Exhibit 10.10
CAPSTAR HOTEL COMPANY
UNDERWRITING AGREEMENT
October 9, 1997
Lehman Brothers Inc.
BT Alex. Brown Incorporated
Goldman Sachs & Co.
Merrill Lynch & Co.
NationsBanc Montgomery Securities, Inc.
Smith Barney Inc.
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Dear Sirs:
CapStar Hotel Company, a Delaware corporation (the "Company"), together
with certain stockholders of the Company named in Schedule 2 hereto (the
"Selling Stockholders"), propose to sell an aggregate of 6,250,000 shares (the
"Firm Stock") of the Company's Common Stock, par value $.01 per share (the
"Common Stock") Of the 6,250,000 shares of the Firm Stock, 5,016,222 are being
sold by the Company and 1,233,778 by the Selling Stockholders. In addition, the
Company proposes to grant to the Underwriters named in Schedule 1 hereto (the
"Underwriters") an option to purchase up to an additional 937,500 shares of the
Common Stock on the terms and for the purposes set forth in Section 3 (the
"Option Stock"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "Offered Securities." This is to confirm the
agreement concerning the purchase of the Offered Securities from the Company and
the Selling Stockholder by the Underwriters named in Schedule 1 hereto (the
"Underwriters").
At or prior to August 23, 1996, the Company completed a series of
transactions described under the heading "The Formation Transactions" in that
certain prospectus dated August 20, 1996, relating to the initial public
offering of 9,250,000 shares of Common Stock of the Company (the "IPO
Prospectus"). As part of these transactions, the Company and CapStar LP
Corporation ("CapStar Sub") became the sole partners of CapStar Management
Company, L.P., as governed by an amended and restated Agreement of Limited
Partnership, as amended ("CapStar Management"), and CapStar Management was
restructured to own, directly or indirectly, all of the properties and other
assets previously owned, directly or indirectly, by EquiStar Hotel Investors,
L.P. and CapStar Management Company, L.P. (as constituted as of
August 20, 1996, "Predecessor CapStar Management"), and their respective
subsidiaries, including owned hotel properties or interests therein and
management agreements with hotels. As used herein the term "Formation
Transactions" shall mean the occurrence of all the events described in the IPO
Prospectus under the heading "The Formation Transactions," the execution of
acquisition agreements for the Additional Hotels (as defined in the IPO
Prospectus) and the other transactions related thereto, and the term
"Predecessor Entities" shall mean the subsidiaries of EquiStar Hotel Investors,
L.P. together with Predecessor CapStar Management and its subsidiaries for all
periods prior to the consummation of the Formation Transactions. Subsequent to
consummation of the Formation Transactions, CapStar Management was restructured
such that all of the Company's assets are currently held indirectly by and
operated through CapStar Management and CapStar Management II, L.P. ("CapStar
Management II" and, together with CapStar Management, the "Operating
Partnerships"), the Company's subsidiary operating partnerships.
1. Representations, Warranties and Agreements of the Company and the
Operating Partnerships. The Company and the Operating Partnerships, jointly and
severally, represent, warrant and agree that:
(a) A registration statement on Form S-3 (333-34253), and amendments
thereto, with respect to the Offered Securities has (i) been
prepared by the Company in conformity with the requirements of
the United States Securities Act of 1933 (the "Securities Act")
and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act. Copies of such registration statement and the
amendments thereto have been delivered by the Company to you as
the representatives (the "Representatives") of the Underwriters.
As used in this Agreement, "Effective Time" means the date and
the time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date of
the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or amendments
thereof, before it became effective under the Securities Act and
any prospectus filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the
Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time,
including any documents incorporated by reference therein at such
time and all information contained in the final prospectus filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 6 hereof and deemed to be
a part of the registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations; "Base Prospectus" means the prospectus included in
the Registration Statement; "Prospectus Supplement" means the
prospectus
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supplement filed with, transmitted for filing to, or promptly
hereafter filed with or transmitted for filing to, the
Commission, specifically relating to the Offered Securities; and
"Prospectus" means such final prospectus, consisting of the Base
Prospectus and together with the Prospectus Supplement, as first
filed with the Commission pursuant to paragraph (1) or (4) of
Rule 424(b) of the Rules and Regulations. Reference made herein
to any Preliminary Prospectus or to the Prospectus shall be
deemed to refer to and include any documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the date of such Preliminary Prospectus or
the Prospectus, as the case may be, and any reference to any
amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any document
filed under the United States Securities Exchange Act of 1934
(the "Exchange Act") after the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to
include any annual report of the Company filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the
Registration Statement. 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
Securities Act ("Rule 462(b) Registration Statement") shall be
deemed a part of the Registration Statement. Any prospectus
(including any amendment or supplement thereto or information
which is deemed to part thereof) included in a Rule 462(b)
Registration Statement and any term sheet as contemplated by Rule
434 of the Rules and Regulations (a "Term Sheet") shall be deemed
to be part of the Prospectus. The Commission has not issued any
order preventing or suspending the use of any Preliminary
Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration
Statement or the Prospectus will, when they become effective or
are filed with the Commission, as the case may be, conform in all
material respects to the requirements of the Securities Act and
the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and
any amendment thereto) and as of the applicable filing date (as
to the Prospectus and any amendment or supplement thereto)
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that no
representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information
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furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the
requirements the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents
become effective or are filed with Commission, as the case may
be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder 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.
(d) The Company and each of its subsidiaries (as defined in
Section 17) have been duly organized and are validly existing as
corporations, general or limited partnerships or limited
liability companies, as the case may be, in good standing under
the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing as foreign
corporations, limited partnerships or limited liability
companies, as the case may be, in each jurisdiction in which
their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are
engaged;
(e) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description
thereof contained in the Prospectus; and any shares of Common
Stock and any Debt Securities (other than the Offered Securities
to be offered and sold by the Company hereunder) that are
outstanding or will be issued on or prior to the First Delivery
Date were or will be offered and sold in compliance with all
applicable laws (including, without limitation, federal and state
securities laws); and all of the issued shares of capital stock,
partnership interests or limited liability company membership
interests, as the case may be, of each subsidiary of the Company
have been duly and validly authorized and issued and (except for
partnership interests of general partners and except to the
extent the limited liability company agreements governing
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the respective limited liability companies provide otherwise) are
fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims except for liens in favor of the
lenders under the Company's senior secured credit facility (the
"1997 Credit Facility") with Lehman Brothers Holdings Inc.,
BankBoston N.A., Bankers Trust Company and Wells Fargo Bank,
N.A., as agents (together, the "Banks") to secure indebtedness.
(f) The unissued shares of the Offered Securities to be issued and
sold by the Company to the Underwriters hereunder have been duly
and validly authorized and, when issued and delivered against
payment therefor as provided herein will be duly and validly
issued, fully paid and non-assessable; and the Offered Securities
will conform to the descriptions thereof contained in the
Prospectus.
(g) The partnership interests of the Operating Partnerships ("Units")
have been duly authorized for issuance by the respective
Operating Partnerships, are validly issued and fully paid, and,
except as otherwise described in the Prospectus (or the materials
incorporated by reference therein), are the only Units
outstanding.
(h) This Agreement has been duly authorized, executed and delivered
by the Company and the Operating Partnerships.
(i) The execution, delivery and performance of this Agreement by the
Company and the Operating Partnerships and the consummation of
the transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter, by-laws, partnership
agreement or operating agreement of the Company, any of its
subsidiaries or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties
or assets; and except for the registration of the Offered
Securities under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and applicable state securities laws in
connection with the purchase and distribution of the Offered
Securities by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any
such court or governmental agency or body or any other person is
required for
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the execution, delivery and performance of this Agreement by the
Company or the Operating Partnerships, the consummation of the
transactions contemplated hereby.
(j) Except as set forth in the Prospectus, there are no preemptive or
other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any unissued shares of the
Offered Securities to be issued and sold by the Company to the
Underwriters hereunder pursuant to the Company's charter or
by-laws or any agreement or other instrument.
(k) Except as set forth in the Prospectus, there will be no
preemptive or other rights to subscribe for or to purchase, nor
any restriction upon the voting of, any of the partnership
interests in the Operating Partnerships pursuant to the Operating
Partnerships' respective Agreements of Limited Partnership, as
restated and amended (as applicable), or any agreement or other
instrument to which the Company is a party.
(l) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right (other than rights which have been
waived or satisfied) to require the Company to file a
registration statement under the Securities Act with respect to
any securities of the Company owned or to be owned by such person
or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or
in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities
Act.
(m) Except as described in the Prospectus, the Company has not sold
or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(n) None of the Company or any of its subsidiaries has sustained,
since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus; and, since such
date, other than as set forth or contemplated in the Prospectus,
(i) there has been no material adverse change in the financial
condition, results of operation or business of the Company, the
Operating Partnerships or any subsidiary of the Company, whether
or not arising in the ordinary course of business,
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(ii) no material casualty loss or material condemnation or other
material adverse event with respect to any Property has occurred,
(iii) there have been no transactions or acquisition agreements
entered into by the Company, the Operating Partnerships or any
subsidiary of the Company other than those in the ordinary course
of business, which are material with respect to such entity, (iv)
there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock or
by the Operating Partnerships with respect to its partnership
interests and (v) there has been no change in the capital stock
of the Company or the partnership interests of the Operating
Partnerships, or any increase in the indebtedness of the Company,
the Operating Partnerships or any subsidiary.
(o) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement
or included or incorporated by reference in the Prospectus
present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and
for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as
otherwise stated herein.
(p) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and the Predecessor Entities, whose
reports appear in the Prospectus or is incorporated by reference
therein and who have delivered the initial letter referred to in
Section 9(h) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations; and
Wertheim & Company, King Griffin & Adamson P.C., Coopers &
Lybrand L.L.P., Mann Frankfort Stein & Lipp, P.C., Pinksen,
Goldberg & Company and Pannell Kerr Forster PC, each of whose
report appears in the Prospectus or is incorporated by reference
therein, were independent accountants as required by the
Securities Act and the Rules and Regulations during the periods
covered by the financial statements on which they reported
contained or incorporated in the Prospectus.
(q) With respect to Owned Hotels (as defined in the Prospectus),
other than the Owned Hotels in which the Company has acquired
less than all of the ownership interest (the "Joint Venture
Properties"), the Company and its subsidiaries have or will have
on the First Delivery Date good and marketable title in fee
simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described
in the Prospectus or such as do not materially affect the value
of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and
its subsidiaries; with respect to the
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Joint Venture Properties, the Company and its subsidiaries that
currently own interests in the Joint Venture Properties have or
will have on the First Delivery Date good and marketable title to
such ownership interests and the respective entities owning the
Joint Venture Properties have good and marketable title in fee
simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described
in the Prospectus or such as do not materially affect the value
of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and
its subsidiaries; and all real property and buildings held under
lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or with such exceptions as are not
material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its
subsidiaries. There shall be issued and outstanding with respect
to each of the Owned Hotels an ALTA form of owner's title
insurance policy (or local equivalent with respect to those Owned
Hotels located in jurisdictions where an ALTA form of owner's
title insurance policy is not available) insuring the fee simple
estate of the applicable subsidiary of the Company in the Owned
Hotel owned by such subsidiary in an amount at least equal to the
acquisition price of such Owned Hotel and each such title
insurance policy will continue to be in full force and effect
immediately following the consummation of the Offering.
(r) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries.
(s) Each of the Company and its subsidiaries possesses such
certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary
to conduct the business now operated by them, except where the
failure to possess such certificates, authorizations or permits
would not have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries (a
"Material Adverse Effect"), and none of the Company or any of its
subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling, or finding, would
have a Material Adverse Effect.
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(t) The Company and/or each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, franchises, copyrights and licenses
necessary for the conduct of their respective businesses and have
no reason to believe that the conduct of their respective
businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others.
(u) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any
property or assets of the Company, any of its subsidiaries or any
Predecessor Entity is the subject which could reasonably be
expected to have a Material Adverse Effect; and to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(v) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(w) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or
filed as exhibits to the Registration Statement.
(x) No relationship, direct or indirect, exists between or among the
Company, the Operating Partnerships, any subsidiary of the
Company, on the one hand, and the directors, officers,
stockholders of the Company, or customers or suppliers of the
Company, or customers or suppliers of the Operating Partnerships,
on the other hand, which is required to be described in the
Prospectus which is not so described.
(y) There is (i) no material unfair labor practice complaint pending
against the Company, its subsidiaries or any Predecessor Entity
nor, to the best knowledge of the Company, threatened against any
of them before the National Labor Relations Board or any state or
local labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company
or its subsidiaries or, to the best knowledge of the Company,
threatened against any of them, (ii) no material strike, labor
dispute, slowdown or stoppage pending against the Company or its
subsidiaries nor, to the best knowledge of the Company,
threatened against the Company or its subsidiaries which might be
expected to have a Material Adverse Effect.
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(z) None of the Company or any subsidiary has violated any safety or
similar law applicable to its business nor any federal, state or
local law relating to discrimination in the hiring, promotion or
pay of employees nor any applicable federal or state wages and
hours laws which in each case might result in a Material Adverse
Effect.
(aa) The Company and each of its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its subsidiaries would
have any liability; the Company and its subsidiaries have not
incurred and do not expect to incur liability under (i) Title IV
of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or any of its subsidiaries
would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(ab) The Company and each of its subsidiaries has filed all federal,
state and local income and franchise tax returns required to be
filed through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to the
Company, any of its subsidiaries or any Predecessor Entity which
has had (nor does the Company have any knowledge of) any tax
deficiency which, if determined adversely to the Company, any of
its subsidiaries or any Predecessor Entity, might have a Material
Adverse Effect; the amounts currently set up as provisions for
taxes or otherwise by the Company and its subsidiaries on their
books and records are sufficient for the payment of all their
unpaid federal, foreign, state, county and local taxes accrued
through the dates as of which they speak, and for which the
Company and its subsidiaries may be liable in their own right or
as a transferee of the assets of, or as successor to any other
corporation, association, partnership, joint venture or other
entity.
(ac) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed
in the Prospectus, the Company and its subsidiaries have not (i)
issued or granted any securities, (ii) incurred any liability or
obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary
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course of business or (iv) declared or paid any dividend on its
capital stock.
(ad) The Company and its subsidiaries (i) make and keep accurate books
and records and (ii) maintain internal accounting controls which
provide reasonable assurance that (A) transactions are executed
in accordance with management's authorization, (B) transactions
are recorded as necessary to permit preparation of their
financial statements and to maintain accountability for their
assets, (C) access to their books, records and accounts is
permitted only in accordance with management's authorization and
(D) the reported accountability for their assets is compared with
existing assets at reasonable intervals.
(ae) None of the Company or any of its subsidiaries is, or will be,
(i) in violation of its charter, by-laws, partnership agreement
or operating agreement, (ii) in default in any material respect,
and no event has or will have occurred which, with notice or
lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties
or assets is subject or (iii) in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject or has or will have failed to
obtain any material license, permit, certificate, franchise or
other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business,
which violation or failure could reasonably be expected to have a
Material Adverse Effect.
(af) None of the Company or any of its subsidiaries, or any director,
officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has
used any corporate, partnership or limited liability company
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or
is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(ag) There has been no storage, disposal, generation, manufacture,
refinement, installation, transportation, handling or treatment
of toxic wastes, medical wastes, hazardous wastes, petroleum or
petroleum products (including crude oil or any fraction thereof),
hazardous substances or any other substances which pose a hazard
to human health, safety, natural resources,
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industrial hygiene or the environment or which cause or threaten
to cause a nuisance by the Company or any of its subsidiaries
(or, to the knowledge of the Company, by any of their
predecessors in interest or by any other entity) at, upon or from
any of the property now or previously owned or leased by the
Company or its subsidiaries except to the extent commonly used in
the normal operations of such property, in violation of any
applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require investigation,
monitoring, removal action, corrective action, remedial action or
other response action ("response action") under any applicable
law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or response action which would
not have, or could not be reasonably likely to have, singularly
or in the aggregate with all such violations and response
actions, a Material Adverse Effect; there has been no material
spill, discharge, leak, emission, injection, escape, dumping or
release or threatened release of any kind onto such property or
into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes, petroleum
or petroleum products (including crude oil or any fraction
thereof), hazardous substances or any other substances which pose
a hazard to human health, safety, natural resources, industrial
hygiene or the environment or which cause or threaten to cause a
nuisance, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release or threatened release which
would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings, releases and
threatened releases, a Material Adverse Effect; and the terms
"hazardous wastes," "solid wastes," "toxic wastes," "hazardous
substances," "petroleum," "petroleum products" and "medical
wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with
respect to environmental protection.
(ah) Neither the Company nor any subsidiary is, or will be as a result
of the offer and sale of the Offered Securities hereunder, an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of
the Commission thereunder.
2. Representations, Warranties and Agreements of the Selling
Stockholders. Each of the Selling Stockholders severally represents, warrants
and agrees that:
(a) The Selling Stockholder has, and immediately prior to the First
Delivery Date the Selling Stockholder will have, good and valid
title to the Offered Securities to be sold by the Selling
Stockholder hereunder on such date, free and clear of all liens,
encumbrances, equities or claims; and upon delivery of such
shares and payment therefor pursuant hereto, good and
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valid title to such shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several
Underwriters.
(b) The Selling Stockholder has full right, power and authority
to enter into this Agreement, the Power of Attorney and the
Custody Agreement; the execution, delivery and performance of
this Agreement, the Power of Attorney and the Custody Agreement
by the Selling Stockholder and the consummation by the Selling
Stockholder of the transactions contemplated hereby and thereby
will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage deed of trust, loan agreement or other
agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder is bound or to which
any of the property or assets of the Selling Stockholder is
subject, nor will such actions result in any violation of any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Selling
Stockholder or the property or assets of the Selling Stockholder;
and, except for the registration of the Offered Securities under
the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in connection
with the purchase and distribution of the Offered Securities by
the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Selling
Stockholder and the consummation by the Selling Stockholder of
the transactions contemplated hereby.
(c) The Registration Statement and the Prospectus and any further
amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, do not and will not, as of the
applicable effective date (as to the Registration Statement and
any amendment thereto) and as of the applicable filing date (as
to the Prospectus and any amendment or supplement thereto)
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that the
representations and warranties in this subsection shall only
apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity
with information relating to the Selling Stockholder furnished in
writing to the Company or the Underwriters by the Selling
Stockholder expressly for use in the Registration Statement or
Prospectus.
13
(d) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or
result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
shares of the Offered Securities.
3. Purchase of the Offered Securities by the Underwriters. On the basis
of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 4,000,000 shares of
the Firm Stock and each Selling Stockholder agrees to sell the number of shares
of the Firm Stock set opposite its or his name in Schedule 2 hereto, severally
and not jointly, to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. Each
Underwriter shall be obligated to purchase from the Company, and from the
Selling Stockholders, that number of shares of the Firm Stock which represents
the same proportion of the number of shares of the Firm Stock to be sold by the
Company, and by the Selling Stockholders, as the number of shares of the Firm
Stock set forth opposite the name of such Underwriter in Schedule 1 represents
of the total number of shares of the Firm Stock to be purchased by all of the
Underwriters pursuant to this Agreement. The respective purchase obligations of
the Underwriters with respect to the Firm Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to purchase
up to 791,027 shares of Option Stock. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Stock shall be adjusted by the Representatives so that no Underwriter
shall be obligated to purchase Option Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock shall be $34.625 per
share.
The Company and the Selling Stockholder shall not be obligated to deliver
any of the Offered Securities to be delivered on the First Delivery Date or the
Second Delivery Date (as hereinafter defined), as the case may be, except upon
payment for all the Offered Securities to be purchased on such Delivery Date as
provided herein.
4. Delivery of and Payment for the Offered Securities. Delivery of and
payment for the Firm Stock shall be made at the offices of Hogan & Hartson
L.L.P., Washington, D.C., at 10:00 A.M., New York City time, on the fourth full
business day following the date of this Agreement or at such other date or place
as shall be determined by agreement between the Representatives and the Company.
This date and time are sometimes referred to as the "First Delivery Date." On
the First Delivery Date, the Company and the Selling Stockholder shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company and the
14
Selling Stockholder of the purchase price by wire transfer of federal (same-day)
funds to an account or accounts previously designated in writing to Lehman
Brothers Inc. by the Company and the Selling Stockholders. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company and the Selling Stockholders shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this Agreement
the option granted in Section 3 may be exercised by written notice being given
to the Company by the Representatives. Such notice shall set forth the
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date.
On the Second Delivery Date, the Company shall deliver or cause to be delivered
the certificates representing the Option Stock to the Representatives for the
account of each Underwriter against payment to or upon the order of the Company
of the purchase price by wire transfer of federal (same-day) funds to an account
or accounts previously designated in writing to Lehman Brothers Inc. by the
Company Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Option Stock shall be registered
in such names and in such denominations as the Representatives shall request in
the aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.
5. Offering of Offered Securities by the Underwriters. Upon
authorization by the Representatives of the release of the Firm Stock, the
several Underwriters propose to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.
15
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than Commission's close
of business on the second business day following the execution
and delivery of this Agreement or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities
Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the last
Delivery Date except as permitted herein; to advise the
Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to
furnish the Representatives with copies thereof; to file promptly
all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the
offering or sale of the Offered Securities; to advise the
Representatives, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, of the suspension of the qualification of the
Offered Securities for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and
exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto
(in each case excluding exhibits other than this Agreement and
the computation of per share earnings), (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in
the Prospectus (excluding exhibits thereto); and, if the delivery
of a prospectus is required at any time after the Effective Time
in connection
16
with the offering or sale of the Offered Securities or any other
securities relating thereto and if at such time any events shall
have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary to
amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act, to
notify the Representatives and, upon their request, to file such
document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested
by the Commission;
(e) To the extent practicable, prior to filing with the Commission
any amendment to the Registration Statement or supplement to the
Prospectus, any document incorporated by reference in the
Prospectus or any Prospectus pursuant to Rule 424 of the Rules
and Regulations, and to the extent not practicable, immediately
thereafter, to furnish a copy thereof to the Representatives and
counsel for the Underwriters and to consult with the
Representatives prior to the filing;
(f) As soon as practicable after the Effective Date, but in any event
not later than 410 or, if the fourth quarter following the fiscal
quarter that includes the Effective Date is the last fiscal
quarter of the Company's fiscal year, 455 days after the end of
the Company's current fiscal quarter, to make generally available
to the Company's security holders and to deliver to the
Representatives an earning statement of the Company and its
subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) Until the earlier of the expiration of the period of five years
following the Effective Date and the date on which the Company
ceases to be subject to the reporting requirements of the
Exchange Act, to furnish to the Representatives copies of all
materials furnished by the Company to its shareholders and all
public reports and all reports and financial statements furnished
by the Company to the principal national securities exchange
17
upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation
of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Offered
Securities for offering and sale under the securities laws of
such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Offered Securities,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(i) Except as described in the Prospectus, for a period of 180 days
from the date of the Prospectus, not to, directly or indirectly,
offer for sale, sell or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected
to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (other than the Offered
Securities and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding
options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock (other than
the grant of options pursuant to option plans existing on the
date hereof), without the prior written consent of Lehman
Brothers Inc.; and to cause each of CapStar GP Corp., CapStar
Hotels, Inc., Latham Hotels, Inc., Paul W. Whetsell, David E.
McCaslin, John Emery, John E. Plunket, and Woody Montgomery to
furnish to the Representatives, prior to the First Delivery Date,
a letter or letters, in form and substance satisfactory to
counsel for the Underwriters, pursuant to which each such person
shall agree not to, directly or indirectly, offer for sale, sell
or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any
shares of Common Stock for a period of 180 days from the date of
the Prospectus, without the prior written consent of Lehman
Brothers Inc.;
(j) Prior to the Effective Date, to apply for the listing of the
Offered Securities on the New York Stock Exchange, Inc. and to
use its best efforts to complete that listing, subject only to
official notice of issuance and evidence of satisfactory
distribution, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Offered Securities
being sold by the Company as set forth in the Prospectus; and
18
(l) To take such steps as shall be necessary to ensure that neither
the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the
Commission thereunder.
7. Further Agreements of the Selling Stockholders. Each of the Selling
Stockholders severally agrees:
(a) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, offer for sale, sell or otherwise dispose
of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person
at any time in the future of) any shares of Common Stock (other
than the Offered Securities), without the prior written consent
of Lehman Brothers Inc. (which consent shall not be unreasonably
withheld); and to cause each of Daniel L. Doctoroff, Bradford E.
Bernstein, Steven B. Gruber, John R. Monsky and Glenn R. August
to furnish to the Representatives prior to the First Delivery
Date, a letter or letters, in form and substance satisfactory to
counsel for the Underwriters, pursuant to which each such person
shall agree not to, directly or indirectly, offer for sale, sell
or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any
shares of Common Stock for a period of 90 days from the Date of
the Prospectus, without the prior written consent of Lehman
Brothers, Inc. (which consent shall not be unreasonably
withheld);
(b) That the Offered Securities to be sold by the Selling
Stockholders hereunder are subject to the interest of the
Underwriters, that the custody arrangements made, or to be made,
by, or on behalf of, the Selling Stockholders in respect of such
Offered Securities are to that extent irrevocable, and that the
obligations of the Selling Stockholders hereunder shall not be
terminated by any act of the Selling Stockholders, by operation
of law or the occurrence of any other event; and
(c) To deliver to the Representatives prior to the First Delivery
Date a properly completed and executed United States Treasury
Department Form W-9.
8. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Offered Securities and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary
19
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement and any other related documents in connection with the offering,
purchase, sale and delivery of the stock; (e) the fees (including reasonable
attorneys' fees) and expenses incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of sale of the
Offered Securities; (f) any applicable listing or other fees; (g) the fees and
expenses of qualifying the Offered Securities under the securities laws of the
several jurisdictions as provided in Section 6(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) any fees charged by rating agencies for the
rating of the Offered Securities; and (i) all other costs and expenses incident
to the performance of the obligations of the Company and the Selling Stockholder
under this Agreement; provided that, except as provided in this Section 8 and in
Section 13 the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Offered
Securities which they may sell and the expenses of advertising any offering of
the Offered Securities made by the Underwriters.
9. Conditions of Underwriters' Obligations. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company and the
Selling Stockholder contained herein, to the performance by the Company and the
Selling Stockholder of their obligations hereunder, and to each of the following
additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional information
in the Registration Statement or the Prospectus or otherwise
shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains
an untrue statement of a fact which, in the opinion of Hogan &
Hartson L.L.P., counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the First Delivery Date, there shall not
have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading, in the rating
accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) of the Securities Act.
20
(d) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Offered
Securities, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the Underwriters, and the
Company and the Selling Stockholder shall have furnished to such
counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(e) Paul, Weiss, Rifkind, Wharton and Garrison shall have furnished
to the Representatives their written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) The Company and each of its significant subsidiaries
have been duly formed and are validly existing as corporations,
limited partnerships or limited liability companies, as the case
may be, in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business
and are in good standing as foreign corporations, limited
partnerships or limited liability companies, as the case may be,
in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses (as set
forth in certificates of officers of the Company upon which such
counsel is relying without independent investigation) requires
such qualification and have all corporate, partnership or limited
liability company, as the case may be, power and authority
necessary to own or hold their respective properties and conduct
the businesses in which they are engaged as described in the
Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the shares of Offered Securities
being delivered on such Delivery Date) have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus;
and any shares of Common Stock and any Debt Securities (other
than the Offered Securities to be offered and sold by the Company
to the Underwriters hereunder) that are outstanding were offered
and sold in transactions exempt from the registration
requirements of the Securities Act and in compliance with all
applicable provisions of the General Corporation Law of the State
of Delaware (the "Delaware Corporation Law") and all of the
issued shares of capital stock, partnership interests or limited
liability company membership interests, as the case may be, of
each subsidiary of the Company (other than Leperq Atlanta
Renaissance Partners, L.P. (the "Atlanta Partnership")) have been
duly and validly authorized and issued and (except for
partnership interests
21
of general partners and except to the extent the limited
liability company agreements governing the respective limited
liability companies provide otherwise) are fully paid,
non-assessable and are owned directly or indirectly by the
Company, to such counsel's knowledge free and clear of all liens,
encumbrances, or claims except for liens in favor of the lenders
under the 1997 Credit Facility to secure indebtedness; with
respect to the general and limited partnership interests of the
Atlanta Partnership held by the Company, such interests are owned
directly or indirectly by the Company, to such counsel's
knowledge free and clear of all liens, encumbrances, or claims
except for liens in favor of _____________ to secure
indebtedness;
(iii) Except as set forth in the Prospectus, there are
no preemptive or other rights to subscribe for or to purchase,
nor any restriction upon the voting or transfer of, any unissued
shares of the Offered Securities to be issued and sold by the
Company to the Underwriters hereunder pursuant to the Company's
charter or by-laws or any agreement or other instrument known to
such counsel;
(iv) Except as set forth in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any of the
partnership interests in the Operating Partnerships pursuant to
the Operating Partnerships' respective Agreements of Limited
Partnership, as amended and restated (as applicable), or, to such
counsel's knowledge, any agreement or other instrument to which
the Company is a party;
(v) To the best of such counsel's knowledge, based solely
on a review of such counsel's internal litigation docket, and
other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which could
be expected to have a Material Adverse Effect; and, to the best
of such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by
others;
(vi) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceeding for that purpose is pending or threatened by the
Commission;
22
(vii) The Registration Statement and the Prospectus and
any further amendments or supplements thereto made by the Company
prior to such Delivery Date (other than the financial statements
and related schedules and statistical data therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and
the Rules and Regulations;
(viii) To the best of such counsel's knowledge, there are
no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to
the Registration Statement;
(ix) This Agreement has been duly authorized, executed and
delivered by the Company;
(x) The Agreement of Limited Partnership, as amended and
restated, of each of the Operating Partnerships has been duly
authorized, executed and delivered by the Company and the other
parties thereto and constitutes the valid and binding agreement
of each such party, enforceable against each such party in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization, liquidation, moratorium or other
similar laws affecting the rights and remedies of creditors
generally and except as may be subject to general principles of
equity (regardless of whether such agreement is considered in a
proceeding in equity or at law), and except as rights to
indemnity and contribution thereunder may be limited by
applicable law and public policy;
(xi) The issue and sale of the shares of Offered Securities
being delivered on such Delivery Date by the Company and the
compliance by the Company and the Operating Partnerships with all
of the provisions of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or result
in a material breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject which breach
is reasonably likely to have a Material Adverse Effect, nor will
such actions result in any violation of the provisions of the
charter, by-laws, limited partnership agreement or operating
agreement of the Company or any of its subsidiaries or any
statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body of the United States,
the State of New
23
York or established pursuant to the Delaware Corporation Law
having jurisdiction over the Company or any of its subsidiaries
or any of their properties or assets; except for the registration
of the Offered Securities under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase
and distribution of the Offered Securities by the Underwriters,
no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby;
(xii) Except as set forth in the Prospectus, to the best
of such counsel's knowledge, there are no contracts, agreements
or understandings between the Company and any person granting
such person the right (other than rights which have been waived
or satisfied) to require the Company to file a registration
statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act;
(xiii) Neither the Company nor any of its subsidiaries is
an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
(xiv) The Operating Partnerships each will be treated as
a partnership, and not as an "association" or "publicly traded
partnership" taxable as a corporation, for federal income tax
purposes; and
(xv) The statements under the captions "Description of
Capital Stock" and "Description of Debt Securities" in the
Prospectus, and "Certain Relationships and Related Transactions"
incorporated into the Prospectus, insofar as such statements
constitute a summary of legal matters, documents or proceedings
referred to therein are correct in all material respects.
In rendering such opinion, such counsel may (i) state that their
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of New York and
the Delaware Corporation Law and that such counsel is not
admitted in the State of Delaware; and (ii) in giving the
opinions referred to in Section 9(e)(i) (solely with regard to
organization and qualification of the Company's significant
subsidiaries), Section 9(e)(ii) (solely with regard to capital
stock,
24
partnership interests or limited liability company membership
interests, as the case may be, of subsidiaries of the Company
being duly and validly authorized and issued and fully paid and
non-assessable), state that they are relying on an opinion or
opinions of other counsel as to such matters, provided that the
Underwriters shall have received such opinion or opinions, in
form and substance satisfactory to Underwriter's counsel, of
other counsel reasonably acceptable to Underwriters' counsel.
Such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated such
Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (x) in connection with the
preparation of the Registration Statement and the Prospectus,
such counsel have participated in conferences with certain
officers and other representatives of the Company, at which the
contents of the Registration Statement and the Prospectus and
related matters were discussed, and (y) based on such
participation, no facts have come to the attention of such
counsel which lead them to believe that the Registration
Statement (except for financial statements and schedules and
other statistical data included therein or omitted therefrom, as
to which such counsel need make no statement), as of the
Effective Date, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading, or that the Prospectus (except for financial
statements and schedules and other statistical data included
therein or omitted therefrom, as to which such counsel need make
no statement) contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The foregoing statement may be qualified by a statement to the
effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus except
for the statements made in the Prospectus under the caption
"Description of Capital Stock," insofar as such statements relate
to the Offered Securities and concern legal matters.
(f) The counsel for the Selling Stockholders shall have furnished to
the Representatives its written opinion, as counsel to the
Selling Stockholder, addressed to the Underwriters and dated the
First Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) Each of the Selling Stockholders has full right, power
and authority to enter into this Agreement, the Power of Attorney
and the Custody Agreement; the execution, delivery and
performance of this Agreement, the Power of Attorney and the
Custody Agreement by each of
25
the Selling Stockholders and the consummation by each the Selling
Stockholders of the transactions contemplated hereby and thereby
will not (i) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which any Selling Stockholder is a
party or by which any Selling Stockholder is bound or to which
any of the property or assets of any Selling Stockholder is
subject or (ii) constitute a violation of any statute, or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over any Selling Stockholder or the
property or assets of any Selling Stockholder. Except for the
registration of the Offered Securities under the Securities Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase
and distribution of the Offered Securities by the Underwriters,
no consent, approval, authorization, or order of, or filing or
registration with, any such court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement by any Selling Stockholder and the consummation by the
Selling Stockholders of the transactions contemplated hereby;
(ii) This Agreement has been duly authorized, executed and
delivered by, or on behalf of, the Selling Stockholders and
constitutes valid and binding agreements of the Selling
Stockholders, enforceable in accordance with their respective
terms, except as rights to indemnification and contribution may
be limited by applicable securities laws (such counsel may except
from the opinion in this clause the application of bankruptcy,
insolvency, moratorium or similar laws affecting creditors'
rights generally and may limit such opinion with respect to the
availability of equitable remedies and the enforceability of
provisions providing for indemnification and contribution for
violations of securities laws);
(iii) Good and valid title to the Offered Securities to
be sold by the Selling Stockholders under this Agreement, free
and clear of all liens, encumbrances, equities or claims, has
been transferred to each of the several Underwriters.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of New York and
the Revised Limited Uniform Partnership Act of Delaware and that
such counsel is not admitted in the State of Delaware and (ii) in
rendering the opinions in Section 9(f)(i) (with regard to breach
or violation of, or default under, any agreement) and 9(f)(iii)
above (in respect of matters of fact as to ownership of and
liens, encumbrances, equities or claims on the shares of
26
Offered Securities sold by the Selling Stockholder), state that
they are relying upon a certificate of the Selling Stockholder as
to such matters, provided that such counsel shall furnish copies
thereof to the Representatives and state that it believes that
both the Underwriters and it are justified in relying upon such
certificate.
(g) The Representatives shall have received from Hogan & Hartson
L.L.P., counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale
of the Offered Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the Representatives
shall have received from KPMG Peat Marwick a letter, in form and
substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they
are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date hereof (or, with respect to matters involving changes
or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date
not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(i) With respect to the letters of KPMG Peat Marwick referred to in
clause (h) hereof and delivered to the Representatives
concurrently with the execution of this Agreement (the "initial
letters"), the Company shall have furnished to the
Representatives letters (the "bring-down letters") of such
accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date of the bring-down
letters (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date
not more than five days prior to the date of the bring-down
letters), the conclusions and findings of such firms with respect
to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
27
(j) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the
Board, its President or a Vice President and its chief financial
officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 9(a) and 9(l)
have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the
Effective Date no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement
or the Prospectus.
(k) The Selling Stockholders (or the Custodian) shall have furnished
to the Representatives on the First Delivery Date certificates,
dated the First Delivery Date, signed by, or on behalf of, each
of the Selling Stockholders (or the Custodian) stating that the
representations, warranties and agreements of the Selling
Stockholder contained herein are true and correct as of the First
Delivery Date and that the Selling Stockholders have complied
with all agreements contained herein to be performed by the
Selling Stockholders at or prior to the First Delivery Date.
(l) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus or (ii) since such
date there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and
its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described
in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering
or the delivery of the Offered Securities being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
28
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in
the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such
market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction,
(ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been
a declaration of a national emergency or war by the United States
or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment
of a majority in interest of the several Underwriters,
impracticable or inadvisable to proceed with the public offering
or delivery of the Offered Securities being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(n) There shall be issued and outstanding with respect to each of the
Owned Hotels (as defined in the Prospectus) an ALTA form of
owner's title insurance policy (or local equivalent with respect
to those Owned Hotels located in jurisdictions where an ALTA form
of owner's title insurance is not available) insuring the fee
simple estate of the applicable subsidiary of the Company in the
Owned Hotel owned by such subsidiary in an amount at least equal
to the acquisition price of such Owned Hotel and each such title
insurance policy will continue to be in full force and effect
immediately following the consummation of the Offering.
(o) The New York Stock Exchange, Inc. shall have approved the Offered
Securities for listing, subject only to official notice of
issuance and evidence of satisfactory distribution.
(p) The Representatives shall have received the written opinion or
opinions or other certification in form and substance acceptable
to Underwriter's counsel, of other counsel reasonably acceptable
to Underwriter's counsel to the effect that with regard to the
Owned Hotels (as defined in the Prospectus), the Company and/or
its subsidiaries hold all state food, beverage and liquor
licenses necessary or required for such corporations,
partnerships and limited liability companies to conduct their
business as currently conducted in each state.
29
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company and the Operating Partnerships, jointly and
severally, shall indemnify and hold harmless each Underwriter,
its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from
and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Offered Securities), to which that
Underwriter, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment
or supplement thereto or (B) in any blue sky application or other
document prepared or executed by the Company (or based upon any
written information furnished by the Company) specifically for
the purpose of qualifying any or all of the Offered Securities
under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter
called a "Blue Sky Application"), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact
required to be stated therein or necessary to make the statements
therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Offered Securities or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or
(ii) above (provided that the Company and the Operating
Partnerships shall
30
not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its
gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter, officer, employee or controlling
person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company and the Operating Partnerships shall not be liable in any
such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and
in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion
therein. The foregoing indemnity agreement is in addition to any
liability which the Company or the Operating Partnerships may
otherwise have to any Underwriter or to any officer, employee or
controlling person of that Underwriter.
(b) The Selling Stockholders, severally and not jointly, shall
indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and
sales of Offered Securities), to which that Underwriter, officer,
employee or controlling person may become subject, under the
Securities Act or otherwise, 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 relating to the Selling
Stockholders furnished to the Company or the Underwriters
expressly for use in the Registration Statement (or any amendment
thereto), or any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto); provided, however, that each
Selling Stockholder's aggregate liability under this Section 10
shall be limited to an amount equal to the net proceeds (after
deducting the Underwriters' discount) received by such Selling
Stockholder from the sale of the Offered Securities pursuant to
this Agreement. The foregoing indemnity agreement is in addition
to any liability which the Selling Stockholders may otherwise
have to any Underwriter or any officer, employee or controlling
person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of
its directors (including any person who, with his or her consent,
is named in the Registration Statement as about to become a
director of the Company), the Selling Stockholders and each
person, if any, who controls the Company within the meaning of
the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to
31
which the Company or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (B) in
any Blue Sky Application or (ii) the omission or alleged omission
to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of that
Underwriter specifically for inclusion therein, and shall
reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending
or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company, the Selling
Stockholders or any such director, officer, employee or
controlling person.
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 10, notify
the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure
to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the
extent it has been materially prejudiced by such failure and,
provided further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 10. If
any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party
under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with
the
32
defense thereof other than reasonable costs of investigation;
provided, however, that the Representatives shall have the right
to employ counsel to represent jointly the Representatives and
those other Underwriters and their respective officers, employees
and controlling persons who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by
the Underwriters against the Company, the Operating Partnerships
or the Selling Stockholders under this Section 10 if, in the
reasonable judgment of the Representatives, it is advisable for
the Representatives and those Underwriters, officers, employees
and controlling persons to be jointly represented by separate
counsel, and in that event the fees and expenses of one such
separate counsel shall be paid by the Company, the Operating
Partnerships and the Selling Stockholders. No indemnifying party
shall (i) without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless
such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for
any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but
if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 10(a), 10(b) or 10(c) in respect
of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, the
Operating Partnerships and the Selling Stockholder on the one
hand and the Underwriters on the other from the offering of the
Offered Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of
the Company, the Operating Partnerships, and the Selling
Stockholder on the one hand and the Underwriters on the other
with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect
33
thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Operating
Partnerships, and the Selling Stockholders on the one hand and
the Underwriters on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds
from the offering of the Offered Securities purchased under this
Agreement (before deducting expenses) received by the Company,
the Operating Partnerships, and the Selling Stockholders, on the
one hand, and the total underwriting discounts and commissions
received by the Underwriters with respect to the shares of the
Offered Securities purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the
shares of the Offered Securities under this Agreement, in each
case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact
relates to information supplied by the Company, the Operating
Partnerships, the Selling Stockholders or the Underwriters, the
intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement
or omission. For purposes of the preceding two sentences, the
net proceeds deemed to be received by the Company shall be deemed
to be also for the benefit of the Operating Partnerships and
information supplied by the Company shall also be deemed to have
been supplied by the Operating Partnerships. The Company, the
Operating Partnerships, the Selling Stockholders and the
Underwriters further agree that it would not be just and
equitable if contributions pursuant to this Section were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in
this Section shall be deemed to include, for purposes of this
Section 10(e), any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 10(e), no Underwriter shall be
required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities
underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 10(e),
no Selling Stockholder shall be required to contribute any amount
in excess of the amount by which the net proceeds (after
deducting the Underwriters' discount) received by such Selling
Stockholder from the sale of the Offered Securities pursuant to
this Agreement exceeds the sum of (a) all
34
damages which such Selling Stockholder has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (b) any
indemnification paid by such Selling Stockholder pursuant to
Section 10(b). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations
to contribute as provided in this Section 10(e) are several in
proportion to their respective underwriting obligations and not
joint. The Selling Stockholders' obligations to contribute as
provided in this Section 10(e) are several in proportion to their
respective net proceeds from the sale of the Offered Securities
pursuant to this Agreement and not joint.
(f) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the
Offered Securities by the Underwriters set forth on the cover
page of, the legend concerning over-allotments on the inside
front cover page of and the concession and reallowance figures
appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf
of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
11. Defaulting Underwriters. If, on either Delivery Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to purchase the Offered
Securities which the defaulting Underwriter agreed but failed to purchase on
such Delivery Date in the respective proportions which the number of shares of
the Firm Stock set opposite the name of each remaining non-defaulting
Underwriter in Schedule 1 hereto bears to the total number of shares of the Firm
Stock set opposite the names of all the remaining non-defaulting Underwriters in
Schedule 1 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Offered Securities on
such Delivery Date if the total number of shares of the Offered Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of shares of the Offered Securities to be
purchased on such Delivery Date, and any remaining non-defaulting Underwriter
shall not be obligated to purchase more than 110% of the number of shares of the
Offered Securities which it agreed to purchase on such Delivery Date pursuant to
the terms of Section 3. If the foregoing maximums are exceeded, the remaining
non-defaulting Underwriters, or those other underwriters satisfactory to the
Representatives who so agree, shall have the right, but shall not be obligated,
to purchase, in such proportion as may be agreed upon among them, all the
Offered Securities to be purchased on such Delivery Date. If the remaining
Underwriters or other underwriters satisfactory to the Representatives do not
elect to purchase the shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such Delivery Date, this Agreement (or, with
respect to the Second Delivery Date, the obligation of the Underwriters to
purchase, and of the Company to sell, the Option Stock) shall terminate without
liability on the
35
part of any non-defaulting Underwriter or the Company or the Selling
Stockholders, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Sections 8 and 13. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule 1 hereto
who, pursuant to this Section 11, purchases Firm Stock which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Stockholders for damages
caused by its default. If other underwriters are obligated or agree to purchase
the Offered Securities of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
and the Selling Stockholders prior to delivery of and payment for the Firm Stock
if, prior to that time, any of the events described in Sections 9(l) or 9(m),
shall have occurred or if the Underwriters shall decline to purchase the Offered
Securities for any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If (a) the Company or the
Selling Stockholders shall fail to tender the Offered Securities for delivery to
the Underwriters by reason of any failure, refusal or inability on the part of
the Company or the Selling Stockholders to perform any agreement on its part to
be performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Stockholders is
not fulfilled, the Company and the Selling Stockholders will reimburse the
Underwriters for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Underwriters in connection with this
Agreement and the proposed purchase of the Offered Securities, and upon demand
the Company and the Selling Stockholders shall pay the full amount thereof to
the Representatives. If this Agreement is terminated pursuant to Section 11 by
reason of the default of one or more Underwriters, neither the Company nor the
Selling Stockholders shall be obligated to reimburse any defaulting Underwriter
on account of those expenses.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: 212-526-6588), with a copy, in the
case of any notice pursuant to Section 10(d), to the Director of
Litigation, Office of the General Counsel, Lehman Brothers Inc.,
Three World Financial Center, 10th Floor, New York, New York
10285;
36
(b) if to the Company or to the Operating Partnerships, shall be
delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement,
Attention: Paul W. Whetsell (Fax: 202-965-4445);
(c) if to the Selling Stockholders, shall be delivered or sent by
mail, telex or facsimile transmission to Acadia Partners, L.P.,
201 Main Street, Suite 3100, Fort Worth, Texas 76102, with a
copy to ______________ ,________________________ ,
_____________________ , ______________ (Fax: ______________ );
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Selling Stockholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Lehman Brothers Inc. on behalf of the Representatives and the Company and the
Underwriters shall be entitled to act and rely upon any request, consent, notice
or agreement given or made on behalf of such Selling Stockholders by the
Custodian.
15. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Underwriters, the Company, the Selling
Stockholders and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
and the Selling Stockholders contained in this Agreement shall also be deemed to
be for the benefit of the person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Securities Act and (B) the indemnity
agreement of the Underwriters contained in Section 10(c) of this Agreement shall
be deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 15, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
16. Survival. The respective indemnities, representations, warranties and
agreements of the Company, the Operating Partnerships, the Selling Stockholders
and the Underwriters contained in this Agreement or made by or on behalf on
them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Offered Securities and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
17. Definition of the Terms "Business Day," "Significant Subsidiary" and
"Subsidiary." For purposes of this Agreement, (a) "business day" means any day
on
37
which New York Stock Exchange, Inc. is open for trading, (b) "significant
subsidiary" has the meaning set forth in Regulation S-X of the Commission and
(c) "subsidiary" has the meaning set forth in Rule 405 of the Rules and
Regulations.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York without regard to the
principles of conflicts of laws thereof.
19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
38
If the foregoing correctly sets forth the agreement Operating Partnerships
among the Company, the Operating Partnerships, the Selling Stockholders and the
Underwriters, please indicate your acceptance in the space provided for that
purpose below.
Very truly yours,
CapStar Hotel Company
By:
----------------------------
Paul W. Whetsell, President
and Chief Executive Officer
CapStar Management Company, L.P.
By:
----------------------------
CapStar Hotel Company,
its general partner
By:
----------------------------
Paul W. Whetsell, President
CapStar Management Company II, L.P.
By:
----------------------------
CapStar Limited Corp.,
its general partner
By:
----------------------------
Paul W. Whetsell, President
The Selling Stockholders
By:
----------------------------
, Attorney-in-Fact
By:
----------------------------
Accepted:
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By ______________
By:
-----------------------------
Authorized Representative
SCHEDULE 1
Number of
Underwriters Shares
------------ ---------
Lehman Brothers Inc. 1,041,700
BT Alex. Brown Incorporated 1,041,660
Goldman, Sachs & Co. 1,041,660
Merrill Lynch, Pierce, Fenner & Smith Incorporated 1,041,660
NationsBanc Montgomery Securities, Inc. 1,041,660
Smith Barney Inc. 1,041,660
---------
Total 6,250,000
---------
---------
SCHEDULE 2
Name of Selling Stockholder Number of Shares
- --------------------------- ----------------
The Equitable Life Assurance Society of the United States 467,339
Overseas Assets Holdings, Inc. 172,654
Umpawaug Corporation 113,931
Xerox Credit Corporation 98,575
Mitsui Nevitt Capital Corporation 92,201
Wells Fargo & Co. 59,144
The Bank of New York Company, Inc. 56,595
David G. Offensend 40,000
Paribas North American, Inc. 39,430
Neuville Company, Inc. 35,177
John Hancock Mutual Life Insurance Company 25,387
Forth Worth Zoological Association 18,134
R. David Andrews 8,752
Oak Hill Investment Partners, L.P. 3,685
Nicholas Orum 1,404
OHP EquiStar, L.P. 800
OHP EquiStar II, L.P. 570
---------
Total 1,233,778
---------
---------