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Exhibit 1.1(b)
600,000 Shares
INTERSTATE HOTELS COMPANY
(a Pennsylvania corporation)
Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
December [ ], 1996
MERRILL LYNCH INTERNATIONAL
CREDIT LYONNAIS SECURITIES
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SMITH BARNEY INC.
as Representatives of the several International
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 International ("Merrill Lynch"),
Credit Lyonnais Securities ("Credit Lyonnais"), Montgomery Securities
("Montgomery"), Morgan Stanley & Co. International Limited ("Morgan Stanley")
and Smith Barney Inc. ("Smith Barney"), and each of the other underwriters
named in Schedule A hereto (collectively, the "International Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Merrill Lynch, Credit Lyonnais,
Montgomery, Morgan Stanley and Smith Barney are acting as representatives (in
such capacity, Merrill Lynch, Credit
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Lyonnais, Montgomery, Morgan Stanley and Smith Barney shall hereinafter be
referred to collectively as the "Representatives"), with respect to the sale by
the Company and the purchase by the International 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 International Pricing Agreement
referred to below) and with respect to the grant by the Company to the
International Underwriters, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 90,000
additional shares of Common Stock to cover over-allotments, in each case except
as may otherwise be provided in the International Pricing Agreement (as
hereinafter defined). The 600,000 shares of Common Stock (the "Initial
International Securities") to be purchased by the International Underwriters
and all or any part of the 90,000 shares of Common Stock subject to the option
described in Section 2(b) hereof (the "Option International Securities") are
collectively hereinafter called the "Securities."
Prior to the purchase and public offering of the Securities by the several
International Underwriters, the Company and the Representatives, acting on
behalf of the several International Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto (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 Representatives and shall specify such 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 International
Pricing Agreement. From and after the date of the execution and delivery of the
International Pricing Agreement, this Agreement shall be deemed to incorporate
the International Pricing Agreement.
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of 3,400,000 shares of Common Stock (the "Initial
U.S. Securities") through arrangements with certain underwriters within the
United States and Canada
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(the "U.S. Underwriters") for whom Merrill Lynch & Co., Montgomery Securities,
Morgan Stanley & Co. Incorporated, Smith Barney Inc. and Credit Lyonnais
Securities (USA) Inc. are acting as the representatives (the "U.S. Repre-
sentatives") and the grant by the Company to the U.S. Underwriters, acting
severally and not jointly, of an option to purchase all or any part of the
International Underwriters' pro rata portion of up to 510,000 additional shares
of Common Stock solely to cover over-allotments, if any (the "Option U.S.
Securities", and collectively with the Initial U.S. Securities, the "U.S.
Securities").
Prior to the purchase and public offering of the U.S. Securities by the
several U.S. Underwriters, the Company and the U.S. Representatives, acting on
behalf of the several U.S. Underwriters, shall enter into an agreement
substantially in the form of Exhibit A to the U.S. Purchase Agreement (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 U.S. Representatives and shall specify such applicable information as
is indicated in Exhibit A to the U.S. Purchase Agreement. The offering of the
U.S. Securities will be governed by U.S. Purchase 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, the U.S. Purchase Agreement shall be
deemed to incorporate the U.S. Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-15507) and a
related preliminary prospectus for the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including the information, 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
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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 International 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 such 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 such revised prospectus from and after the time
it was provided to the International Underwriters for such use. Two forms of
prospectuses are to be used in connection with the offering and sale of the
Securities to the International 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 International Underwriters propose to
make an offering of the Securities as soon as the Representatives deem
advisable after the Registration Statement becomes effective and the
International Pricing Agreement has been executed and delivered.
The Company has reserved up to 100,000 of the Securities (the "Reserved
Securities") for offering and sale to certain of its employees, customers,
vendors and business associates pursuant to a reserve share program
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as stated in the "Underwriting" section of the Prospectus (the "Reserve Share
Program"). The Securities under the Reserve Share Program will be sold to the
employees, customers, vendors and business associates by the International
Underwriters pursuant to this Agreement and by the U.S. Underwriters pursuant
to the U.S. Purchase Agreement at the public offering price. Any such shares
not orally confirmed for purchase by such persons by the end of the first
business day following the date of this Agreement will be offered to the public
by the International Underwriters and the U.S. Underwriters as set forth in the
Prospectus.
SECTION 1. Representations and Warranties of the Company.
(a) The Company represents and warrants to each International Underwriter
as of the date hereof and as of the date of the International Pricing Agreement
(such 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 International 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 International Underwriters for such use) and at the
Closing Time referred to in Section 2 hereof, will comply in all material
respects with the requirements of the 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
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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 International 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 such
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 results of operations for the respective periods specified.
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(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 all acquisitions (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 such
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 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
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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 such 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
International 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 such 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 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
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registered as a foreign entity to transact business and is in good
standing in each jurisdiction in which such 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 constitute, at the Closing
Time, 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 such 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 such 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 such
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 into or
exchangeable for any capital stock of the Company's Subsidiaries and no
outstanding options, rights (preemptive or otherwise) or
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warrants to purchase or to subscribe for shares of such capital stock or
any other securities of Company's Subsidiaries other than pursuant to such
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 such Common Stock or any other securities of the Company.
(x) The Securities have been duly authorized for issuance and sale to
the International 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 International 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 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
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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 such entity is a party or by
which such entity may be bound, or to which any of its property or assets
or any Hotel may be bound or subject, except for such violations and
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.
(xiii) [UPDATE ACCORDING TO EXHIBITS] (A) This Agreement and the U.S.
Purchase 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 International Pricing
Agreement and the U.S. 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
Credit Agreement dated June 25, 1996 as amended October [ ], 1996 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; (D) at the Closing time, the Master Agreement, dated as of
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November 4, 1996, among Equity Inns Partnership, IHC, Equity Inns, Inc.,
Crossroads/Memphis Partnership, L.P. and Crossroads Furniture Company,
L.L.C. (the "Master 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. This
Agreement, the International Pricing Agreement, the Credit Agreement, the
Master 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
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 such 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
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"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 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 such 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.
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(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 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 such 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
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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 such 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.
(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 such 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 such 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 such consent would have a Material Adverse Effect, except such as
may have been received prior to the date of this Agreement.
(xxiv) Each of the Transaction Entities possesses, or has made
application for, such 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 such 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
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revocation or modification of any such 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.]
(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 such 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.
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(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 such 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 (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
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(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, pesticides, explosives, radioactive materials, dioxins, urea
formaldehyde insulation or any constituent of any such 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 9601, et seq.) ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. section 6901, et
seq.), the Clean Air Act, as amended (42 U.S.C. section 7401, et seq.), the
Clean Water Act, as amended (33 U.S.C. section 1251, et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. section 2601, et seq.), the
Occupational Safety and Health Act of 1970, as amended (29 U.S.C. section 651,
et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
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
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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 such 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.
(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 such 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 International Underwriters or U.S. Underwriters shall be deemed
a representation and warranty by such entity or person, as the case may be, to
each International Underwriter or U.S. Underwriters as to the matters covered
thereby.
SECTION 2. Sale and Delivery to International 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 International Underwriter, severally and not
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jointly, and each International Underwriter, severally and not jointly, agrees
to purchase from the Company, at the price per share set forth in the
International Pricing Agreement, the number of Initial International Securities
set forth in Schedule A hereto opposite the name of such International
Underwriter (except as otherwise provided in the International Pricing
Agreement), plus any additional number of Initial International Securities
which such International 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 public offering price and the purchase price per
share to be paid by the several International Underwriters for the
Securities each have been determined and set forth in the International
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 purchase price per share to be paid by the several
International Underwriters for the Securities shall be an amount equal to
the public offering price, less an amount per share to be determined by
agreement between the Representatives and the Company. The 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 public
offering price and the purchase price, when so determined, shall be set
forth in the International Pricing Agreement. In the event that such
prices have not been agreed upon and the International 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
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the terms and conditions herein set forth, the Company hereby grants an option
to the International Underwriters, severally and not jointly, to purchase up to
an additional 90,000 shares of Common Stock at the price per share set forth in
the International 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 International Pricing Agreement), provided that if such
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 International Securities upon notice by the
Representatives to the Company setting forth the number of Option International
Securities as to which the several International Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option International Securities. Any such 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 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
International Securities, the Option International Securities shall be
purchased by the International Underwriters, severally and not jointly, in
proportion to their respective Initial International Securities underwriting
obligations as set forth in Schedule A.
(c) Payment of the purchase price for, and delivery of certificates for,
the Initial International Securities shall be made at the office of Jones, Day,
Reavis & Pogue ("Jones Day"), 599 Lexington Avenue, New York, New York 10022,
or at such 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 accor-
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dance 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 International Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein called
"Closing Time"). In addition, in the event that any or all of the Option
International Securities are purchased by the International Underwriters,
payment of the purchase price for, and delivery of certificates for, such
Option International Securities shall be made at the above-mentioned offices of
Jones Day, or at such 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
International 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 International
Securities in federal funds for one day at Merrill Lynch's overnight borrowing
rate shall be deducted from such payment and shall reduce the purchase price
payable for the Initial International Securities by such amount. Payment for
the Option International Securities 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 International
Underwriters of certificates for the Securities to be purchased by them.
Certificates for the Initial International Securities and the Option
International Securities, if any, shall be in such denominations and registered
in such 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 International Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Initial International
Securities and the Option International Securities, if any, which it has agreed
to purchase. Merrill Lynch, Credit Lyonnais, Montgomery, Morgan Stanley and
Smith Barney, individually and not as representa-
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tives of the International Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial International Securities or
the Option International Securities, if any, to be purchased by any
International Underwriter whose payment has not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but any such payment
shall not relieve such International Underwriter from its obligations
hereunder. The certificates for the Initial International Securities and the
Option International 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 International 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 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 International Underwriters in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the
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Registration Statement becomes effective, whether or not such 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 such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such amendment or supplement or use any
such prospectus to which the Representatives or counsel for the International
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 International Underwriter, from time
to time during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such International Underwriter reasonably may
request for the purposes contemplated by 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 International 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 International 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
International Underwriters a reasonable number of copies of such amendment or
supplement.
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(f) The Company will endeavor, in cooperation with the International
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such 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 such 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 such statements and reports as may be required by
the laws of such jurisdiction to continue such 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 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 Pro-
ceeds."
(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 International Pricing
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26
Agreement, the Company will prepare and file with the Commission in accordance
with such Rule 430A and/or Rule 434 and Rule 424(b) of the 1933 Act Regulations
copies of an amended Prospectus, or, if required by such 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 International 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 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 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 International 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.
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(m) During a period of [THREE] years from the Closing Time, the Company or
any partnership affiliated with the Company will not, without the prior written
consent of Merrill Lynch, waive or assign any options or rights granted to the
Company in relation to the Company's acquisition of Equity Inns, including, but
not limited to, any right of first offer to purchase or manage any property.
(n) 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.
(o) The Company hereby agrees that it will ensure that the Reserved
Securities will be restricted as required by the National Association of
Securities Dealers, Inc. (the "NASD") or the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three months following the
date of this Agreement. The International Underwriters will notify the Company
as to which persons will need to be so restricted. At the request of the
International Underwriters, the Company will direct the transfer agent to place
a stop transfer restriction upon such securities for such period of time.
Should the Company release, or seek to release, from such restrictions any of
the Reserved Securities, the Company agrees to reimburse the International
Underwriters for any reasonable expenses (including, without limitation, legal
expenses) they incur in connection with such release.
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 distribut-
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ing to the International Underwriters copies of this Agreement and the
International Pricing Agreement, (iii) the preparation, issuance and delivery
of the certificates for the Securities to the International 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 INTERNATIONAL 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 THE INTERNATIONAL 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 International Underwriters and (xi) all costs and
expenses of the International Underwriters, including the fees and
disbursements of counsel for the International Underwriters, in connection with
matters related to the Reserved Securities which are designated by the Company
for sale to employees and others having a business relationship with the
Company. It is understood, however, that except as provided in this Section 4,
the International 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 International Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the International Underwriters.
SECTION 5. Conditions of International Underwriters' Obligations. The
obligations of the International Underwriters hereunder are subject to the
accu-
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racy in all material 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
such later time and date as may be approved by a majority in interest of the
International 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 such 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 such timely filing, or a post-effective
amendment providing such 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 such 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, such 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 International Underwriters evidence of such filing and
effectiveness in accordance with Rule 462(b) of the 1933 Act Regulations.
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30
(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 International Underwriters, dated as of the
Closing Time, with respect to the matters set forth below:
(i) 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 the requisite power and authority to own or lease its
properties and conduct its business as described in the Prospectus, and
the Company has the requisite power and authority to enter into and
perform its obligations under this Agreement and the other Company
Documents to which it is a party.
(ii) 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 and its Significant Subsidiaries,
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 and its Subsidiaries have been duly authorized and
are validly issued, fully paid and non-assessable. To the knowledge of
such 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
such 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 such stock or any other securities
of the Company.
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(iii) The Securities have been duly authorized for issuance and sale
to the International Underwriters and, when issued and paid for in
accordance with this Agreement and the International 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 such counsel is aware.
(iv) Each of this Agreement and the International Pricing Agreement
has been duly and validly authorized, executed and delivered by the
Company.
(v) The execution and delivery of each of this Agreement and the
International 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 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 such 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.
(vi) The Company is not an "investment company" or a person
"controlled by" an "investment company" within the meaning of the 1940
Act.
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32
(vii) 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 such 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 such as have been
received prior to the date of such opinion.
(viii) 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.
(ix) To such 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.
(x) The statements in the Prospectus under "Business and Properties --
Operations," "Management" 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.
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(xi) To such 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.
(xii) To such 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.
[(XIII) THE SECURITIES ARE APPROVED FOR LISTING ON THE NEW YORK STOCK
EXCHANGE UPON OFFICIAL NOTICE OF ISSUANCE.]
(xiv) The Registration Statement has become effective under the 1933
Act, and, to such 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.
In addition, Jones Day shall state that representatives of such 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 International 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 such 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
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or any amendments or supplements thereto, no facts have come to the attention
of such 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 such counsel expresses no views), at the time such 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 such 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, such 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.
(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 (the "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 Subsidiaries have the
requisite power and authority to enter into and
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perform their obligations under this Agreement and the other Company
Documents to which they are a party. The Subsidiaries are duly
qualified or registered as foreign corporations or entities to
transact business and are in good standing in each jurisdiction in
which such 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 such counsel's knowledge, the 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 such
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 such counsel is aware, except for conflicts, breaches,
violations or defaults that, 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 International Pricing Agreement and the
performance by the 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 Subsidiaries are a party or by which they are
or any Hotel may be bound or subject to and of which such counsel is
aware; (3) the articles of incorporation, by-laws or other governing
docu-
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ments of the Subsidiaries; (4) any law, rule or administrative
regulation applicable to the 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 such 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 such counsel's knowledge, there is no litigation or any
legal or governmental proceeding pending or threatened against the
Subsidiaries or any Hotel which would affect the subject matter of
this Agreement.
In giving its opinion, such 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, as to the knowledge of such counsel, such opinion
may recite that such knowledge is limited to matters in which counsel has had
direct involvement or about which such counsel has received notification from
senior management of the Company or otherwise and that, since such counsel has
no direct management responsibilities for the Company, there may be matters
concerning the Company of which such counsel is not aware.
(3) The favorable opinion, dated as of the Closing Time, of Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York ("Skadden Arps"),
counsel for the Representatives, (A) with respect to the matters set forth
in (viii) (with respect to the Company only and with respect to this
Agreement and the International Pricing Agreement only) and [(XIII)] 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).
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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 such jurisdictions,
which opinions shall be in form and substance satisfactory to counsel for the
International 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 such
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 such as the
offering of the Securities, 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 Registration Statement prepared by such 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 such other
inquiries and procedures as may be specified in
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such 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 September 30, 1996 historical
financial information of the Company included in the Registration Statement or,
during the period from September 30, 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 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 such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of the
Company identified in such letter.
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(e) 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 such amounts, percentages and financial information to be in
agreement with the records specified in such clause (iv).
[(F) AT THE CLOSING TIME, THE SECURITIES SHALL BE APPROVED FOR LISTING ON
THE NEW YORK STOCK EXCHANGE UPON OFFICIAL NOTICE OF ISSUANCE.]
(g) At the Closing Time and at each Date of Delivery, if any, counsel for
the International Underwriters shall have been furnished with such 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 International Underwriters.
(h) 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 such as the offering of the
Securities to the effect that such holder shall agree that during the
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period of 180 days from the date hereof, such 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
members or affiliate of such holder, including any trust established by such
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 foreclosure of such
pledges.
(i) In the event that the International Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
International 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 such 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 such Date of Delivery.
(2) The favorable opinion of Jones Day, in form and substance
reasonably satisfactory to counsel for the International Underwriters,
dated such Date of Delivery, relating to the Option International
Securities to be purchased on such 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 Counsel of the Company, in form and substance
reasonably satisfactory to counsel for the International Underwriters,
dated such 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
International Underwriters, dated such Date of Delivery, relating to the
Option International Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 5(b)
(3) hereof.
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(5) A letter from Coopers & Lybrand L.L.P. in form and substance
reasonably satisfactory to the Representatives and dated such 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 such 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 such 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 International
Underwriter and each person, if any, who controls any International 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 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
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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 International
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 International
Underwriter from whom the person asserting any such losses, liabilities,
claims, damages or expenses purchased Securities, or any person
controlling such International Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
such amendments or supplements thereto) was not sent or given by or on
behalf of such International Underwriter to such person, if such is
required by law, at or prior to the written confirmation of the sale of
such Securities to such person and if the Prospectus (as so amended or
supplemented) would have corrected the defect giving rise to such loss,
liability, claim, damage or expense;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, 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 such settlement is effected with the written consent of the
indemnifying party; and
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(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 such
expense is not paid under (i) or (ii) above.
(b) Each International 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 such
International Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such 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 commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability which it may have otherwise than on
account of this indemnity agreement except to the extent the
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indemnifying party has been prejudiced in any material respect by such failure.
An indemnifying party may participate at its own expense in the defense of any
such action. If it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel
chosen by it and reasonably approved by the indemnified parties defendant in
such action, unless such indemnified parties reasonably object to such
assumption on the ground that there may be legal defenses available to them
which are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such 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 such consent was not unreasonably withheld.
(d) In connection with the offer and sale of the Reserved Securities, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the International Underwriters from and against any and all losses,
liabilities, claims, damages and expenses incurred by them as a result of the
failure of eligible employees of the Company and other persons to pay for and
accept delivery of Reserved Securities which, by the end of the first business
day following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
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
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although applicable in accordance with its terms, the Company, on the one hand,
and the International 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 International Underwriters, on the other hand, as
incurred, in such proportions that the International Underwriters are
responsible for that portion represented by the percentage that the sum of the
underwriting discount appearing on the cover page of the Prospectus bears to
the public offering price appearing thereon and the Company, responsible for
the balance, and the fees payable pursuant to Sections 4(c) and (d) hereof;
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 such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an International Underwriter within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as such International
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 International 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 International Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the International 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,
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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 in the international financial markets 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
such as to make it, in the judgment of the Representatives, impracticable 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, such
termination shall be without liability of any party to any other party except
as provided in Sections 4 and 10 hereof. Notwithstanding any such 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 International Underwriters shall fail at the Closing
Time to purchase the Initial International Securities or on the Date of
Delivery to purchase the Option International Securities which it or they are
obligated to purchase under this Agreement and the International 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 International Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representatives shall not have completed such arrangements within such
24-hour period, then:
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(a) If the number of Defaulted Securities does not exceed 10% of the
International Securities, each of the non-defaulting International 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
International Underwriters, or
(b) If the number of Defaulted Securities exceeds 10% of the International
Securities, this Agreement shall terminate without liability on the part of any
non-defaulting International Underwriter; provided that if such default occurs
with respect to the Option International Securities after the Closing Time,
this Agreement will not terminate as to the Initial International Securities.
No action taken pursuant to this Section shall relieve any defaulting
International Underwriter from liability in respect of its default.
In the event of any such 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 International 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 LLP, 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.
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SECTION 12. Parties.
This Agreement and the International 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
International 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 claim under or in respect of this Agreement or the International Pricing
Agreement or any provision herein or therein contained. This Agreement and the
International 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 International Underwriter shall be deemed to be a successor
by reason merely of such practice.
13. Governing Laws and Time.
THIS AGREEMENT AND THE INTERNATIONAL PRICING 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 WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICT OF LAW. Specified times of day refer to New
York City time.
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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 International 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 INTERNATIONAL
CREDIT LYONNAIS SECURITIES
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SMITH BARNEY INC.
as Representatives of the several International
Underwriters
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-------------------------------
Name:
Title: Authorized Signatory
For themselves and as Representatives of the other International Underwriters
named in Schedule A hereto.
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SCHEDULE A
Number of
Initial
International
Name of International Underwriter Securities
- --------------------------------- ----------
Merrill Lynch International.................................................. 120,000
Credit Lyonnais Securities................................................... 120,000
Montgomery Securities........................................................ 120,000
Morgan Stanley & Co. International Limited................................... 120,000
Smith Barney Inc............................................................. 120,000
-------
600,000
51
EXHIBIT A
600,000 Shares
INTERSTATE HOTELS COMPANY
(a Pennsylvania corporation)
Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PRICING AGREEMENT
December [ ], 1996
MERRILL LYNCH INTERNATIONAL
CREDIT LYONNAIS SECURITIES
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SMITH BARNEY INC.
as Representatives of the several International
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 International Purchase Agreement dated December
[ ], 1996, (the "International Purchase Agreement") relating to the purchase by
the several International Underwriters named in Schedule A thereto (the "Inter-
Ex. A-1
52
national Underwriters"), for whom Merrill Lynch & International, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Credit Lyonnais Securities, Montgomery
Securities, Morgan Stanley & Co. International Limited and Smith Barney 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 International Purchase Agreement, the Company
agrees with each International Underwriter as follows:
1. The public offering price per share for the Securities, determined as
provided in said Section 2, shall be $[ ].
2. The purchase price per share for the Securities to be paid by the
International Underwriters shall be $[ ], being an amount equal to the public
offering price set forth above less $[ ] 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 International 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 INTERNATIONAL
CREDIT LYONNAIS SECURITIES
MONTGOMERY SECURITIES
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SMITH BARNEY INC.
as Representatives of the several International
Underwriters
By:
---------------------------------
Name:
Title: Authorized Signatory
For themselves and as Representatives of the other
International Underwriters named in the International Purchase
Agreement.
Ex. A-3