Exhibit 1.1
ORANGE HOSPITALITY,
INC.
1775 BROADWAY, SUITE
604
NEW YORK, NEW YORK,
10019
Common Shares
Agency Agreement
May 27, 2004
Bergen Capital Incorporated
Heights Plaza
777 Terrace Avenue, 3 rd Floor
Hasbrouck Heights, NJ 07604
Dear Sirs:
Orange Hospitality, Inc., a Maryland
corporation (the “Company”), is a corporation that will
elect to qualify as a real estate investment trust pursuant to
Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended ( the “Code”). Subject to the terms and
conditions stated herein, the Company proposes to engage Bergen
Capital Incorporated as its managing dealer (the
“Agent”) to solicit offers to buy and obtain purchasers
for shares of common stock, $.01 par value, of the Company
(“Shares”) in a public offering for a minimum of
$20,000,000 up to a maximum of $350,000,000 (the
“Offering”). The Shares will be registered for sale to
the public under the Securities Act of 1933, as amended (the
“Act”), and the regulations promulgated thereunder by
the Securities and Exchange Commission (the
“Commission”), on SEC Form S-11, but will not be listed
for post-issuance trading on any exchange or included for quotation
on any of the Nasdaq markets. The net proceeds of the Offering will
be employed by us primarily for the purposes of acquiring hotel
properties, including extended-stay, limited service hotels and
other hotels, and to repay up to $350,000 of funds loaned to the
Company by Brad Honigfeld. This will confirm our agreement
respecting your engagement as agent to solicit offers to buy and
obtain purchasers for the Shares on a “best efforts”
basis.
1 Representations and
Warranties.
(a) The Company represents and
warrants to, and agrees with, the Agent with effect from the date
hereof, that:
(i) The Company will file a
registration statement on Form S-11 with the Commission, and as a
part thereof a preliminary prospectus, with respect to the
registration of the Shares under the Act; any preliminary
prospectus included in such registration statement or filed with
the Commission pursuant to Rule 424 of the Commission under the Act
is hereinafter called a “Preliminary Prospectus”; the
registration statement, as amended at the time it becomes effective
under the Act, and the prospectus filed as a part thereof pursuant
to Rule 424(b) of the Act are hereinafter called the
“Registration Statement” and “Prospectus,”
respectively; except that (A) if the Company files a post-effective
amendment to the registration statement, then the term
“Registration Statement” shall refer to the
registration statement as amended by such post-effective amendment
thereto and the term “Prospectus” shall refer to the
amended prospectus
then on file with the Commission, and (B) if the
prospectus, including any sticker supplement thereto not
theretofore consolidated into a post-effective amendment, filed by
the Company pursuant to either Rule 424(b) or (c) of the rules and
regulations of the Commission under the Act (the
“Regulations”), shall differ from the prospectus on
file at the time the Registration Statement or any post-effective
amendment thereto shall have become effective, the term
“Prospectus” shall refer to the prospectus, including
any such sticker supplement, filed pursuant to either Rule 424(b)
or (c), as the case may be, from and after the date on which it
shall have been filed. The Company will not file any registration
statement for Shares or any amendment to the registration statement
or any amendment or supplement to the Prospectus to which you shall
reasonably object in writing or which shall be reasonably
disapproved by your counsel;
(ii) Each Preliminary Prospectus, at
the time of filing thereof, will conform in all material respects
to the requirements of the Act and the Regulations, and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished to the Company by you, and relating to you, expressly for
use therein;
(iii) The Registration Statement and
the Prospectus, when effective or filed with the Commission, as the
case may be, will conform, in all material respects to the
requirements of the Act and the Regulations and will not as of the
applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date and as of
each Closing Date (as defined below) as to the Prospectus and any
amendment or supplement thereto contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished to the
Company by you, and relating to you, expressly for use
therein;
(iv) The Shares to be issued and
sold by the Company pursuant to this Agreement have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and
fully paid and nonassessable and will conform to the description of
the Shares contained in the Prospectus;
(v) The Company has the corporate
power to enter into this Agreement, and the issue and sale of the
Shares by the Company and the performance of this Agreement and the
consummation by the Company of the transactions herein contemplated
will not result in a breach or violation of any terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company, or any statute or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its
subsidiaries or properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue
and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may
be required under the Act and under state securities or Blue Sky
laws in connection with the distribution of the Shares by the
Agent;
2
(vi) This Agreement has been duly
authorized executed and delivered by the Company, and constitutes a
valid and binding agreement of the Company, enforceable in
accordance with its terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency or other laws affecting
the enforcement of creditors’ rights generally or by general
principles of equity, and except to the extent that the
enforceability of the indemnity and contribution provisions
contained in this Agreement may be limited under applicable
laws;
(vii) PricewaterhouseCoopers LLP,
which shall audit the financial statements of the Company, is an
independent public accountant as required by the Act and the rules
and regulations of the Commission thereunder;
(viii) The Company is not in
violation of its Articles of Incorporation, By-laws or other
organizational documents or in default in the performance or
observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be
bound;
(ix) There are no legal or
governmental proceedings pending to which the Company is a party or
to which any property of the Company is the subject, which,
individually or in the aggregate, would have a material adverse
effect on the financial position, shareholders’ equity or
results of operations of the Company and, to the best of the
knowledge of the Company’s management, no such proceedings
are threatened or contemplated by governmental authorities or
threatened or contemplated by others;
(x) The Company is not and will not
be an “investment company,” or under the control of an
investment company as defined in the Investment Company Act of
1940, as amended;
(xi) No person has been engaged by
the Company to act as a finder or investment adviser in connection
with the transactions contemplated herein;
(xii) None of the Company’s
officers, directors or shareholders is a member of the National
Association of Securities Dealers, Inc. (“NASD”), an
affiliate or an associated person of a member of the
NASD;
(xiii) The Company has not promised
or represented to any person that any Shares will be directed or
otherwise made available to them in connection with the proposed
offering; and
(xiv) Any certificate signed by any
officer of the Company and delivered to you in connection with the
Offering shall be deemed a representation and warranty by the
Company to you, as to matters covered thereby.
(b) As a condition to the issuance
by you to the Commission of your consent to the declaration of
effectiveness of the Registration Statement, the Company shall
represent and warrant to, and agree with, the Agent with effect
from the date upon which the Registration Statement shall be
declared effective (the “SEC Effective Date”),
that:
(i) There are no contracts or other
documents that are required to be filed as exhibits to the
Registration Statement which will not have been so
filed;
3
(ii) The Company and each of its
subsidiaries has been duly incorporated or organized, is validly
existing, and if a corporation is in good standing, under the laws
of its state of organization, with power and authority (corporate
or other) to own its properties and conduct its business, and has
been duly qualified as a foreign entity for the transaction of
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership of
property or the conduct of business, except such jurisdictions, if
any, in which the failure to be so qualified will not have a
material adverse effect on the respective company;
(iii) The Company and each of its
subsidiaries possesses all material licenses, permits,
authorizations, consents and orders required for the contemplated
method of operation of its business;
(iv) The Company has an authorized
capitalization as set forth in the Prospectus; all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable and conform
to the description of the capital stock of the Company contained in
the Prospectus; there are no preemptive or other rights to
subscribe for or to purchase any shares of capital stock of the
Company or of any of its subsidiaries; except as will be described
in the Prospectus, there are no warrants or options to purchase any
shares of capital stock of the Company or of any of its
subsidiaries; and neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this
Agreement will give rise to any rights for or relating to the
registration of any shares of the capital stock of the
Company;
(v) The financial statements of the
Company, together with related notes, as set forth in the
Registration Statement and the Prospectus, present fairly the
consolidated financial position and results of operations of the
Company as of and for the periods ended on the indicated dates in
accordance with generally accepted accounting principles in the
United States of America (“GAAP”);
(vi) Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries has
experienced any material adverse change or any development
involving a prospective material adverse change in the general
affairs, prospects, management, financial position, properties or
results of operations of the Company or any of its subsidiaries,
otherwise than as set forth in the Prospectus; and neither the
Company nor any of its subsidiaries have entered into any material
transactions other than as described in the Prospectus; and the
capitalization, indebtedness, properties, material liabilities and
business of the Company and its subsidiaries conform to the
descriptions thereof contained in the Prospectus;
4
(vii) Neither the Company nor any of
its subsidiaries is in violation of its Articles of Incorporation,
By-laws or other organizational documents or in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be
bound;
(viii) There are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or to which any property of the Company or
any of its subsidiaries is the subject, which, individually or in
the aggregate, would have a material adverse effect on the
financial position, shareholders’ equity or results of
operations of the Company or any of its subsidiaries and, to the
best of their knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened or
contemplated by others;
(ix) The Company is organized in
conformity with the requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Code and the
rules and regulations thereunder. The contemplated method of
operation of the Company’s business as described in the
Prospectus will allow the Company to satisfy the operational
requirements for qualification as a real estate investment trust
under such Sections and such rules and regulations;
(x) The Company has disclosed in the
Prospectus all potential conflicts of interest involving the
officers, directors, principal shareholders, and/or employees of
the Company and any of its subsidiaries required to be disclosed
therein or the omission of which would render the Prospectus
materially misleading.
2. Offering and Sale of
Shares—Closing Dates.
(a) On the basis of the
representations, warranties and covenants herein contained, but
subject to the terms and conditions herein set forth, the Agent is
hereby appointed the selling agent of the Company during the term
herein specified (the “Offering Period”) for the
purpose of finding subscribers for the Shares for the account and
risk of the Company through a public offering beginning on the SEC
Effective Date. Your agency hereunder, which is subject to the
conditions of Section 6 hereof, shall continue as long as Shares
are being offered through the Registration Statement, but not to
exceed 30 months after the Effective Date. However, your agency may
be terminated by the Company if you cease to be a member in good
standing of the NASD or if you become subject to an order or other
action of or by the Commission or other securities authority
substantially restricting or impairing your ability to offer and
sell the Shares under this Agreement, or if there is a material
default by you under this Agreement which is not promptly cured
within a reasonable time after the Company notifies you in writing
of the default. Subject to the performance by the Company of all of
its obligations to be performed hereunder, and to the completeness
and accuracy of all the representations and warranties contained
herein, the Agent hereby accepts such agency and agrees on the
terms and conditions herein set forth to use its best efforts
during the Offering Period to find subscribers for the Shares at
the current public offering price (each subscriber being required
to invest at least $5,000, except for IRAs and Keogh and Pension
Plans which shall be required to invest at least $2,000). The time
for each issuance of and payment for Shares is herein referred to
as a “Closing Date.” The initial Closing Date shall
take place promptly after subscribers have been obtained for $20
million of Shares (the “Initial Closing Date”). The
offering shall terminate if the Initial Closing Date has not
occurred on or before the first anniversary date of the SEC
Effective Date.
5
(b) All subscription payments for
the Shares shall be deposited into an escrow account maintained by
a bank mutually satisfactory to you and us.
(c) If less than all the Shares
shall have been subscribed and paid for at the Initial Closing
Date, then, at periodic intervals to be mutually agreed upon by you
and the Company during the Offering Period, there shall be
subsequent closings for the payment to the Company of the purchase
price of additional Shares sold by you (“Subsequent Closing
Date(s)”) as described in Section 2 (d).
(d) Subsequent closing(s) will take
place at such time(s), date(s) and place(s) as determined by the
Company, with the concurrence of the Agent. Shares will be issued
to subscribers and compensation will be paid to the Agent at each
Closing Date.
(e) Subscriptions for Shares may be
solicited by certain dealers selected by you or by any co-managing
agent that the Company may appoint pursuant to Section 2 (h) hereof
subject, in each case, to the Company’s approval of such
selections which shall not be unreasonably withheld or delayed (the
“Selected Dealers”). Each such Selected Dealer shall be
a member in good standing of the NASD.
(f) As compensation for your
services under this Agreement, you will be paid in immediately
available funds, on each Closing Date, a commission equal to 7.5%
of the public offering price for each Share subscribed and paid for
at each Closing Date which was sold by you or a Selected Dealer
engaged by you. In addition, you will be paid in immediately
available funds, on each Closing Date, a non-accountable marketing
expense allowance equal to 1.5% of the public offering price for
each Share subscribed and paid for on the applicable Closing Date
which was sold by you or a Selected Dealer engaged by you. You also
will be paid in immediately available funds a commission and a
non-accountable marketing expense allowance in the amounts set
forth above each time the Company issues Shares under the
reinvestment plan covered by the Registration Statement to
purchasers obtained by you or a Selected Dealer engaged by
you.
(g) Neither the Company, nor the
Agent or any Selected Dealer participating in the Offering shall,
directly or indirectly, pay or award any finder’s fees,
commissions or other compensation to any person engaged by a
potential investor for investment advice as an inducement to such
adviser to advise the purchase of Shares; provided, however, that
normal sales commissions payable to a registered broker
