Exhibit 1.1
Strategic Hotel Capital, Inc.
Common Stock, par value $0.01 per share
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Underwriting Agreement
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August 10, 2005
Deutsche Bank Securities Inc.,
As representative of the several Underwriters
named in Schedule I hereto,
c/o Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Strategic Hotel Capital, Inc., a Maryland corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 11,100,000 shares (the "Firm Shares") and, at the election of the
Underwriters, up to 1,665,000 additional shares (the "Optional Shares") of
Common Stock, par value $0.01 per share ("Stock"), of the Company. The Firm
Shares and the Optional Shares that the Underwriters elect to purchase pursuant
to Section 2 hereof are herein collectively called the "Shares."
On July 13, ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, LLC ("SCD"), a wholly owned
subsidiary of Strategic Hotel Funding, LLC, a Delaware limited liability company
(the "Operating Company"), entered into an Purchase and Sale Agreement with
Buckingham Fountain Hotel, LLC (such agreement, together with any document
related to the transaction, are hereinafter referred to as the "Fairmont
Agreements") to acquire the Fairmont Chicago Hotel for an agreed aggregate
purchase price of $154.7 million (such acquisition and any related financing are
hereinafter referred to as the "Fairmont Transaction"). The Company intends to
use the net proceeds of the offering of the Shares in the manner described in
the section entitled "Use of Proceeds" in the final prospectus supplement
relating to the Shares filed with the Securities Exchange Commission (the
"Commission") pursuant to Rule 424(b) under the Securities Act of 1933, as
amended (the "Securities Act"). This includes, among things, applying a portion
of the net proceeds to consummate the Fairmont Transaction.
The Company acknowledges and agrees that each Underwriter in providing
underwriting services to the Company in connection with the offering of the
Shares, including in acting pursuant to the terms of this Agreement, has acted
and is acting as an independent contractor on an arm's length basis and not as a
fiduciary and the Company does not intend such Underwriter to act in any
capacity other than as an independent contractor, including as a fiduciary or in
any other position of higher trust. The Company shall be responsible for making
its own independent
investigation and appraisal of the transactions contemplated by this Agreement
and the Underwriters shall have no responsibility or liability with respect
thereto.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) a registration statement on Form S-3 (File No. 333-126314) (the
"Registration Statement"), including the Base Prospectus (as defined below) in
respect of the Shares and other equity securities of the Company to be offered
from time to time by the Company (i) was prepared by the Company in conformity
with the requirements of the Securities Act and the rules and regulations of the
Commission promulgated thereunder (the "Securities Act Regulations"); (ii) was
filed with the Commission on June 30, 2005; and (iii) was declared effective by
the Commission on July 13, 2005. The Company at all times relevant to the
offering of the Shares contemplated hereby complied with the conditions for the
use of Form S-3 and has been eligible to use Form S-3 since June 29, 2005. No
other document, including any post-effective amendment, with respect to the
Registration Statement has heretofore been filed with the Commission. The
Company will file with the Commission pursuant to Rule 424(b) a final supplement
to such Base Prospectus relating to the Shares and the offering thereof in
conformity with the requirements of the Securities Act and the Securities Act
Regulations. "Base Prospectus" means the prospectus included in the Registration
Statement at the time it became effective under the Securities Act. "Prospectus"
means the Base Prospectus together with the final prospectus supplement relating
to the Shares filed pursuant with the Commission pursuant to Rule 424(b). Each
preliminary prospectus supplement to the Base Prospectus which describes the
Shares and the offering thereof and is used prior to the filing of the
Prospectus with the Commission, together with the Base Prospectus, is herein
referred to as a "Preliminary Prospectus." Any reference herein to the
Registration Statement, the Base Prospectus, the Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934 (the "Exchange Act"), on or before the effective
date of the Registration Statement or the date of such Base Prospectus,
Preliminary Prospectus or Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Base Prospectus, Preliminary Prospectus or
Prospectus shall be deemed to refer to and include any document (x) filed under
the Exchange Act after the effective date of the Registration Statement, or the
date of such Base Prospectus, any Preliminary Prospectus or Prospectus, as the
case may be, and prior to the termination of the offering of the Shares by you,
and (y) deemed to be incorporated therein by reference. Neither the Commission
nor the Blue Sky or securities authority of any jurisdiction has issued a stop
order suspending the effectiveness of the Registration Statement, preventing or
suspending the use of the Prospectus, any Preliminary Prospectus or the
Registration Statement or any amendment or supplement thereto, or suspending the
registration or qualification of the Shares, nor, has any of such authorities
instituted or threatened to institute any proceedings with respect to a stop
order with respect thereto.
(b) each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Securities Act and
the Securities Act Regulations, and did not contain an untrue statement of a
material fact or omit to state a material fact required
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to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, 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
in writing to the Company by an Underwriter through Deutsche Bank Securities
Inc. ("DBS") expressly for use therein. It is understood and agreed that the
information furnished by the Underwriters for use in the Prospectus consists of:
(i) the names and corresponding share amounts set forth in the table of
Underwriters in the first paragraph of text under the caption "Underwriters" in
the Prospectus; (ii) the third paragraph of text under the caption
"Underwriters" in the Prospectus concerning the terms of the offering by the
Underwriters; (iii) the ninth paragraph of text under the caption "Underwriters"
in the Prospectus concerning short sales, purchases to cover positions created
by short sales and stabilizing transactions; (iv) the 13th paragraph of text
under the caption "Underwriters" in the Prospectus concerning penalty bids; (v)
the 15th paragraph of text under the caption "Underwriters" in the Prospectus
concerning the availability of the Prospectus in electronic format; and (v) the
16th, 17th and 19th paragraphs of text under the caption "Underwriters" in the
Prospectus concerning the representations of the Underwriters.
(c) the Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Securities Act and the Securities Act Regulations and do not and will not, as of
the applicable effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through DBS expressly for use therein;
(d) neither the Company nor any of its subsidiaries (collectively, the
"subsidiaries" and each a "subsidiary") that would be required to be listed on
Exhibit 21 of an Annual Report on Form 10-K of the Company (the "Significant
Subsidiaries"), including the Operating Company, has sustained since the date of
the latest audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or as would not have, individually or in the
aggregate, a Material Adverse Effect (as defined below); and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been (i) any change in the capital stock or
members' equity, as applicable, or long-term debt of the Company or any of its
subsidiaries or (ii) any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' or members' equity, as applicable,
or results of operations of the Company and its subsidiaries, taken as a whole
(a "Material Adverse Effect"), other than as set forth or contemplated in the
Prospectus;
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(e) the Company and its subsidiaries have (i) good and marketable title
in fee simple to, or a valid leasehold interest in, all real property described
in the Prospectus as owned by them (the "Real Property"), and good and
marketable title to all personal property owned by them that are material to the
business of the Company, and (ii) upon consummation of the Fairmont Transaction
by SCD, the Company will have good and marketable title in fee simple to all
Fairmont Chicago Hotel real property and good and marketable title to all
personal property necessary to the business of the Fairmont Chicago Hotel , in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company and its subsidiaries; and any real
property, buildings and equipment held under lease by the Company and its
subsidiaries and described in the Prospectus are held by them under valid,
subsisting and enforceable leases (such leases, the "Company Leases") with such
exceptions as are not material and do not materially interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries;
(f) except for the vacant parcel of land owned by SHC Santa ▇▇▇▇▇▇
Land, L.L.C., the Company or its subsidiaries has either (i) an owner's or
leasehold title insurance policy, from a nationally recognized title insurance
company licensed to issue such policy, on any Real Property located in the
United States or Mexico (the "North American Properties"), as the case may be,
by the Company or its subsidiaries, that insures the fee or leasehold interest,
as the case may be, in the North American Properties, 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, or (ii) one or more lender's title insurance policies insuring the lien
of the mortgages encumbering the North American Properties with coverages, in
the aggregate, equal to the maximum aggregate principal amount of indebtedness
incurred by the Company or its subsidiaries and secured by the North American
Properties; upon the consummation of the Fairmont Transaction, SCD will obtain
an owner's title insurance policy on the Fairmont Chicago Hotel property;
(g) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Maryland, with power and
authority (corporate and other) to own its properties and conduct its business
as described in the Prospectus;
(h) the Operating Company has been duly organized and is validly
existing as a limited liability company, in good standing under the laws of
Delaware, with power and authority (limited liability company and other) to own
its properties and conduct its business as described in the Prospectus;
(i) each of the Company and its subsidiaries has been duly qualified as
a foreign entity for the transaction of business and is in good standing under
the laws of each jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, except to the extent that the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
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(j) (x) each corporate subsidiary of the Company that is a Significant
Subsidiary (a "Corporate Significant Subsidiary") and each limited liability
company in which the Company or one of its subsidiaries is a managing member
that is a Significant Subsidiary (an "LLC Significant Subsidiary") has been duly
incorporated or organized, as the case may be, and is validly existing as a
corporation or limited liability company, as the case may be, in good standing
under the laws of its jurisdiction of incorporation or organization, as the case
may be, with the power (corporate or limited liability company, as the case may
be) and authority to own its properties and conduct its business as described in
the Prospectus and (y) all of the issued shares of capital stock of each
Corporate Significant Subsidiary and all of the membership interests in each LLC
Significant Subsidiary have been duly and validly authorized and issued, are
fully paid and are non-assessable and (except for membership interests in SHCI
Santa ▇▇▇▇▇▇ Beach Hotel, L.L.C.) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims except as
described in the Prospectus or as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect;
(k) the Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and the Shares conform to the description of the Stock contained in the
Prospectus;
(l) the Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued and
fully paid and non-assessable and will conform to the description of the Stock
contained in the Prospectus;
(m) except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company or any of its subsidiaries convertible
into or exchangeable for any capital stock, partnership interests, membership
interests or other equity interests, as the case may be, in the Company or any
of its Significant Subsidiaries, other than the limited liability company units
of the Operating Company, which, upon their redemption by the holders thereof,
the redemption price therefor, in the Company's discretion, may be paid in cash
or in shares of common stock of the Company, or (ii) obligations of the Company
or any of its subsidiaries to issue any such securities or obligations;
(n) except as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any equity or debt securities,
including securities that are convertible into or exchangeable for equity
securities, registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act, other than Strategic Value
Investors, LLC, The Prudential Insurance Company of America, Prudential
Investment Management, Inc., PIC Realty Corporation, Prudential Assets, LLC,
(SHC/Olayan) Redemption Vehicle, LLC, SVI (SHC/Houston) Redemption Vehicle, LLC,
Whitehall Street Real Estate Limited Partnership VII and Whitehall Street Real
Estate Limited Partnership IX and the holders of the preferred stock of the
Company;
(o) the issuance and sale of the Shares to be sold by the Company and
compliance by the Company with all of the provisions of this Agreement and the
consummation of the
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transactions contemplated by the Fairmont Agreements and all other transactions
therein contemplated by the Company or the Operating Company (to the extent a
party thereto) will not (i) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any Company
Lease, indenture, mortgage, deed of trust, loan agreement, operating agreement,
property management agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) result in any violation of
the provisions of the charter or bylaws of the Company, or (iii) result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or its
subsidiaries or any of their properties ("Governmental Authority"), except in
the case of clauses (i) and (iii) for such conflicts, breaches, defaults or
violations as would not, individually or in the aggregate, reasonably be
expected to (x) result in a Material Adverse Effect, or (y) adversely affect the
validity, performance or consummation of the transactions contemplated by this
Agreement;
(p) no consent, approval, authorization, order, registration or
qualification of or with any such Governmental Authority is required for sale of
the Shares or the consummation by the Company of the transactions contemplated
by this Agreement or the Fairmont Agreements, except the registration under the
Securities Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters;
(q) neither the Company nor any of its Significant Subsidiaries is in
(i) violation of its organizational documents, or (ii) default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any Company Lease, indenture, mortgage, deed of trust, loan
agreement, operating agreement, property management agreement or other agreement
or instrument to which it is a party or by which it or any of its properties may
be bound, except in the case of clause (ii) to the extent that such default
would not, individually or in the aggregate, reasonably be expected to (x)
result in a Material Adverse Effect, or (y) adversely affect the validity,
performance or consummation of the transactions contemplated by this Agreement;
(r) each of the Company and the Operating Company has the power and
authority to enter into and perform this Agreement, and to the extent a party
thereto, the Fairmont Agreements and to consummate the transactions contemplated
herein and therein; this Agreement and the Fairmont Agreements have been duly
authorized, executed and delivered by the Company (to the extent a party
thereto) and the Operating Company (to the extent a party thereto), and are
legal, valid and binding agreements of the Company (to the extent a party
thereto) and the Operating Company (to the extent a party thereto), enforceable
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions may be limited
by U.S. federal or state securities laws and public policy considerations in
respect thereof;
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(s) each of the Company and its subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any U.S. 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 its business as described in the
Prospectus, except to the extent that any failure to have any such licenses,
authorizations, consents or approvals, to make any such filings or to obtain any
such authorizations, consents or approvals would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
neither the Company nor any of its subsidiaries is in violation of, in default
under, or has received any notice regarding a possible violation, default or
revocation of any such license, authorization, consent or approval or any U.S.
federal, state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or any subsidiary, other than any such
violations, defaults, or revocations that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
(t) the statements set forth in the Prospectus under the captions "Risk
Factors - Tax Risks" and "Certain United States Federal Tax Considerations,"
insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate and complete and fairly summarize the federal
income tax considerations described therein;
(u) the statements set forth in the Prospectus under the caption
"Description of Common Stock," insofar as they purport to constitute a summary
of the terms of the Stock, are accurate, complete and fair;
(v) the issuance and sale of the Shares by the Company are not subject
to preemptive or other similar rights arising by operation of law under the
organizational documents of the Company;
(w) other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, would, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by any
Governmental Authority or threatened by others;
(x) neither the Company nor the Operating Company is and, after giving
effect to the offering and sale of the Shares, will be an "investment company,"
as such term is defined in the Investment Company Act of 1940, as amended;
(y) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent registered
public accountants as required by the Securities Act and the Securities Act
Regulations;
(z) the Shares have been approved for listing on the New York Stock
Exchange (the "NYSE"), subject to official notice of issuance;
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(aa) 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 in violation of applicable law;
(bb) the form of certificate used to represent the Stock complies in
all material respects with (i) all applicable statutory requirements, (ii) any
applicable requirements of the organizational documents of the Company, and
(iii) the requirements of the NYSE;
(cc) the Company has been and is properly taxed as a real estate
investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "Code")
commencing with the taxable year ending December 31, 2004, and the Company is
organized and is being operated in conformity with the requirements for
qualification as a REIT under the Code and the method of operation of the
Company and its subsidiaries enables the Company to meet the requirements for
qualification and taxation as a REIT under the Code; the Operating Company is
treated as a partnership for U.S. federal income tax purposes and not as a
corporation or association taxable as a corporation; and 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 could reasonably be expected to cause
the Company to fail to qualify as a REIT under the Code at any time;
(dd) there are no outstanding loans, advances or guarantees of
indebtedness by the Company or any of its subsidiaries to or for the benefit of
any of the officers or directors of the Company or any of the officers or
directors of any of its subsidiaries or any of the members of the families of
any of them;
(ee) the Company has obtained Phase I Environmental Audits with respect
to the North American Properties and the Fairmont Chicago Hotel property and a
Building Survey Report with respect to the Inter.Continental Prague dated June
2003 (the "Building Survey Report") and, except as otherwise disclosed in the
Prospectus or in the Phase I Environmental Audits, the Building Survey Report
and other environmental documents previously delivered to the Underwriters and
except to an extent that would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect: (i) neither the Company nor
any of its subsidiaries nor, to the knowledge of the Company, any other owners
of the Real Property (which such term for purposes of this Section (gg) shall
include the Fairmont Chicago Hotel) at any time or any other party has at any
time, handled, stored, treated, transported, manufactured, spilled, leaked, or
discharged, dumped, transferred or otherwise disposed of or dealt with,
Hazardous Materials (as hereinafter defined) on, to or from any Real Property,
other than by any such action taken in material compliance with all applicable
Environmental Statutes (as defined below) or by the Company, any of its
subsidiaries or any other party in connection with the ordinary use of
residential, retail or commercial properties owned by the Company or any
subsidiary; (ii) the Company and its subsidiaries do not intend to use the Real
Property or any subsequently acquired properties for the purpose of handling,
storing, treating, transporting, manufacturing, spilling, leaking, discharging,
dumping, transferring or otherwise disposing of or dealing with Hazardous
Materials other than by any such action taken in compliance with all applicable
Environmental Statutes or by the Company, any of its subsidiaries or any other
party
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in connection with the ordinary use of residential, retail or commercial
properties owned by the Company or any subsidiary; (iii) the Company does not
know of any seepage, leak, discharge, release, emission, spill, or dumping of
Hazardous Materials from the Real Property into waters on or adjacent to the
Real Property or from the Real Property onto any real property owned or occupied
by any other party, or onto lands from which Hazardous Materials might seep,
flow or drain into such waters other than in substantial compliance with
Environmental Statutes; (iv) the Company has not received any notice of, and has
no 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 U.S. federal,
state or local environmental statute or regulation or under common law,
pertaining to Hazardous Materials on or originating from any of the Real
Property or arising out of the conduct of the Company, including without
limitation a claim under or pursuant to any Environmental Statute; and (v)
neither the Real Property is included nor, to the Company's knowledge, is
proposed for inclusion on the National Priorities List issued pursuant to CERCLA
(as defined below) by the United States Environmental Protection Agency or, to
the Company's knowledge, proposed for inclusion on any similar list or inventory
issued pursuant to any other Environmental Statute or issued by any other
Governmental Authority.
As used herein, "Hazardous Materials" shall include, without
limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, toxic substances, or related materials,
asbestos or any hazardous material as defined by any U.S. 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 Materials Transportation Act, as
amended, 49 U.S.C. Sections 1801-1819, the Resource Conservation and
Recovery 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, 15 U.S.C. Sections
2601-2671, the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C. Sections
7401-7642, the Clean Water Act (Federal Water Pollution Control Act),
33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C.
Sections 300f-330j-26, and the Occupational Safety and Health Act, 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
Governmental Authority.
(ff) to the Company's knowledge, except as described in the Prospectus or where
such will not have a Material Adverse Effect on any of the properties (which for
purposes of this Section (hh) shall include the Fairmont Chicago Hotel property)
or on the Company: (a) there have been no complaints relating to air quality or
Microbial Matter at any of the properties; (b) there have been no significant
incidents of water damage at any of the properties or visual evidence of
Microbial Matter in any structure or system at any of the properties; (c) there
have been no indications of improper design or construction of any structure at
any of the properties or any system contained therein that has led or could
reasonably be expected to lead to the growth of Microbial Matter; (d) there is
no pending, or to Company's knowledge, threatened claim, governmental
investigation or proceeding pending relating to Microbial Matter; and (e) the
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Company has provided true and complete copies to the Underwriters of all
reports, surveys, assessments and material documents relating to Microbial
Matter at any of the properties;
For purposes of this Section, the term "Microbial Matter"
shall mean: fungi, bacterial or viral matter which reproduces through
the release of spores or the splitting of cells or other means,
including, but not limited to, mold, mildew and viruses, whether or not
such Microbial Matter is living;
(gg) the consolidated financial statements of the Company, together
with related notes and schedules, contained in or incorporated by reference in
the Prospectus present fairly in all material respects the financial position
and the results of operations, stockholders' equity and cash flows of the
Company, at the indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout the periods
involved, except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included or incorporated by reference in the Prospectus
present fairly in all respects the information shown therein and such data has
been compiled on a basis consistent with the financial statements presented
therein and the books and records of the Company. The pro forma financial
statements and other pro forma financial information included or incorporated by
reference in the Prospectus present fairly in all material respects the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein;
(hh) the Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its subsidiaries, is made known
to the Company's chief executive officer and its chief financial officer by
others within those entities, and such disclosure controls and procedures are
effective to perform the functions for which they were established; since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses; the
principal executive officer and principal financial officer of the Company have
timely and properly made all certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") and any related rules and regulations
promulgated by the Commission, and the statements contained in any such
certification are complete and correct; and the Company is and, to the knowledge
of the Company, all of its directors and executive officers (in their capacity
as such) are, otherwise in compliance with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are effective;
(ii) nothing has come to the attention of the Company that has caused
the Company to believe that the statistical and market-related data included or
incorporated by reference in the Preliminary Prospectus and the Prospectus is
not based on or derived from sources that are reliable and accurate in all
material respects.
10
(jj) any certificate signed by any officer of the Company and delivered
to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2. (a) Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $17.0974, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
(b) The Company hereby grants to the Underwriters the right to purchase
at their election up to 1,665,000 Optional Shares, at the purchase price per
share set forth in the paragraph above, for the sole purpose of covering sales
of shares in excess of the number of Firm Shares, provided that the purchase
price per Optional Share shall be reduced by an amount per share equal to any
dividends or distributions declared by the Company and payable on the Firm
Shares but not payable on the Optional Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, no earlier
than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as DBS may request upon at least 48 hours' prior notice to the Company
shall be delivered by or on behalf of the Company to DBS, through the facilities
of The Depository Trust Company ("DTC"), for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer of federal (same-day) funds to the account specified
by the Company to DBS at least 48 hours in advance. The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at least 24 hours prior to the Time of Delivery (as defined below)
with respect thereto at the office of Deutsche Bank Securities Inc., ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Designated Office"). The
11
time and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York time, on August 16, 2005 or such other time and date
as DBS and the Company may agree upon in writing, and, with respect to the
Optional Shares, 9:30 a.m., New York time, on the date specified by DBS in the
written notice given by DBS of the Underwriters' election to purchase such
Optional Shares, or such other time and date as DBS and the Company may agree
upon in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the "Second
Time of Delivery," and each such time and date for delivery is herein called a
"Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(m) hereof, will be delivered at the offices
of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (the "Closing Location"), and the
Shares will be delivered at the Designated Office, all at such Time of Delivery.
A meeting will be held at the Closing Location at 3:00 p.m., New York City time,
on the New York Business Day next preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) to prepare a prospectus supplement in a form approved by
you and to file such prospectus supplement and the Base Prospectus
pursuant to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second New York Business Day
following the execution and delivery of this Agreement; to make no
further amendment or any supplement to the Registration Statement, any
Preliminary Prospectus or Prospectus if such amendment or supplement
shall be reasonably disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies
thereof; to advise you, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such
12
jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of each of the Preliminary
Prospectus and Prospectus and from time to time, to furnish the
Underwriters with written and electronic copies of such Preliminary
Prospectus and Prospectus in New York City in such quantities as you
may reasonably request, and, if at any time when the delivery of a
prospectus is required in connection with the offering or sale of the
Shares and if at such time any events shall have occurred as a result
of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in
order to comply with the Securities Act, to notify you and upon your
request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many written and electronic copies as
you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any such time, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many written
and electronic copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Securities Act;
(d) to make generally available to its security holders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Securities Act), an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Securities Act Regulations
(including, at the option of the Company, Rule 158);
(e) during the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus (the "Lock-up Period"), not to offer, sell, contract to sell
or otherwise dispose of, except as provided hereunder, any Stock or
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, Stock or
any such substantially similar securities, (other than (i) pursuant to
the 2004 Incentive Plan, the Employee Stock Purchase Plan and employee
stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the Time of
Delivery, (ii) pursuant to that certain Employment Agreement, dated as
of November 29, 2004, among the Company, the Operating Company and
▇▇▇▇▇ ▇. ▇▇▇▇ (which shares when issued
13
shall be subject to the terms of the Lockup Agreement, dated as of the
date hereof, by and between the Company, the Operating Company and
▇▇▇▇▇ ▇. ▇▇▇▇), and that certain Amended and Restated Employment
Agreement dated June 8, 2004, between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the
Company (which shares when issued shall be subject to the terms of the
Lockup Agreement, dated as of the date hereof, by and between the
Company, the Operating Company and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇); or (iv) as
consideration for the redemption of limited liability company interests
in the Operating Company in accordance with the Limited Liability
Company Agreement, as amended, of the Operating Company;
(f) to furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), to make available to its stockholders consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) unless otherwise publicly available in electronic format
on the website of the Company or the Commission, during a period of
three years from the effective date of the Registration Statement, to
furnish to you copies of all reports or other communications (financial
or other) furnished to stockholders generally, and to deliver to you
(i) as soon as they are publicly available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional non-confidential
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) to use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds;"
(i) to use its best efforts to list, subject to notice of
issuance, the Shares on the NYSE; and
(j) to continue to use its best efforts to meet the
requirements to qualify as a REIT under the Code and to cause the
Operating Company to continue to use its best efforts to meet the
requirements to qualify as a partnership under the Code, in each case
unless otherwise determined by the Company's Board of Directors.
6. The Company covenants and agrees with the several Underwriters that
(a) the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments
14
and supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, the Blue Sky Memorandum (if any), closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky survey (if any) and the
filing fees and expenses (including legal fees and disbursements) incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; and (iv) all fees and expenses in
connection with listing the Shares on the NYSE; and (b) the Company will pay or
cause to be paid: (i) the cost of preparing stock certificates; (ii) the cost
and charges of any transfer agent or registrar; and (iii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, however,
that except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers the Underwriters may make.
7. The obligations of the Underwriters hereunder as to the Shares to be
delivered at each Time of Delivery shall be subject, in their discretion, to the
condition that all representations and warranties and other statements of the
Company are, at and as of such Time of Delivery, true and correct, the condition
that the Company and the Operating Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) the Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the Securities Act Regulations in accordance with
Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, shall have furnished to you their written opinion, each
dated such Time of Delivery, with respect to the issuance and sales of
the Shares and other related matters as you may reasonably require;
(c) the General Counsel of the Company shall have furnished to
you her written opinion, dated such Time of Delivery, substantially in
the form attached as Exhibit A hereto;
(d) Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the
Company, shall have furnished to you their written opinion and letter,
each dated such Time of Delivery, in the form attached as Exhibit B
hereto;
15
(e) ▇▇▇▇▇▇▇ LLP, special Maryland counsel for the Company,
shall have furnished to you their written opinion, dated such Time of
Delivery, in the form attached as Exhibit C hereto;
(f) on the date of the prospectus supplement, at a time prior
to the execution of this Agreement, at 9:30 a.m., New York City time,
on the effective date of any post-effective amendment to the
Registration Statement filed subsequent to the date of this Agreement
and also at each Time of Delivery, Deloitte & Touche LLP shall have
furnished to you a letter or letters, dated the respective dates of
delivery thereof, in the form attached as Exhibit D hereto;
(g) (i) neither the Company nor any of its Significant
Subsidiaries shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or members'
equity, as applicable, or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' or members' equity, as applicable, or results
of operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is
in your judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) on or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt
securities;
(i) on or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the NYSE; (ii) a suspension or
material limitation in trading in the Company's securities on the NYSE;
(iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities or a material disruption
in commercial banking or securities settlement or clearance services in
the United States; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war; or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic
conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery
16
of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(j) the Shares at such Time of Delivery shall have been duly
listed, subject to notice of issuance, on the NYSE;
(k) the National Association of Securities Dealers, Inc. shall
not have raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements;
(l) the Company shall have complied with the provisions of
Section 5(c) hereof with respect to furnishing copies of the Prospectus
on the New York Business Day next succeeding the date of this
Agreement;
(m) the Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
reasonably satisfactory to you as to the accuracy of the
representations and warranties of the Company, herein at and as of such
Time of Delivery, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request,
and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (g) of
this Section; and
(n) the Company shall have received lock-up agreements from
each executive officer and director, Strategic Value Investors, LLC,
The Prudential Insurance Company of America, Prudential Investment
Management, Inc., PIC Realty Corporation, Prudential Assets, LLC,
(SHC/Olayan) Redemption Vehicle, LLC, SVI (SHC/Houston) Redemption
Vehicle, LLC, Whitehall Street Real Estate Limited Partnership VII and
Whitehall Street Real Estate Limited Partnership IX in the form
attached as Exhibits E-1 and E-2 hereto, and such lock-up agreements
shall be in full force and effect.
8. Indemnification and Contribution.
(a) The Company and the Operating Company each, jointly and
severally, will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter
in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company and
the Operating Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue
17
statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through DBS expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the
Company and the Operating Company against any losses, claims, damages
or liabilities to which the Company and the Operating Company may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through DBS expressly for use therein (which such
information is described in Section 1(b) hereof); and will reimburse
the Company and the Operating Company for any legal or other expenses
reasonably incurred by the Company and the Operating Company in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party under such subsection for any legal expenses
of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional
18
release of the indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company on the one hand or
the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d)
19
to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls any Underwriter within the meaning of the
Securities Act; and the obligations of the Underwriters under this
Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company (including
any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the
Securities Act.
9. Defaulting Underwriters.
(a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time
of Delivery, you may in your discretion arrange for you or another
party or other parties to purchase such Shares on the terms contained
herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then
the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to
you to purchase such Shares on such terms. In the event that, within
the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies
you that it has so arranged for the purchase of such Shares, you or the
Company shall have the right to postpone the Time of Delivery for a
period of not more than seven days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The
term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Shares to be purchased
at such Time of Delivery, then the Company shall have the right to
require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time
of Delivery and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of
Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
20
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of
the aggregate number of all of the Shares to be purchased at such Time
of Delivery, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell
the Optional Shares) shall thereupon terminate, without liability on
the part of any non-defaulting Underwriter or the Company, except for
the expenses to be borne by the Company and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. Full Force and Effect. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any officer or director or controlling person of
the Company, and shall survive delivery of and payment for the Shares.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company in subsection (a) of Section 8 hereof, the
representations and warranties in subsections (b) and (c) of Section 1 hereof
and any representation or warranty as to the accuracy of the Registration
Statement or the Prospectus contained in any certificate furnished by the
Company pursuant to Section 7 hereof, insofar as they may constitute a basis for
indemnification for liabilities (other than payment by the Company of expenses
incurred or paid in the successful defense of any action, suit or proceeding)
arising under the Securities Act, shall not extend to the extent of any interest
therein of a controlling person or partner of an Underwriter who is a director,
officer or controlling person of the Company when the Registration Statement has
become effective or who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company, except in each case to
the extent that an interest of such character shall have been determined by a
court of appropriate jurisdiction as not against public policy as expressed in
the Securities Act. Unless in the opinion of counsel for the Company the matter
has been settled by controlling precedent, the Company will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question of whether such interest is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason any Shares are
not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the
21
Shares not so delivered, but the Company shall then be under no further
liability to any Underwriter except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by DBS on behalf of you as the representative.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to you as the representative in care of Deutsche Bank
Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity
Capital Markets; if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: General Counsel; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you on request.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts (including by facsimile), each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
17. The Company is authorized, subject to applicable law, to disclose
any and all aspects of this potential transaction that are necessary to support
any U.S. federal income tax benefits expected to be claimed with respect to such
transaction, and all materials of any kind (including tax opinions and other tax
analyses) related to those benefits, without the Underwriters imposing any
limitation of any kind.
22
If the foregoing is in accordance with your understanding, please sign
and return to us one copy for each of the Company, the Operating Company and DBS
plus one for each counsel, and upon the acceptance hereof by you, on behalf of
each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters, the Operating
Company and the Company. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters, the form of which shall be submitted to
the Company and the Operating Company for examination, upon request, but without
warranty on your part as to the authority of the signers thereof.
[Remainder of Page Intentionally Left Blank.]
23
Very truly yours,
STRATEGIC HOTEL CAPITAL, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
STRATEGIC HOTEL FUNDING, L.L.C.
By: Strategic Hotel Capital, Inc.,
its Managing Member
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
Accepted as of the date hereof:
DEUTSCHE BANK SECURITIES INC.,
on behalf of each of the Underwriters
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇ ▇▇▇▇
-------------------
Name: ▇▇▇ ▇▇▇▇
Title: Director
24
SCHEDULE I
Number of Optional
Shares to be
Purchased if
Total Number of Firm Maximum Option
Underwriter Shares to be Purchased Exercised
----------- ---------------------- -----------------
Deutsche Bank Securities Inc........................................ 4,102,794 615,422
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co................................................. 2,564,246 384,636
Banc of America Securities LLC...................................... 1,024,990 153,748
Credit Suisse First Boston LLC...................................... 1,024,990 153,748
Wachovia Capital Markets, LLC....................................... 1,024,990 153,748
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc..................................... 1,024,990 153,748
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated............................ 111,000 16,650
JMP Securities LLC.................................................. 111,000 16,650
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc............................................ 111,000 16,650
----------------- -------------------
Total..................................................... 11,100,000 1,665,000
================= ===================
EXHIBIT A
[Form of Opinion of the General Counsel of the Company]
EXHIBIT B
[Form of Opinion of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP]
EXHIBIT C
[Form of Opinion of ▇▇▇▇▇▇▇ LLP]
EXHIBIT D
[Form of Deloitte & Touche LLP Comfort Letter]
EXHIBIT E-1
[Form of Lock-up Agreement for Directors and Officers]
EXHIBIT E-2
[Form of Lock-up Agreement for Whitehall and Prudential]