, dated October 19, 2009, to the prospectus filed as part of the Registration Statement. This opinion letter addresses the Company’s qualification as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), the classification of DiamondRock Hospitality Limited Partnership, a Delaware limited partnership (the “Operating Partnership”), for federal income tax purposes, and the accuracy of certain matters discussed in the Registration Statement under the heading “Federal Income Tax Considerations Related to our REIT Election” and in the prospectus supplement under the heading “Supplement to Federal Income Tax Considerations.”
In rendering the following opinions, we have reviewed and relied upon the Articles of Amendment and Restatement of Articles of Incorporation dated as of June 25, 2004 and Second Amended and Restated Bylaws of the Company dated as of April 20, 2005, each as amended from time to time and as in effect as of the date of this opinion letter, the Limited Partnership Agreement of the Operating Partnership dated as of June 4, 2004 and as in effect as of the date hereof, and such other records, certificates, and documents as we have deemed necessary or appropriate for purposes of rendering the opinions set forth herein. For purposes of this opinion letter, we have assumed (i) the genuineness of all signatures on documents we have examined, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as copies, (iv) the conformity, to the extent relevant to our opinions, of final documents to all documents submitted to us as drafts, (v) the authority and capacity of the individual or individuals who executed any such documents on behalf of any person, (vi) due execution and delivery of all such documents by all the parties thereto, (vii) the compliance of each party with all material provisions of such documents, and (viii) the accuracy and completeness of all records made available to us.
DiamondRock Hospitality Company
As
of October 19, 2009
Page 2
We also have reviewed and relied upon the representations, as to factual matters, and covenants of the Company and the Operating Partnership contained in a letter that the Company provided to us in connection with the preparation of this opinion letter (the “REIT Certificate”), and that we have discussed with the Company’s representative, regarding the organization and operations of the Company and the Operating Partnership and other matters affecting the Company’s ability to qualify as a REIT. For purposes of this opinion letter, we assume that each such representation and covenant has been, is and will be true, correct and complete, that the Company, the Operating Partnership and any subsidiaries have been, are and will be owned and operated in accordance with the REIT Certificate and that all representations that speak to the best of the belief and/or knowledge of any person(s) or party(ies), or are subject to similar qualification, have been, are and will continue to be true, correct and complete as if made without such qualification. To the extent such representations and covenants speak to the intended ownership or operations of the Company or the Operating Partnership, we assume that each of the Company and the Operating Partnership will in fact be owned and operated in accordance with such stated intent.
Based upon the foregoing and subject to the limitations set forth herein, we are of the opinion that:
(i) commencing with the Company’s taxable year ended December 31, 2005, the Company has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and its current and proposed ownership and operations will allow the Company to continue to satisfy the requirements for qualification and taxation as a REIT under the Code for subsequent taxable years;
(ii) as long as the Operating Partnership has only one partner for federal income tax purposes, it will be disregarded as an entity separate from the Company and if and when the Operating Partnership has two or more partners for federal income tax purposes, the Operating Partnership will be treated as a partnership within the meaning of Code Sections 7701(a)(2) and 761(a) and will not be treated as a publicly traded partnership taxable as a corporation under the rules of Code Section 7704; and
(iii) the statements set forth under the heading “Federal Income Tax Considerations Related to our REIT Election” in the Registration Statement and under the heading “Supplement to Federal Income Tax Considerations” in the prospectus supplement, insofar as such statements constitute matters of law, summaries of legal matters, legal documents, contracts or legal proceedings, or legal conclusions, are correct in all material respects and do not omit to state a matter of law necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
* * * * *
DiamondRock Hospitality Company
As
of October 19, 2009
Page 3
We express no opinion other than the opinions expressly set forth herein. Our opinions are not binding on the Internal Revenue Service or a court. The Internal Revenue Service may disagree with and challenge our conclusions, and a court could sustain such a challenge. Our opinions are based upon the Code, the Income Tax Regulations and Procedure and Administration Regulations promulgated thereunder and existing administrative and judicial interpretations thereof, all as in effect as of the date of this opinion letter. Changes in applicable law could cause the federal income tax treatment of the Company or the Operating Partnership to differ materially and adversely from the treatment described above and render the tax discussion in the Registration Statement incorrect or incomplete.
This opinion is furnished to you solely for use in connection with the Registration Statement. We hereby consent to the filing of this opinion letter as an exhibit to the Current Report on Form 8-K of the Company and to such Registration Statement. We also consent to the reference to our firm name wherever appearing in the Registration Statement and the prospectus supplement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder.
We are rendering this opinion letter to you in connection with the issuance and sale of the Shares and this opinion letter may not be relied upon by any other person or for any other purpose without our prior written consent. This opinion letter speaks only as of the date hereof, and we undertake no obligation to update this opinion letter or to notify any person of any changes in facts, circumstances or applicable law (including without limitation any discovery of any facts that are inconsistent with the REIT Certificate).
Very truly yours,
/s/ Goodwin Procter LLP
Goodwin Procter LLP