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Exhibit 1.1(a)
9,350,000 Shares
INTERSTATE HOTELS COMPANY
(a Pennsylvania corporation)
Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
June 20, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MONTGOMERY SECURITIES
MORGAN STANLEY & CO., INCORPORATED
SMITH BARNEY INC.
CREDIT LYONNAIS SECURITIES (USA) INC.
as Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Interstate Hotels Company, a Pennsylvania corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Montgomery Securities
("Montgomery"), Morgan Stanley & Co. Incorporated ("Morgan Stanley"), Smith
Barney Inc. ("Smith Barney"), Credit Lyonnais Securities (USA) Inc. ("Credit
Lyon-nais"), and each of the other underwriters named in Schedule A hereto
(collectively, the "U.S. Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for
whom Merrill Lynch, Montgomery, Morgan Stanley, Smith Barney and Credit
Lyonnais are acting as representatives (in capacity, Merrill Lynch,
Montgomery, Morgan Stanley,
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Smith Barney and Credit Lyonnais shall hereinafter be referred to collectively
as the "Representatives"), with respect to the sale by the Company and the
purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective number of shares of common stock, par value $.01 per share, of the
Company ("Common Stock") set forth in said Schedule A (except as otherwise
provided in the U.S. Pricing Agreement referred to below) and with respect to
the grant by the Company to the U.S. Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 1,402,500 additional shares of Common Stock to cover over-allotments,
in each case except as may otherwise be provided in the U.S. Pricing Agreement
(as hereinafter defined). The 9,350,000 shares of Common Stock (the "Initial
U.S. Securities") to be purchased by the U.S. Underwriters and all or any part
of the 1,402,500 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option U.S. Securities") are collectively
hereinafter called the "Securities."
Prior to the purchase and public offering of the Securities by the
several U.S. Underwriters, the Company and the Representatives, acting on
behalf of the several U.S. Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto (the "U.S. Pricing Agreement").
The U.S. Pricing Agreement may take the form of an exchange of any standard
form of written telecommunication between the Company and the Representatives
and shall specify applicable information as is indicated in Exhibit A hereto.
The offering of the Securities will be governed by this agreement (the
"Agreement"), as supplemented by the U.S. Pricing Agreement. From and after
the date of the execution and delivery of the U.S. Pricing Agreement, this
Agreement shall be deemed to incorporate the U.S. Pricing Agreement.
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of 1,650,000 shares of Common Stock
(the "Initial International Securities") through arrangements with certain
underwriters outside the United States and Canada (the "International
Underwriters") for whom Merrill Lynch International, Credit Lyonnais
Securities, Montgomery Securities, Morgan Stanley & Co. International Limited
and Smith Barney Inc. are acting as the
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representatives (the "International Representatives") and the grant by the
Company to the International Underwriters, acting severally and not jointly,
of an option to purchase all or any part of the International Underwriters'
pro rata potion of up to 247,500 additional shares of Common Stock solely to
cover over-allotments, if any (the "Option International Securities", and
collectively with the Initial International Securities, the "International
Securities"). It is understood that the Company is not obligated to sell, and
the International Underwriters are not obligated to purchase, any Initial
International Securities unless all of the Initial U.S. Securities are
contemporaneous purchased by the U.S. Underwriters.
Prior to the purchase and public offering of the International
Securities by the several International Underwriters, the Company and the
International Representatives, acting on behalf of the several International
Underwriters, shall enter into an agreement substantially in the form of
Exhibit A to the International Purchase Agreement (the "International Pricing
Agreement"). The International Pricing Agreement may take the form of an
exchange of any standard form of written telecommunication between the Company
and the International Representatives and shall specify applicable
information as is indicated in Exhibit A to the International Purchase
Agreement. The offering of the International Securities will be governed by
the International Purchase Agreement, as supplemented by the International
Pricing Agreement. From and after the date of the execution and delivery of
the International Pricing Agreement, the International Purchase Agreement
shall be deemed to incorporate the International Pricing Agreement.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (File No. 333-3958)
and a related preliminary prospectus for the registration of the Securities
under the Securities Act of 1933, as amended (the "1933 Act"), has filed
amendments thereto, if any, and amended preliminary prospectuses as may have
been required to the date hereof, and will file additional amendments thereto
and amended prospectuses as may hereafter be required. registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including the information,
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if any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act
Regulations")), as from time to time amended or supplemented pursuant to the
1933 Act, or otherwise, are hereinafter referred to as the "Registration
Statement," and the "Prospectus," respectively, except that if any revised
prospectus shall be provided to the U.S. Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not revised prospectus is required to be filed
by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the term
Prospectus shall refer to revised prospectus from and after the time it was
provided to the U.S. Underwriters for use. Two forms of prospectuses are to
be used in connection with the offering and sale of the Securities to the
Underwriters, one relating to the International Securities and one relating to
the U.S. Securities. The form of prospectus relating to the International
Securities is identical to the form of prospectus relating to the U.S.
Securities, except for the front and back covers and the information under the
caption "Underwriting." Any registration statement (including any amendment
or supplement thereto or information which is deemed part thereof) filed by
the Company to register additional shares of Common Stock of the Company under
Rule 462(b) of the 1933 Act Regulations (a "Rule 462(b) Registration
Statement") shall be deemed to be part of the Registration Statement. Any
prospectus (including any amendment or supplement thereto or information which
is deemed part thereof) included in a Rule 462(b) Registration Statement and
any term sheet as contemplated by Rule 434 of the 1933 Act Regulations (a
"Term Sheet") shall be deemed to be part of the Prospectus. Capitalized terms
used but not otherwise defined herein shall have the meanings given to those
terms in the Prospectus.
The Company understands that the U.S. Underwriters propose to make a
public offering of the Securities as soon as the U.S. Representatives deem
advisable after the Registration Statement becomes effective and the U.S.
Pricing Agreement has been executed and delivered.
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The Company has reserved up to 250,000 of the Shares for offering
and sale to certain of its employees, customers, vendors and business
associates pursuant to a reserve share program as stated in the "Underwriting"
section of the Prospectus (the "Reserve Share Program"). The Shares under the
Reserve Share Program will be sold to the employees, customers, vendors and
business associates by the U.S. Underwriters (except for 1,000 shares which
will be sold directly by the Company to two employees of the Company or one of
its Subsidiaries in Canada) pursuant to this Agreement and by the
International Underwriters pursuant to the International Purchase Agreement at
the public offering price. Any shares not purchased by persons by the end
of the first business day after the date on which the Registration Statement
has become effective will be offered to the public by the U.S. Underwriters
and the International Underwriters as set forth in the Prospectus.
SECTION 1. Representations and Warranties of the Company.
(a) The Company represents and warrants to each U.S. Underwriter as
of the date hereof and as of the date of the U.S. Pricing Agreement ( later
date being hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective
and at the Representation Date, the Registration Statement will comply in
all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus,
at the Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the U.S. Underwriters by the
Company for use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the time it is
first provided to the U.S. Underwriters for use) and at the Closing Time
referred to in Section 2 hereof, will comply in all material respects
with the requirements of the
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1933 Act and the 1933 Act Regulations and will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement
or Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any U.S. Underwriter through the
Representatives expressly for use in the Registration Statement or
Prospectus.
(ii) Coopers & Lybrand L.L.P., the accounting firm that audited
the financial statements included in the Registration Statement and
Prospectus, is an independent public accountant as required by the 1933
Act and the 1933 Act Regulations.
(iii) The financial statements (including the related notes
thereto) included in the Registration Statement and the Prospectus
present fairly, in all material respects, the financial position of the
respective entity or entities or group presented therein at the
respective dates indicated and the results of their operations for the
respective periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis through the periods specified. The other financial and
statistical information and data included in the Registration Statement
and the Prospectus present fairly, in all material respects, the
information included therein and, to the extent applicable, have been
prepared on a basis consistent with financial statements and/or the
books and records of the respective entities or group presented therein.
Pro forma financial information included in the Prospectus has been
prepared in accordance with the applicable requirements of the 1933 Act
and the 1933 Act Regulations with respect to pro forma financial
information and includes all adjustments necessary to present fairly, in
all material respects, the pro forma financial position of the Company at
the respective dates indicated and the
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results of operations for the respective periods specified.
(iv) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the executive officers of the Company, after due inquiry, threatened by
the Commission or by the state securities authority of any jurisdiction.
No order preventing or suspending the use of the Prospectus has been
issued and no proceeding for that purpose has been instituted or, to the
knowledge of the executive officers of the Company, after due inquiry,
threatened by the Commission or by the state securities authority of any
jurisdiction.
(v) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise described therein, and giving pro forma effect to the
Acquisition (as described in the Prospectus), (A) there has been no
change in the condition, financial or otherwise, in the earnings, assets,
business affairs or business prospects of the Company or any of its
Subsidiaries, whether or not arising in the ordinary course of business,
which would be materially adverse to the Company and its Subsidiaries
taken as a whole (any change being hereinafter referred to as a
"Material Adverse Change"), (B) there has been no casualty, loss or
condemnation or other adverse event with respect to any of the hotel
properties in which the Company or any of its Subsidiaries will own as of
the Closing Date (the "Hotels") which would have a material adverse
effect on the earnings, assets, business affairs or business prospects of
the Company, its Subsidiaries or the Hotels, which would be materially
adverse to the Company and its Subsidiaries taken as a whole (a "Material
Adverse Effect"), (C) there have been no transactions or acquisitions
entered into by the Company or any of its Subsidiaries, other than those
in the ordinary course of business, which would have a Material Adverse
Effect, (D) there have been no changes to any of the management
agreements which the Company has entered into with various hotel property
owners, other than
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those in the ordinary course of business, which would have a Material
Adverse Effect, (E) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock, and (F) there has been no change in the capital shares of the
Company, or any increase in the indebtedness of the Company or any of its
Subsidiaries or encumbering of the Hotels which would have a Material
Adverse Effect. For purposes of this Agreement, "Subsidiary" means, with
respect to any party, any corporation or other entity, whether
incorporated or unincorporated of which more than 50% of either the
equity interests is, or voting control of corporation or other entity
is, directly or indirectly through subsidiaries, beneficially owned by
the Company.
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania, with corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under
this Agreement and the U.S. Pricing Agreement and the other Company
Documents (as hereinafter defined) to which it is a party; and the
Company is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which qualification is
required, whether by reason of the ownership, leasing or management of
property or the conduct of business, except where the failure to so
qualify would not have a Material Adverse Effect.
(vii) Each of the Company's Subsidiaries that is a limited
partnership (collectively, the "Partnership Subsidiaries") and would
constitute a "significant subsidiary" under Rule 1-02 of Regulation S-X
under the Securities Act has been duly formed and is validly existing as
a limited partnership in good standing under and by virtue of the laws of
the state of its formation, with the requisite partnership power and
authority to own, lease and manage its properties, to conduct the
business in which it is engaged or proposes to engage as described in the
Prospectus and to enter into and
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perform its obligations under the Company Documents (as defined herein)
to which it is a party. Each of the Partnership Subsidiaries is duly
qualified or registered as a foreign entity to transact business and is
in good standing in each jurisdiction in which qualification is
required, whether by reason of the ownership, leasing or management of
property or the conduct of business, except where the failure to so
qualify would not have a Material Adverse Effect.
(viii) Each of the Company's Subsidiaries that is a
corporation (the "Corporate Subsidiaries," and collectively with the
Partnership Subsidiaries, the "Subsidiaries") and would at the Closing
Time constitute a "significant subsidiary" under Rule 1-02 of Regulation
S-X under the Securities Act ("Significant Subsidiary") is a corporation
duly incorporated and validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation with the requisite
corporate power and authority to own, lease and manage its properties, to
conduct the business in which it is engaged or proposes to engage and to
enter into and perform its obligations under the Company Documents to
which it is a party. Each of the Corporate Subsidiaries is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which qualification is required,
whether by reason of the ownership, leasing or management of property or
the conduct of business, except where the failure to so qualify would not
have a Material Adverse Effect. As of the Closing Time, all of the
issued and outstanding capital stock of each of the Corporate
Subsidiaries will be duly authorized, validly issued, fully paid and
non-assessable, and except as described, or in respect of indebtedness
which is described, in the Prospectus, all of capital stock will be
owned by the Company, directly or through the Company's Subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or restriction other than any lien or encumbrance
imposed by any Subsidiaries' organizational documents or by shareholder
agreements. No shares of capital stock of the Company's Subsidiaries are
reserved for any purpose, and there are no outstanding securities
convertible
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into or exchangeable for any capital stock of the Company's Subsidiaries
and no outstanding options, rights (preemptive or otherwise) or warrants
to purchase or to subscribe for shares of capital stock or any other
securities of Company's Subsidiaries other than pursuant to
Subsidiaries' respective organizational documents.
(ix) At the Closing Time, the capital shares of the Company
will be as set forth in the Prospectus under "Capitalization" and
"Description of Capital Stock." All the issued and outstanding shares of
Common Stock of the Company have been duly authorized and are validly
issued, fully paid and non-assessable and have been offered and sold in
compliance with all applicable laws (including, without limitation,
federal or state securities laws). No shares of the capital stock of the
Company are reserved for any purpose except as described in the
Prospectus. Except as described in the Prospectus and except as granted
under this Agreement, there are no outstanding securities convertible
into or exchangeable for any capital stock of the Company and there are
no outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for Common Stock or any other securities of the
Company.
(x) The Securities have been duly authorized for issuance and
sale to the U.S. Underwriters pursuant to this Agreement, and, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth in the U.S. Pricing Agreement,
will be validly issued, fully paid and non-assessable. The terms of the
Common Stock conform in all material respects to all statements and
descriptions related thereto contained in the Prospectus. The issuance
of the Securities is not subject to any preemptive or other similar
rights, other than pursuant to the Registration Rights Agreement
(referred to in the Prospectus under "The Organization, Acquisition and
Financing Plan") and the Stockholders' Agreements (as hereinafter
defined).
(xi) All shares of Common Stock (other than the Securities)
issued or to be issued, at or
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prior to the Closing Time, in connection with the Transactions (as
hereinafter defined) have been duly authorized for issuance by the
Company, and as of the Closing Time upon payment therefor as provided
herein will be validly issued, fully paid and non-assessable.
(xii) None of the Company or any of its Subsidiaries (the
"Transaction Entities") is in violation of its certificate or articles of
incorporation, by-laws, certificate of partnership, partnership
agreement, certificate of formation, limited liability company agreement
or other similar governing document, as the case may be, and none of the
Transaction Entities is in default in the performance or observance of
any obligation, agreement covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument or of any applicable law, rule, order, administrative
regulation or administrative or court decree, to which entity is a party
or by which entity may be bound, or to which any of its property or
assets or any Hotel may be bound or subject, except for violations and
defaults that would not, individually or in the aggregate, have a
Material Adverse Effect.
(xiii) (A) This Agreement has been duly and validly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Representatives, is a valid
and binding agreement of the Company; (B) at the Representation Date, the
Pricing Agreement will have been duly and validly authorized, executed
and delivered by the Company, and assuming due authorization, execution
and delivery by the Representatives, will be a valid and binding
agreement of the Company; (C) at the Closing Time, the two Stockholders'
Agreements among the Company and the other parties signatory thereto (the
"Stockholders' Agreements") will be duly and validly authorized, executed
and delivered by the Company or its Subsidiaries that are parties there-
to, and will be valid and binding agreements of the Company or its
Subsidiaries that are parties thereto, enforceable against each of the
Company or its Subsidiaries that are parties thereto in accordance with
their terms,
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except as enforceability may be limited by (i) bankruptcy, moratorium,
insolvency or other similar laws generally affecting the enforcement of
creditors' rights, (ii) general principles of equity, whether considered
in a proceeding in equity or at law, and (iii) the unenforceability under
certain circumstances under law or court decisions of provisions
providing for the indemnification of or contribution to a party with
respect to a liability where indemnification or contribution is against
public policy; (D) at the Closing Time, the Registration Rights Agreement
among the Company and the other parties signatory thereto (the
"Registration Rights Agreement") will be duly and validly authorized,
executed and delivered by the Company or its Subsidiaries that are
parties thereto, will be a valid and binding agreement of the Company or
its Subsidiaries that are parties thereto, and will be enforceable
against the Company or its Subsidiaries that are parties thereto in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights, (ii) general principles of
equity, whether considered in a proceeding in equity or at law, and (iii)
the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where indemnification
or contribution is against public policy; (E) at the Closing Time, the
Credit Agreement among the Company, Interstate Hotels Corporation ("IHC"),
Credit Lyonnais New York Branch, and the other banks signatory thereto
(the "Credit Agreement") will be duly and validly authorized, executed and
delivered by the parties thereto, will be a valid and binding agreement of
the parties thereto, and will be enforceable against the parties thereto
in accordance with its terms; (F) the Option Agreement dated as of October
12, 1995, as amended December 15, 1995 and March 29, 1996, among IHC and
the other parties signatory thereto (the "Option Agreement") has been duly
and validly authorized, executed and delivered by IHC and IHC Member
Corporation, is a valid and binding agreement of IHC and IHC Member
Corporation, and is enforceable against IHC and IHC Member Corporation in
accordance with its terms, except as enforceability may be limited by
bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights and by general principles
of equity, whether considered in a proceeding in equity or at law; (G) the
Agreement of Purchase and Sale, dated as of March 29, 1996, among IHC
Member Corporation and the other parties signatory thereto (the "Purchase
and Sale Agreement") has been duly and validly authorized, executed and
delivered by IHC Member Corporation, is a valid and binding agreement of
IHC Member Corporation,
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and is enforceable against IHC Member Corporation in accordance with its
terms, except as enforceability may be limited by bankruptcy,
moratorium, insolvency or other similar laws generally affecting the
enforcement of creditors' rights and by general principles of equity,
whether considered in a proceeding in equity or at law; and (H) the
Contribution Agreement, dated as of March 29, 1996, among IHC and the
other parties signatory thereto (the "Contribution Agreement") has been
duly and validly authorized, executed and delivered by IHC, is a valid
and binding agreement of IHC, and is enforceable against IHC in
accordance with its terms, except as enforceability may be limited by
bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights and by general principles
of equity, whether considered in a proceeding in equity or at law. This
Agreement, the U.S. Pricing Agreement, the Stockholders' Agreements, the
Registration Rights Agreement, the Credit Agreement, the Option
Agreement, the Purchase and Sale Agreement, the Contribution Agreement
and the Transaction Agreements (defined below) are sometimes hereinafter
collectively called the "Company Documents."
(xiv) The performance of the obligations set forth herein or
in the other Company Documents and the consummation of the Transactions
or the
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other transactions contemplated hereby and thereby or in the Prospectus
by the Transaction Entities will not conflict with or constitute a breach
or violation by parties of, or default under or result in the creation
or imposition of any lien, charge or encumbrance upon any Hotel or any
other property or asset of a Transaction Entity under, (A) any of the
other Company Documents; (B) any material contract, indenture, mortgage,
loan agreement, note, lease, joint venture or partnership agreement or
other instrument or agreement to which any Transaction Entity is a party
or by which they, any of them, any of their respective properties or
other assets or any Hotel may be bound or subject; (C) the certificate or
articles of incorporation, by-laws, certificate of limited partnership,
partnership agreement or other governing documents, as the case may be,
of any Transaction Entity, or (D) any applicable law, rule, order,
administrative regulation or administrative or court decree, in each case
except for conflicts, breaches, violations or defaults that would not
have a Material Adverse Effect.
(xv) The execution and delivery of all material agreements and
documents executed in connection with or in contemplation of the
transactions (collectively, the "Transactions") described in the
Prospectus as "The Organization," "Acquisition of Owned Hotels,"
"Acquisition of Additional Hotels," and "The Financing Plan" under the
heading "THE ORGANIZATION, ACQUISITION AND FINANCING PLAN" (the
"Transaction Agreements"), and the performance of the obligations set
forth therein and the consummation of the Transactions or the
transactions contemplated thereby by the Transaction Entities have been
duly and validly authorized by all necessary corporate or partnership
action, as the case may be, by or on behalf of the Transaction Entities.
Except as described in the Prospectus (including, without limitation, the
transactions described in the Prospectus under the heading "The
Organization, Acquisition and Financing Plan -- Acquisition of Additional
Hotels"), each of the Transactions will have been completed on or before
the Closing Time.
(xvi) None of the Company's commitments to a partnership formed
between or among one or more
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affiliates of the Company and one or more affiliates of Blackstone Real
Estate Advisors, L.P. (the "Interstone III Partnership"), including, but
not limited to the capital commitments described under "The Organization
and Financing Plan -- Acquisition of Owned Hotels" in the Prospectus is
expected to result in any Material Adverse Effect.
(xvii)(a) No labor dispute with the employees of any
Transaction Entity exists or is imminent, and (b) none of the executive
officers of the Company is aware of any existing or imminent labor
disturbance by the employees of any of the Transaction Entities'
principal suppliers, manufacturers or contractors, which, in the case of
either (a) or (b), could reasonably be expected to result in any Material
Adverse Effect.
(xviii) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the executive officers of the Company,
after due inquiry, threatened against or affecting any Transaction
Entity, Hotel or officer or director of the Company that is required to
be disclosed in the Registration Statement or the Prospectus or that, if
determined adversely to any Transaction Entity, Hotel, or officer or
director, considered in the aggregate will or could reasonably be
expected to (A) have a Material Adverse Effect, or (B) materially and
adversely affect the consummation of the Transactions.
(xix) Except as described in the Prospectus, there are no
pending legal or governmental proceedings to which any Transaction Entity
is a party or of which they or any of their respective properties or
assets or any Hotel is the subject, including ordinary routine litigation
incidental to the business, that, considered in the aggregate, could
reasonably be expected to have a Material Adverse Effect. There are no
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments which are required to be described or referred to in the
Registration Statement or to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which
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have not been so described, referred to or filed, and the descriptions
thereof or references thereto in the Registration Statement are accurate
in all material respects.
(xx) Except as described in the Prospectus, each of the
Transaction Entities has filed all federal, state, local and foreign
income tax returns which have been required to be filed (except in any
case in which the failure to so file would not have a Material Adverse
Effect), and has paid all taxes required to be paid and any other
assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except, in all cases, for any tax,
assessment, fine or penalty that is being contested in good faith (except
in any case in which the failure to so pay would not have a Material
Adverse Effect).
(xxi) None of the Transaction Entities is, and at Closing Time
none of the Transaction Entities will be, required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxii) Except as described in the Prospectus, the Company and
its Subsidiaries own or possess, or can acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "proprietary
rights") material to the conduct of the business now operated by them,
and none of the Company or any of its Subsidiaries has received any
notice nor is any executive officer of the Company otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any proprietary rights, or of any facts which would render any
proprietary rights invalid or inadequate to protect the interest of
Transaction Entity therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling, or finding) or invalidity or
inadequacy, singly or in the aggregate, would have a Material Adverse
Effect.
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(xxiii) No authorization, approval, consent or order of any
court or governmental authority or agency or other entity or person is
required to be obtained by any Transaction Entity in connection with the
offering, issuance or sale of the Securities hereunder, except as may be
required under the 1933 Act or the 1933 Act Regulations or state
securities or real estate syndication laws or the by-laws and rules of
the National Association of Securities Dealers, Inc. (the "NASD") or as
have been received prior to the date of this Agreement. No consent is
required to be obtained by any Transaction Entity in connection with the
consummation of any part of the Transactions, for which the failure to
obtain consent would have a Material Adverse Effect, except as may have
been received prior to the date of this Agreement.
(xxiv) Each of the Transaction Entities possesses, or has made
application for, certificates, authorizations or permits issued by the
appropriate local, state, federal or foreign regulatory agencies or
bodies necessary to conduct the business now operated by it, or proposed
to be conducted by it, except for certificates, authorizations and
permits, the failure to obtain, maintain or possess of which by any of
the Transaction Entities would not have a Material Adverse Effect, and
none of the Transaction Entities have received any notice of proceedings
relating to the revocation or modification of any certificate, authority
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
(xxv) Except as described in the Prospectus or pursuant to the
Registration Rights Agreement or Stockholders' Agreements, there are no
persons with registration or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act.
(xxvi) The Securities have been approved for listing on the
New York Stock Exchange upon notice of issuance.
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(xxvii) At the Closing Time, (A) the Transaction Entities will
have good indefeasible title or a valid leasehold estate, as the case may
be, to each of the Hotels and other real property interests indicated in
the Prospectus to be owned or leased by the Company (or its
Subsidiaries), in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than (i) those referred to
in the Prospectus, (ii) mortgages and security agreements relating to the
Hotels, (iii) those referred to in the existing title insurance policies
pertaining to the Hotels, and (iv) those which would not have a Material
Adverse Effect; (B) there will be no options or rights of first refusal
to purchase any Hotel, any interest therein or any part thereof, other
than those referred to in the Prospectus; (C) each of the Hotels will
comply with all applicable codes, laws and regulations (including,
without limitation, building and zoning codes, laws and regulations and
laws relating to access to the Hotels), except for failures to comply
that would not have Material Adverse Effect, and (D) the executive
officers of the Company shall have no knowledge of, after due inquiry,
any pending or threatened condemnation proceeding, zoning change or other
proceeding or action that would have a Material Adverse Effect.
(xxviii) The Transaction Entities have obtained title
insurance on the fee and ground lease interests in each of the Hotels in
which the Company has an ownership interest, in an amount at least equal
to the purchase price of each owned Hotel.
(xxix) Except as disclosed in the Prospectus, and, except for
activities, conditions, circumstances or matters that would not have a
Material Adverse Effect, (A) to the knowledge of the executive officers
of the Company, after due inquiry, the operations of the Transaction
Entities are in compliance with all Environmental Laws (as defined below)
and all requirements of applicable permits, licenses, approvals and other
authorizations issued pursuant to Environmental Laws; (B) to the
knowledge of the executive officers of the Company, after due inquiry,
none of the Transaction Entities has caused or suffered to occur any
Release
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(as defined below) of any Hazardous Substance (as defined below) into the
Environment (as defined below) on, in or under or from any Hotel or any
developed or undeveloped land held (at any time) by any of the
Transaction Entities, and no condition exists on, in or under to any
Hotel that could reasonably be expected to result in the Company
violating, or incurring liability under, any Environmental Law or give
rise to the imposition of any Lien (as defined below) under any
Environmental Law; (C) none of the Transaction Entities has received any
written notice of a claim under or pursuant to any Environmental Law or
under common law pertaining to Hazardous Substances on, in, under or
originating from any Hotel; (D) none of the executive officers of the
Company has knowledge of, after due inquiry, nor has any Transaction
Entity received any written notice from any Governmental Authority (as
defined below) or other person claiming any violation of any
Environmental Law or a determination to undertake and/or request the
investigation, remediation, clean-up or removal of any Hazardous
Substance released into the Environment on, in, under or from any Hotel;
and (E) no Hotel is included or, to the knowledge of the executive
officers of the Company, after due inquiry, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA (as defined below) by
the United States Environmental Protection Agency (the "EPA") or on the
Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA, and the executive
officers of the Company have no knowledge, after due inquiry, that any
Hotel has otherwise been identified in a published writing by the EPA as
a potential CERCLA removal, remedial or response site or, to the
knowledge of the executive officers of the Company, after due inquiry,
proposed for inclusion on any similar list of potentially contaminated
sites pursuant to any other Environmental Law.
As used herein, "Hazardous Substance" shall include any hazardous
substance, hazardous waste, toxic substance, pollutant, hazardous material, or
similarly designated materials including, without limitation, oil, petroleum
or any petroleum-derived substance or waste, asbestos or asbestos-containing
materials, PCB's, pesti-
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cides, explosives, radioactive materials, dioxins, urea formaldehyde
insulation or any constituent of any substance, pollutant or waste which is
identified, regulated, prohibited or limited under any Environmental Law
(including, without limitation, materials listed in the United States
Department of Transportation Optional Hazardous Material Table, 49 C.F.R.
Section 172.101, or in the EPA's List of Hazardous Substances and Reportable
Quantities, 40 C.F.R. Part 302 as the same may now or hereafter be amended;
"Environment" shall mean any surface water, drinking water, ground water, land
surface, subsurface strata, river sediment, buildings, structures, workplace
and indoor and outdoor air; "Environmental Law" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section Section 9601, et seq.) ("CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended (42 U.S.C. Section Section 6901, et
seq.), the Clean Air Act, as amended (42 U.S.C. Section Section 7401, et
seq.), the Clean Water Act, as amended (33 U.S.C. Section Section 1251, et
seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section Section
2601, et seq.), the Occupational Safety and Health Act of 1970, as amended (29
U.S.C. Section Section 651, et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Section Section 1801, et seq.), and all other
federal, state and local laws, ordinances, regulations, rules and orders
relating to the protection of the environment or of human health from
environmental effects; "Governmental Authority" shall mean any federal, state
or local governmental office, agency or authority having the duty or authority
to promulgate, implement or enforce any Environmental Law; "Lien" shall mean,
with respect to any Hotel, any mortgage, deed of trust, pledge, security
interest, lien, encumbrance, penalty, fine, charge, assessment, judgment or
other liability in, on or affecting Hotel; and "Release" shall mean any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, emanating or disposing of any
Hazardous Substance into the Environment, including, without limitation, the
abandonment or discard of barrels, containers, tanks (including, without
limitation, underground storage tanks) or other receptacles containing or
previously containing any Hazardous Substance or any release, emission,
discharge or similar term, as those terms are defined or used in any
Environmental Law.
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(xxx) To the actual knowledge of the executive officers of the
Company, none of the environmental consultants retained by the Company or any
Subsidiary which prepared environmental and asbestos inspection reports with
respect to any of the Hotels was employed for purpose on a contingent basis
or has any substantial interest in any Transaction Entity, and none of them
nor any of their directors, officers or employees is connected with any
Transaction Entity as a promoter, selling agent, voting trustee, director,
officer or employee.
(b) Any certificate signed by any executive officer or authorized
representative of the Company and delivered to the Representatives or to
counsel for the U.S. Underwriters shall be deemed a representation and
warranty by entity or person, as the case may be, to each U.S. Underwriter as
to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company agrees to sell to each U.S. Underwriter, severally and not jointly,
and each U.S. Underwriter, severally and not jointly, agrees to purchase from
the Company, at the price per share set forth in the U.S. Pricing Agreement,
the number of Initial U.S. Securities set forth in Schedule A hereto opposite
the name of U.S. Underwriter (except as otherwise provided in the U.S.
Pricing Agreement), plus any additional number of Initial U.S. Securities
which U.S. Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(i) If the Company has elected not to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price and the
purchase price per share to be paid by the several U.S. Underwriters for
the Securities each have been determined and set forth in the U.S.
Pricing Agreement and an amendment to the Registration Statement and the
Prospectus will be filed before the Registration Statement becomes
effective.
(ii) If the Company has elected to rely upon Rule 430A under
the 1933 Act Regulations, the
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purchase price per share to be paid by the several U.S. Underwriters for
the Securities shall be an amount equal to the initial public offering
price, less an amount per share to be determined by agreement between the
Representatives and the Company. The initial public offering price per
share of the Securities shall be a fixed price to be determined by
agreement among the Representatives and the Company. The initial public
offering price and the purchase price, when so determined, shall be set
forth in the U.S. Pricing Agreement. In the event that prices have not
been agreed upon and the U.S. Pricing Agreement has not been executed and
delivered by all parties thereto by the close of business on the
fourteenth business day following the date of this Agreement, this
Agreement shall terminate forthwith, without liability of any party to
any other party other than pursuant to Sections 6 and 7 hereof, unless
otherwise agreed to by the Company and the Representatives.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the U.S. Underwriters, severally and not
jointly, to purchase up to an additional 1,402,500 shares of Common Stock at
the price per share set forth in the U.S. Pricing Agreement solely to cover
over-allotments. The option hereby granted will expire 30 days after the date
hereof (or, if the Company has elected to rely on Rule 430A under the 1933 Act
Regulations, 30 days after the execution of the U.S. Pricing Agreement),
provided that if thirtieth day is not a New York Stock Exchange trading day,
the thirtieth day will be the next succeeding New York Stock Exchange trading
day and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial U.S. Securities upon notice by the
Representatives to the Company setting forth the number of Option U.S.
Securities as to which the several U.S. Underwriters are then exercising the
option and the time and date of payment and delivery for Option U.S.
Securities. Any time and date of delivery (a "Date of Delivery") shall be
determined by the Representatives, but shall not be later than seven full
business days nor earlier than two full business
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23
days after the exercise of said option, nor in any event prior to the Closing
Time, as hereinafter defined, unless otherwise agreed upon by the
Representatives and the Company. If the option is exercised as to all or any
portion of the Option U.S. Securities, the Option U.S. Securities shall be
purchased by the U.S. Underwriters, severally and not jointly, in proportion
to their respective Initial U.S. Securities underwriting obligations as set
forth in Schedule A.
(c) Payment of the purchase price for, and delivery of certificates
for, the Initial U.S. Securities shall be made at the office of Jones, Day,
Reavis & Pogue ("Jones Day"), 599 Lexington Avenue, New York, New York 10022,
or at other place as shall be agreed upon by the Representatives and the
Company, at 10:00 A.M. on the fourth business day (or the third business day
if required under Rule 15c6-1 of the rules and regulations (the "1934 Act
Regulations") of the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or unless postponed in accordance with the
provisions of Section 10) following the date the Registration Statement
becomes effective (or, if the Company has elected to rely upon Rule 430A of
the 1993 Act Regulations, the fourth business day (or the third business day
if required under Rule 15c6-1 of the 1934 Act) after execution of the U.S.
Pricing Agreement), or other time not later than ten business days after
date as shall be agreed upon by the Representatives and the Company ( time and
date of payment and delivery being herein called "Closing Time"). In
addition, in the event that any or all of the Option U.S. Securities are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, Option U.S. Securities shall be made at the
above-mentioned offices of Jones Day, or at other place as shall be agreed
upon by the Representatives and the Company, on each Date of Delivery as
specified in the notice from the Representatives to the Company. Payment for
the Initial U.S. Securities shall be made to the Company by wire transfer in
immediately available funds, provided that it is understood and agreed that
interest on the aggregate purchase price for the Initial U.S. Securities in
federal funds for one day at Merrill Lynch's overnight borrowing rate shall be
deducted from payment and shall reduce the purchase price payable for the
Initial U.S. Securities by amount. Payment for the Option U.S. Securi-
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ties shall be made to the Company by certified or official bank check or
checks drawn in New York Clearing House funds or similar next day funds
payable to the order of the Company, against delivery to the Representatives
for the respective accounts of the U.S. Underwriters of certificates for the
Securities to be purchased by them. Certificates for the Initial U.S.
Securities and the Option U.S. Securities, if any, shall be in denominations
and registered in names as the Representatives may request in writing at
least two business days before the Closing Time or the relevant Date of
Delivery, as the case may be. It is understood that each U.S. Underwriter has
authorized the Representatives, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Initial U.S.
Securities and the Option U.S. Securities, if any, which it has agreed to
purchase. Merrill Lynch, Montgomery, Morgan Stanley, Smith Barney and Credit
Lyonnais, individually and not as representatives of the U.S. Underwriters,
may (but shall not be obligated to) make payment of the purchase price for the
Initial U.S. Securities or the Option U.S. Securities, if any, to be purchased
by any U.S. Underwriter whose payment has not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but any payment
shall not relieve U.S. Underwriter from its obligations hereunder. The
certificates for the Initial U.S. Securities and the Option U.S. Securities,
if any, will be made available for examination and packaging by the
Representatives not later than 10:00 A.M. on the last business day prior to
Closing Time or the relevant Date of Delivery, as the case may be, in New
York, New York.
SECTION 3. Covenants of the Company.
The Company covenants with each U.S. Underwriter as follows:
(a) As soon as the Company is advised or otherwise obtains
knowledge of any of the following, the Company will promptly notify the
Representatives of (i) the effectiveness of the Registration Statement and any
amendment thereto (including any post-effective amendments), (ii) the receipt
of any comments from the Commission relating to the Registration Statement and
the Prospectus, (iii) any request by the Commission for any amendment to the
Registration Statement or any amendment
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or supplement to the Prospectus or for additional information, and (iv) the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the suspension of qualification of the
Securities for offering or sale in any jurisdiction or the initiation or
threat of any proceedings for these purposes. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment), any Rule 462(b) Registration
Statement or any amendment or supplement to the Prospectus (including any
revised prospectus) which the Company proposes for use by the U.S.
Underwriters in connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not revised prospectus is required to
be filed pursuant to Rule 424(b) of the 1933 Act Regulations, the 1934 Act,
the 1934 Act Regulations or any Term Sheet. The Company will furnish the
Representatives with copies of any amendment or supplement a reasonable
amount of time prior to proposed filing or use, as the case may be, and will
not file any amendment or supplement or use any prospectus to which the
Representatives or counsel for the U.S. Underwriters reasonably shall object.
(c) The Company will deliver to the Representatives, as soon as
possible, as many signed and conformed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated by
reference therein) as the Representatives reasonably may request.
(d) The Company will furnish to each U.S. Underwriter, from time to
time during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, number of copies of the Prospectus (as amended
or supplemented) as U.S. Underwriter reasonably may request for the purposes
contemplated by
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26
the 1933 Act or the applicable rules and regulations of the Commission
thereunder.
(e) If any event shall occur as a result of which it is necessary,
in the opinion of counsel for the U.S. Underwriters, to amend or supplement
the Prospectus in order to comply with the 1933 Act or the 1934 Act or to make
the Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, the Company forthwith will amend or
supplement the Prospectus (in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters) so that, as so amended or supplemented, the
Prospectus will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances existing at the time it is delivered to a
purchaser, not misleading; and the Company will furnish to the U.S.
Underwriters a reasonable number of copies of amendment or supplement.
(f) The Company will endeavor, in cooperation with the U.S.
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of states and other United States or foreign
jurisdictions as the Representatives may reasonably designate; provided,
however, the Company will not be required to qualify as a foreign corporation,
file a general consent to service of process in any jurisdiction, subject
itself to taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject, or provide any undertaking or make any change
in its charter, certificate of incorporation, by-laws or other governing
document that the Board of Directors of the Company reasonably determines to
be contrary to the best interests of the Company and its shareholders. In
each jurisdiction in which the Securities have been so qualified, the Company
will use all reasonable efforts to file statements and reports as may be
required by the laws of jurisdiction to continue qualification in effect for
so long a period as the Representatives reasonably may request for the
distribution of the Securities.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the Company's
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27
fiscal year, an earnings statement (in form and in a manner complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the "effective date" (as defined in said Rule 158) of the
Registration Statement.
(h) The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under "Use of
Proceeds."
(i) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A and/or Rule 434 of the 1933 Act Regulations, then immediately
following the execution of the U.S. Pricing Agreement, the Company will
prepare and file with the Commission in accordance with Rule 430A and/or Rule
434 and Rule 424(b) of the 1933 Act Regulations copies of an amended
Prospectus, or, if required by Rule 430A and/or Rule 434, a post-effective
amendment to the Registration Statement (including an amended Prospectus),
containing all information so omitted. If required, the Company will prepare
and file or transmit for filing a Rule 462(b) Registration Statement not later
than the date of execution of the U.S. Pricing Agreement. If a Rule 462(b)
Registration Statement is filed by the Company, the Company shall make payment
of, or arrange for payment of, the additional registration fee owing to the
Commission as required by Rule 111 of the 1933 Act Regulations.
(j) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Sections 13, 14 or 15 of
the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) The Company will use its reasonable efforts to maintain the
listing of the Securities on the New York Stock Exchange.
(l) During a period 180 days from the Closing Time, the Company
will not, without the prior written consent of Merrill Lynch, directly or
indirectly, sell, offer to sell, transfer, pledge, hypothecate, grant any
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option for the sale of or otherwise dispose of, any shares of Common Stock or
any security convertible into or exchangeable or exercisable for shares of the
Common Stock, except for (i) Securities to be sold to the U.S. Underwriters,
(ii) the award of options or other rights or the issuance of Common Stock
pursuant to employee and director stock purchase, equity incentive and option
plans as described in the Prospectus, (iii) the issuance of Common Stock
(whether upon conversion, exchange or otherwise) in connection with an
acquisition, whether by purchase of assets, merger or other form of business
acquisition or combination transaction, provided that the foregoing
restrictions apply to the issued Common Stock, or (iv) the adoption of a
shareholder rights plan.
(m) During a period of three years from the Closing Time, the
Company will deliver to Merrill Lynch, on behalf of the Representatives
promptly upon their being mailed or filed, copies of all current, regular and
periodic reports of the Company mailed to its shareholders or filed with the
New York Stock Exchange or with the Commission or any governmental authority
succeeding to any of the Commission's functions other than reports on Form 3
or Form 4 or registration statements on Form S-8.
SECTION 4. Payment of Expenses; Financial Advisory Fees.
(a) The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the printing and filing
of the Registration Statement as originally filed and of each amendment
thereto, of each preliminary prospectus, and of the Prospectus and any
amendments or supplements thereto, (ii) the cost of printing, or reproducing,
and distributing to the U.S. Underwriters copies of this Agreement and the
U.S. Pricing Agreement, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the U.S. Underwriters, (iv) the fees and
disbursements of the Company's counsel and accountants, (v) the qualification
of the Securities under securities laws and real estate syndication laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the fees of counsel at their normal hourly rate, in an aggregate amount
not to exceed $20,000 and reasonable charges and disbursements for the U.S.
Underwriters in connection therewith and in connection with the preparation of
the "blue sky" survey, (vi) the cost of printing, or reproducing and
delivering to
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the U.S. Underwriters copies of the "blue sky" survey, (vii) the fee of the
National Association of Securities Dealers, Inc., (viii) the fees and expenses
incurred in connection with the listing of the Securities on the New York
Stock Exchange, Inc., (ix) the costs and charges of any transfer agent or
registrar, and the cost of preparing share certificates, and (x) any transfer
taxes imposed on the sale of the Securities to the several U.S. Underwriters.
It is understood, however, that except as provided in this Section 4, the U.S.
Underwriters will pay all of their costs and expenses, including the fees and
disbursements of their counsel, and any expenses in connection with a
"tombstone" advertisement in connection with the offering of the Securities.
(b) If this Agreement is cancelled or terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the U.S. Underwriters.
(c) At Closing Time, the Company shall pay to Merrill Lynch a fee
(a "Financial Advisory Fee") in consideration of the financial advisory
services provided to the Company by Merrill Lynch in connection with the
Financing Plan. The Financial Advisory Fee to Merrill Lynch shall be equal to
.25% of the purchase price paid by the U.S. Underwriters for the purchase and
sale of the U.S. Securities hereunder. Payment of the Financial Advisory Fee
shall be, at the option of the Merrill Lynch, deducted from the amount of the
purchase price payable for the U.S. Securities hereunder, or made by certified
or official bank check or similar next day funds payable to the order of
Merrill Lynch.
(d) At Closing Time, the Company shall pay to Merrill Lynch an
additional fee equal to .25% of the purchase price paid by the U.S.
Underwriters for the purchase and sale of the U.S. Securities hereunder in the
event the sale of Securities is consummated on or before June 30, 1996.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the U.S. Underwriters hereunder are subject to the accuracy in
all material
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respects, as of the date hereof and at Closing Time, of the representations
and warranties of the Company herein contained, to the performance by the
Company of its obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M., New York City time, on the date hereof, or with the
consent of the Representatives, at a later time and date, not later, however,
than 5:30 P.M., New York City time, on the first business day following the
date hereof, or at later time and date as may be approved by a majority in
interest of the U.S. Underwriters; and at the Closing Time, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission or any state securities regulatory authority. If the Company
has elected to rely upon Rule 430A and/or Rule 434 of the 1933 Act
Regulations, (A) the price of the Securities and any price-related information
previously omitted from the effective Registration Statement pursuant to Rule
430A and/or Rule 434 shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed time
period and (B) prior to the Closing Time, the Company shall have provided
evidence satisfactory to the Representatives of timely filing, or a
post-effective amendment providing information shall have been promptly filed
and declared effective in accordance with the requirements of Rule 430A and/or
Rule 434 of the 1933 Act Regulations and shall have become effective not later
than 5:30 p.m., New York City time, on the Representation Date or, with the
consent of the Representatives, at a later time and date, not later, however,
than 5:30 p.m., New York City time, on the first business day following the
Representation Date, or of later date and time as shall have been approved by
a majority in interest of the Representatives. If a Rule 462(b) Registration
Statement is required, Rule 462(b) Registration Statement shall have been
transmitted to the Commission for filing and have become effective within the
prescribed time period, and, prior to the Closing Time, the Company shall have
provided to the U.S. Underwriters evidence of filing and effectiveness in
accordance with Rule 462(b) of the 1933 Act Regulations.
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31
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion of Jones Day, in form and substance
reasonably satisfactory to counsel for the U.S. Underwriters, dated as of
the Closing Time, with respect to the matters set forth below:
(i) The Company and IHC have been duly incorporated and
are validly existing as corporations in good standing under the laws
of the Commonwealth of Pennsylvania with the requisite power and
authority to own or lease their properties and conduct their
business as described in the Prospectus, and the Company and IHC
have the requisite power and authority to enter into and perform
their obligations under the other Company Documents to which they
are a party.
(ii) IHC is duly qualified or registered as a foreign
corporation to transact business and is in good standing in the
states of Arizona, California, Colorado, Connecticut, Florida,
Georgia, Hawaii, Illinois, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio,
Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia and
Washington and in the District of Columbia and Toronto, Ontario.
(iii) The Company has the authorized and outstanding
capital as set forth under the caption "Capitalization" in the
Prospectus, and the authorized capital of the Company, including the
Securities, conforms in all material respects to the description
thereof set forth under the caption "Description of Capital Stock"
in the Prospectus. All the issued and outstanding shares of Common
Stock of the Company has been duly authorized and are validly
issued, fully paid and non-assessable. To the
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knowledge of counsel, no shares of the capital stock of the Company
are reserved for any purpose except as described in the Prospectus.
To the knowledge of counsel, except as described in the Prospectus
and other than as provided in this Agreement, there are no
outstanding securities convertible into or exchangeable for any
capital shares of the Company and no outstanding options, rights
(preemptive or otherwise) or warrants to purchase or to subscribe
for shares of stock or any other securities of the Company.
(iv) The Securities have been duly authorized for
issuance and sale to the U.S. Underwriters and, when issued and paid
for in accordance with this Agreement and the U.S. Pricing
Agreement, will be validly issued, fully paid and non-assessable.
The issuance of the Securities is not subject to any preemptive or
other similar rights (other than pursuant to the Registration Rights
Agreement and the Stockholders' Agreements) arising under the
Pennsylvania Business Corporation Law, the Articles of Incorporation
or the by-laws of the Company, or any agreement to which the Company
is a party of which counsel is aware.
(v) Each of this Agreement and the U.S. Pricing Agreement
has been duly and validly authorized, executed and delivered by the
Company.
(vi) The execution and delivery of each of this Agreement
and the U.S. Pricing Agreement, and the performance by the Company
of its obligations set forth herein or therein do not and will not
conflict with or constitute a breach or violation of, or default
under: (1) any other Company Document; (2) any other contract or
agreement filed as an exhibit to the Registration Statement; (3) its
articles of incorporation or by-laws of the Company or (4) any law,
rule or administrative regulation applicable to the Company of any
governmental authority or agency of the United States or the
Commonwealth of Pennsylvania (except no opinion
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need be expressed as to the by-laws or rules of the NASD or any
state securities or real estate syndication laws); or (5) any order
or decree of any court or governmental authority of which counsel
is aware, except in each case for conflicts, breaches, violations or
defaults that, individually or in the aggregate, would not have a
Material Adverse Effect.
(vii) The Company is not an "investment company" or a
person "controlled by" an "investment company" within the meaning of
the 1940 Act.
(viii) No authorization, approval, consent or order of
any federal or state court or governmental authority or agency is
required in connection with the offering, issuance or sale of the
Securities hereunder, in each case, except as may be required in
connection with the sale of the Securities under the 1933 Act or the
1933 Act Regulations, the 1934 Act or the 1934 Act Regulations, the
by-laws and rules of the NASD, or state securities laws, real estate
syndication laws or as have been received prior to the date of
opinion.
(ix) At the time the Registration Statement became
effective, the Registration Statement (other than the operating
statistics, financial statements and other financial data included
therein or omitted therefrom, as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(x) To counsel's knowledge, there is no litigation or
governmental proceeding pending or threatened against the Company,
any of its Subsidiaries or any Hotel which would affect the subject
matter of this Agreement or is required to be described in the
Prospectus which is not so described.
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(xi) The statements in the Prospectus under "Business and
Properties -- Operations" and "-- Host Funding Transaction,"
"Management," "The Organization, Acquisition and Financing Plan" and
"Certain Relationships and Related Transactions," insofar as they
purport to summarize the provisions of documents referred to
therein, and the statements in the Prospectus under "Description of
Capital Stock," "Shares Eligible for Future Sale" and "Taxation,"
insofar as they purport to summarize the provisions of documents or
matters of law referred to therein or constitute legal conclusions
are accurate in all material respects.
(xii) To counsel's knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described in the Registration Statement,
or to be filed as exhibits thereto by the 1933 Act Regulations,
other than those described or referred to therein or filed as
exhibits thereto, and the descriptions thereof or references thereto
are accurate in all material respects.
(xiii) To counsel's knowledge, except as disclosed in
the Prospectus, there are no persons with registration or other
similar rights to have any securities of the Company registered
pursuant to the Registration Statement or otherwise registered by
the Company under the 1933 Act.
(xiv) The Securities are approved for listing on the New
York Stock Exchange upon official notice of issuance.
(xv) The Registration Statement has become effective
under the 1933 Act, and, to counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are pending or threatened by the Commission.
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In addition, Jones Day shall state that representatives of firm
have participated in conferences with officers, directors and employees of the
Company, representatives of the independent public accountants who examined
the financial statements contained in the Registration Statement and
Prospectus and representatives of the U.S. Underwriters concerning the
information contained in the Registration Statement and Prospectus and the
proposed responses to various items in Form S-1. On the basis thereof
(relying as to materiality and matters of fact upon the opinions or
certificates of officers and other representatives of the Company), but
without independent verification by counsel of, and without passing upon or
assuming any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus or any
amendments or supplements thereto, no facts have come to the attention of
counsel that cause them to believe that (i) the Registration Statement (other
than the operating statistics, financial statements (including the notes
thereto) and other financial data included therein or omitted therefrom as to
which counsel expresses no views), at the time Registration Statement became
effective, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading or (ii) the Prospectus (other than
the operating statistics, financial statements and other financial and
statistical data included therein or omitted therefrom as to which counsel
expresses no views), as of its date or at the Closing Time, contained or
contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In giving its opinion, counsel may rely, as to all matters of fact,
upon certificates and written statements of officers, directors and employees
of and accountants for the Company. Counsel may state that their opinion is
limited to matters governed by the federal laws of the United States, the laws
of the State of New York and the Business Corporation Law of the Commonwealth
of Pennsylvania.
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(2) The favorable opinion in form and substance reasonably
satisfactory to counsel for the Underwriters, dated as of the Closing
Time, of Marvin I. Droz, Esq., Senior Vice President and General Counsel
of the Company, with respect to the matters set forth below:
(i) The Company's Significant Subsidiaries other than IHC
(the "Other Subsidiaries") have been duly incorporated or formed and
are validly existing as corporations or entities in good standing
under the laws of the Commonwealth of Pennsylvania with the full
requisite power and authority to own or lease their properties and
conduct their business as described in the Prospectus, and the Other
Subsidiaries have the requisite power and authority to enter into
and perform their obligations under this Agreement and the other
Company Documents to which they are a party. The Other Subsidiaries
are duly qualified or registered as foreign corporations or entities
to transact business and are in good standing in each jurisdiction
in which qualifications are required, whether by reason of the
ownership, leasing or management of property or the conduct of
business, except where the failure to so qualify would not have a
Material Adverse Effect.
(ii) To counsel's knowledge, the Other Subsidiaries are
not in breach or violation of or default under (1) any of the
Company Documents; (2) any other contract, indenture, mortgage, loan
agreement, note, lease, joint venture or partnership agreement or
other instrument or agreement to which they are a party or by which
they are or any Hotel may be bound or subject to and of which
counsel is aware; (3) their articles of incorporation, by-laws or
other applicable governing document; (4) any applicable law, rule or
administrative regulation of the United States or the jurisdiction
of its incorporation; or (5) any order or administrative or court
decree of which counsel is aware, except for conflicts, breaches,
violations or defaults that,
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individually or in the aggregate, would not have a Material Adverse
Effect.
(iii) The execution and delivery of the Company Documents
other than this Agreement and the U.S. Pricing Agreement and the
performance by the Other Subsidiaries of their obligations set forth
therein, do not and will not conflict with or constitute a breach or
violation of, or default under: (1) any of the Company Documents;
(2) any other contract, indenture, mortgage, loan agreement, note,
lease joint venture or partnership agreement or other instrument or
agreement to which the Other Subsidiaries are a party or by which
they are or any Hotel may be bound or subject to and of which
counsel is aware; (3) the articles of incorporation, by-laws or
other governing documents of the Other Subsidiaries; (4) any law,
rule or administrative regulation applicable to the Other
Subsidiaries of any governmental authority or agency of the United
States or the Commonwealth of Pennsylvania; or (5) any order or
administrative or court decree of which counsel is aware, except
for conflicts, breaches, violations or defaults, that, individually
or in the aggregate, would not have a Material Adverse Effect.
(iv) To counsel's knowledge, there is no litigation or
any legal or governmental proceeding pending or threatened against
the Other Subsidiaries or any Hotel which would affect the subject
matter of this Agreement.
In giving its opinion, counsel may (i) rely, as to all matters of
fact, upon certificates and written statements of officers, directors,
partners and employees of and accountants for the Company and the Subsidiaries
and (ii) state that his opinion is limited to matters governed by the federal
laws of the United States and the Business Corporation Law of the Commonwealth
of Pennsylvania. In addition, while counsel is the Company's General
Counsel, he would not necessarily be familiar with all legal matters affecting
the Company or any of its Subsidiaries.
(3) The favorable opinion, dated as of the Closing Time, of
Skadden, Arps, Slate, Meagher &
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Flom, New York, New York ("Skadden Arps"), counsel for the
Representatives, (A) with respect to the matters set forth in (vi) (with
respect to parts (1) and (5) only), (ix) (with respect to the Company
only and with respect to this Agreement and the U.S. Pricing Agreement
only), and (xiv) of subsection (b)(1) of this Section and (B) containing
a statement similar to the statement referred to in the first sentence of
the next to last paragraph of Section 5(b)(1).
In giving its opinion, Skadden Arps may rely, (A) as to all matters
of fact, upon certificates and written statements of officers and employees of
and accountants for the Company, (B) as to the good standing and qualification
of the Company to do business in any state or jurisdiction, upon certificates
of appropriate government officials or opinions of counsel in jurisdictions,
which opinions shall be in form and substance satisfactory to counsel for the
U.S. Underwriters, and (C) as to certain matters of law, upon the opinions
given pursuant to Sections 5(b)(1) and 5(b)(2) above.
(c) At Closing Time, (i) there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any Material Adverse Change, and
(ii) the Representatives shall have received a certificate of the President or
a Vice President and the chief financial or chief accounting officer (or
officer acting in a similar capacity) of the Company, dated as of the Closing
Time, evidencing compliance with the provisions of this subsection (c) and
stating that the representations and warranties in Section 1 hereof are true
and correct, in all material respects, with the same force and effect as
though expressly made at and as of Closing Time.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from Coopers & Lybrand L.L.P. a letter,
dated the date of delivery thereof, in form and substance customary for
transactions as the Initial Public Offering, to the effect that (i) they are
independent public accountants with respect to the Company as required by the
1933 Act and the 1933 Act Regulations; (ii) it is its opinion that the
financial statements included in the Registra-
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tion Statement prepared by firm and covered by their opinions therein comply
as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations; (iii) based upon
limited procedures set forth in its letter, including a reading of the latest
available interim financial statements of the Company, a reading of the minute
books of the Company, inquiries of officials of the Company responsible for
financial and accounting matters and other inquiries and procedures as may be
specified in letter, nothing has come to its attention which causes Coopers &
Lybrand L.L.P. to believe that (A) the unaudited financial statements of the
Company included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration Statement, (B)
the operating data and balance sheet data set forth in the Prospectus under
the captions "Pro Forma Financial Data" were not determined on a basis
substantially consistent with that used in determining the corresponding
amounts in the audited financial statements included in the Registration
Statement, (C) the pro forma financial information included in the
Registration Statement was not prepared in accordance with the applicable
requirements of the 1933 Act or the 1933 Act Regulations with respect to pro
forma financial information or was not determined on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, or (D) at a specified date not more than five days
prior to the date of this Agreement, there has been any change in the capital
shares of the Company or any increase in the debt of the Company or any
decrease in the net assets of the Company as compared with the amounts shown
in March 31, 1996 historical financial information of the Company included in
the Registration Statement or, during the period from March 31, 1996 to a
specified date not more than five days prior to the date of this Agreement,
there were any decreases, as compared with the corresponding period in the
preceding year, in total revenues, net income or funds from operations of the
Company, except in all instances for changes, increases or decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur,
and (iv) in
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addition to the examination referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the
Representatives, and have found amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Company identified in letter.
(d) At the Closing Time, the Representatives shall have received
from Coopers & Lybrand L.L.P. a letter, dated the Closing Time, to the effect
that it reaffirms that statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the "specified date" referred to
shall be a date not more than five days prior to the Closing Time and, if the
Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that they have carried out procedures as specified in clause
(iv) of subsection (d) of this Section with respect to certain amounts,
percentages and financial information specified by the Representatives and
deemed to be a part of the Registration Statement pursuant to Rule 430A(b) and
have found amounts, percentages and financial information to be in agreement
with the records specified in clause (iv).
(e) At the Closing Time, the Securities shall be approved for
listing on the New York Stock Exchange upon official notice of issuance.
(f) At the Closing Time and at each Date of Delivery, if any,
counsel for the U.S. Underwriters shall have been furnished with documents
and opinions as they may reasonably require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein contemplated
and related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives and
counsel for the U.S. Underwriters.
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(g) At or prior to the Closing Time, the Representatives shall have
received a letter agreement from each director and executive officer of the
Company who is also a holder of Common Stock (the "Restricted Shares") and
Blackstone in form customary for transactions as the Initial Public Offering
to the effect that holder shall agree that during the period of 180 days from
the date hereof, holder will not, without the prior written consent of
Merrill Lynch, sell, offer to sell, transfer, grant any option for the sale
of, pledge, enter into any agreement to sell, or otherwise dispose of any
Restricted Shares, except (i) transfers to any family member or affiliate of
holder, including any trust established by holder, provided that the
foregoing restrictions apply thereto, (ii) transfers to the estate or legal
guardian of any other holder of shares of Common Stock, and (iii) pledges to
secure bona fide indebtedness or any disclosure of pledges.
(h) In the event that the U.S. Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
U.S. Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Transaction
Entities hereunder shall be true and correct in all material respects as of
the Date of Delivery and, at the Date of Delivery, the Representatives shall
have received:
(1) A certificate, dated Date of Delivery, of the President
or a Vice President and the chief financial or chief accounting officer
of the Company confirming that the certificates delivered at Closing Time
pursuant to Section 5(c) hereof remain true and correct in all material
respects as of Date of Delivery.
(2) The favorable opinion of Jones Day, in form and substance
reasonably satisfactory to counsel for the U.S. Underwriters, dated Date
of Delivery, relating to the Option U.S. Securities to be purchased on
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(b)(1) hereof.
(3) The favorable opinion of Marvin I. Droz, Esq., Senior Vice
President and General Coun-
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sel of the Company, in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters, dated Date of Delivery and otherwise
to the same effect as the opinion required by Section 5(b)(2) hereof.
(4) The favorable opinion of Skadden Arps, counsel for the
U.S. Underwriters, dated Date of Delivery, relating to the Option U.S.
Securities to be purchased on Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(b)(3) hereof.
(5) A letter from Coopers & Lybrand L.L.P. in form and
substance reasonably satisfactory to the Representatives and dated Date
of Delivery, substantially the same in form and substance as the letter
furnished to the Representatives pursuant to Section 5(d) hereof, except
that the "specified date" in the letter furnished pursuant to this
Section 5(i)(5) shall be a date not more than five days prior to Date of
Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time, and termination shall be without liability of any
party to any other party except as provided in Section 4 hereof.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each U.S.
Underwriter and each person, if any, who controls any U.S. Underwriter within
the meaning of Section 15 of 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement, or alleged untrue statement, of a material fact contained
in the Registration Statement (or any amendment thereto), including
the information deemed to be part of the Registration Statement
pursuant to Rule 430A(b) of the 1933 Act Regulations, if applicable,
any information
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contained in any Rule 462(b) Registration Statement, if applicable,
any information contained in any Term Sheet, if applicable, or the
omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information
furnished to the Company by any U.S. Underwriter through the
Representatives expressly for use in the Registration Statement (or
any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided,
further, that this indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any U.S.
Underwriter from whom the person asserting any losses, liabilities,
claims, damages or expenses purchased Securities, or any person
controlling U.S. Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on
behalf of U.S. Underwriter to person, if is required by law, at
or prior to the written confirmation of the sale of Securities to
person and if the Prospectus (as so amended or supplemented) would
have corrected the defect giving rise to loss, liability, claim,
damage or expense;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever,
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as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever for which indemnification is provided under
subsection (i) above if settlement is effected with the written
consent of the indemnifying party; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the reasonable fees and
disbursements of one law firm chosen by Merrill Lynch to act as
counsel for all underwriters and their controlling persons),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever for which indemnification is provided under subsection
(i) or (ii) above, to the extent that any expense is not paid under
(i) or (ii) above.
(b) Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, each of the Company's directors and each of the
Company's officers who signs the Registration Statement or any amendment
thereto and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a)(i),
(ii) and (iii) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by U.S. Underwriter through the Representatives expressly for use in
the Registration Statement (or any amendment thereto) or preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claims asserted
against or any action
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commenced against it in respect of which indemnity may be sought hereunder,
but failure to so notify an indemnifying party shall not relieve indemnifying
party from any liability which it may have otherwise than on account of this
indemnity agreement except to the extent the indemnifying party has been
prejudiced in any material respect by failure. An indemnifying party may
participate at its own expense in the defense of any action. If it so elects
within a reasonable time after receipt of notice, an indemnifying party,
jointly with any other indemnifying parties receiving notice, may assume the
defense of action with counsel chosen by it and reasonably approved by the
indemnified parties defendant in action, unless indemnified parties
reasonably object to assumption on the ground that there may be legal
defenses available to them which are different from or in addition to those
available to indemnifying party. If an indemnifying party assumes the
defense of action, the indemnifying parties shall not be liable for any fees
and expenses of counsel for the indemnified parties incurred thereafter in
connection with action. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 6 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent provided that
consent was not unreasonably withheld.
SECTION 7. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 is
for any reasons held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, on the one hand, and the
U.S. Underwriters, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated
by said indemnity agreement incurred by the Company, on the one hand, and one
or more of the U.S. Underwriters, on the other hand, as incurred, in
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proportions that the U.S. Underwriters are responsible for that portion
represented by the percentage that the sum of the fees payable pursuant to
Sections 4(c) and (d) hereof and the underwriting discount appearing on the
cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company, responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of fraudulent misrepresentation. For
purposes of this Section, each person, if any, who controls a U.S. Underwriter
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as U.S. Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act shall have the same rights to contributions as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and agreements contained in this
Agreement and the U.S. Pricing Agreement, or contained in certificates of
officers or authorized representatives of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by
written notice to the Company, at any time at or prior to Closing Time (i) if
there has been, since the date of this Agreement or since the respective dates
as of which information is given in the Registration Statement, any Material
Adverse Change, (ii) if there has occurred any material adverse change in the
financial markets in the United States or any outbreak of hostilities or
escalation of existing hostilities or other calamity or crisis the effect of
which on the financial markets of the United States is as to make it, in the
judgment of the Representatives, impracticable
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to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in the Common Stock has been suspended by the
Commission or if trading generally on either the New York Stock Exchange, Inc.
or the American Stock Exchange, Inc. has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by any of Federal, New York or Pennsylvania authorities.
(b) If this Agreement is terminated pursuant to this Section,
termination shall be without liability of any party to any other party except
as provided in Sections 4 and 10 hereof. Notwithstanding any termination,
the provisions of Section 4, 6, and 7 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the U.S. Underwriters shall fail at the Closing
Time to purchase the Initial U.S. Securities or on the Date of Delivery to
purchase the Option U.S. Securities which it or they are obligated to purchase
under this Agreement and the U.S. Pricing Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting U.S.
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Securities in amounts as may be agreed upon and upon
the terms herein set forth; if, however, the Representatives shall not have
completed arrangements within 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the Securities, each of the non-defaulting U.S. Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that its respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall
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terminate without liability on the part of any non-defaulting U.S.
Underwriter; provided that if default occurs with respect to the Option U.S.
Securities after the Closing Time, this Agreement will not terminate as to the
Initial U.S. Securities.
No action taken pursuant to this Section shall relieve any
defaulting U.S. Underwriter from liability in respect of its default.
In the event of any default which does not result in a termination
of this Agreement, any of the Representatives or the Company shall have the
right to postpone Closing Time for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements.
SECTION 11. Notices.
All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the U.S. Underwriters shall be
directed to the Representatives at Merrill Lynch World Headquarters, North
Tower, World Financial Center, New York, New York 10281-1326, attention of
Michael F. Profenius, Managing Director, with a copy to Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York 10022, attention of
Patrick J. Foye, Esq.; notices to the Company shall be directed to it at
Foster Plaza 10, 680 Andersen Drive, Pittsburgh, Pennsylvania 15220, attention
of Marvin I. Droz, Senior Vice President and General Counsel, with a copy to
Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022,
attention of Robert A. Profusek, Esq.
SECTION 12. Parties.
This Agreement and the U.S. Pricing Agreement shall each inure to
the benefit of and be binding upon the parties hereto and their respective
successors. Nothing expressed or mentioned in this Agreement or the U.S.
Pricing Agreement is intended or shall be construed to give any person, firm
or corporation, other than those referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or
48
49
claim under or in respect of this Agreement or the U.S. Pricing Agreement or
any provision herein or therein contained. This Agreement and the U.S.
Pricing Agreement and all conditions and provisions hereof and thereof are
intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any U.S. Underwriter shall be deemed to be a successor by reason merely
of practice.
13. Governing Laws and Time.
This Agreement and the Pricing U.S. Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said State. Specified times of day
refer to New York City time. If the foregoing is in accordance with your
understanding of our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the U.S. Underwriters and the Company in
accordance with its terms.
Very truly yours,
INTERSTATE HOTELS COMPANY
By:
Name: W. Thomas Parrington, Jr.
Title: President and Chief
Executive Officer
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INCORPORATED
SMITH BARNEY INC.
CREDIT LYONNAIS SECURITIES (USA) INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: -------------------------------------------
Name:
Title: Authorized Signatory
For themselves and as Representatives of the other
U.S. Underwriters named in Schedule A hereto.
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50
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Securities
- - ------------------------ ------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . .
Montgomery Securities . . . . . . . . . . . .
Morgan Stanley & Co. Incorporated . . . . . .
Smith Barney Inc. . . . . . . . . . . . . . .
Credit Lyonnais Securities (USA) Inc. . . . .
[ADD OTHER UNDERWRITERS]
51
EXHIBIT A
9,350,000 Shares
INTERSTATE HOTELS COMPANY
(a Pennsylvania corporation)
Common Stock
(Par Value $.01 Per Share)
U.S. PRICING AGREEMENT
June 20, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INCORPORATED
SMITH BARNEY INC.
CREDIT LYONNAIS SECURITIES (USA) INC.
as Representative of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Reference is made to the U.S. Purchase Agreement dated June 20, 1996,
(the "U.S. Purchase Agreement") relating to the purchase by the several U.S.
Underwriters named in Schedule A thereto (the "U.S. Underwriters"), for whom
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Ex. A-1
52
Incorporated, Montgomery Securities, Morgan Stanley & Co. Incorporated, Smith
Barney Inc. and Credit Lyonnais Securities (USA) Inc. are acting as
representatives (the "Representatives"), of the above shares of common stock
(the "Securities") of Interstate Hotels Company (the "Company").
Pursuant to Section 2 of the U.S. Purchase Agreement, the Company agrees
with each U.S. Underwriter as follows:
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $21.
2. The purchase price per share for the Securities to be paid by the
U.S. Underwriters shall be $19.625, being an amount equal to the initial
public offering price set forth above less $1.375 per share.
Ex. A-2
53
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the U.S. Underwriters and the Company in accordance with its
terms.
Very truly yours,
INTERSTATE HOTELS COMPANY
By: -------------------------------------
Name: W. Thomas Parrington, Jr.
Title: President and Chief
Executive Officer
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INCORPORATED
SMITH BARNEY INC.
CREDIT LYONNAIS SECURITIES (USA) INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ------------------------------------------------------------
Name:
Title: Authorized Signatory
For themselves and as Representatives of the other
U.S. Underwriters named in the U.S. Purchase Agreement.
Ex. A-3