<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>5
<FILENAME>ex_5.txt
<DESCRIPTION>EXHIBIT 5: REGISTRATION RIGHTS AGREEMENT
<TEXT>
EXHIBIT 5
REGISTRATION RIGHTS AGREEMENT
(PRINCIPAL INVESTORS)
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and
entered into as of June 29, 2004, among Strategic Hotel Capital, Inc., a
Maryland corporation (the "Company"), WHSHC, L.L.C., a Delaware limited
liability company ("Whitehall 7"), W9/WHSHC, L.L.C. I, a Delaware limited
liability company ("Whitehall 9"; and, together with Whitehall 7, "Whitehall"),
The Prudential Insurance Company of America, a New Jersey corporation
("Prudential Insurance"), PIC Realty Corporation, a Delaware corporation ("PIC";
and, together with Prudential Insurance, "Prudential"), and Strategic Value
Investors, LLC, a Delaware limited liability company ("SVI").
WHEREAS, Strategic Hotel Capital, L.L.C., a Delaware limited liability
company ("SHC LLC"), Whitehall, Prudential and SVI are parties to a Transfer and
Registration Rights Agreement dated as of October 31, 1999 (the "SHC LLC
Agreement");
WHEREAS, concurrently with the execution of this Agreement, the Company
will effect an initial public offering of shares of its common stock ("IPO");
and
WHEREAS, the parties desire to provide each Investor (as defined
herein) with certain registration rights substantially analogous to those under
the SHC LLC Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Affiliate": with regard to a Person, a Person that controls, is
controlled by, or is under common control with, such original Person. For
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and controlled" have
meanings correlative to the foregoing.
"Closing Price": the reported last sale price of a unit of a security,
on a given day, regular way, or, in case no such sale takes place on such day,
the average of the reported closing bid and asked prices regular way, in each
case on the New York Stock Exchange Composite Tape, or, if the security is not
listed or admitted to trading on such exchange, on the American Stock Exchange
Composite Tape, or, if the security is not listed or admitted to trading on such
exchange, the principal national securities exchange on which the security is
listed or admitted to trading, or, if the security is not listed or admitted to
trading on any national securities exchange, the closing sales price, or, if
there is no closing sales price, the average of the closing bid and asked
prices, in the Nasdaq Stock Market, Inc., or, if not so reported, as reported by
the National Quotation Bureau, Incorporated, or any successor thereof, or, if
not so reported, the average of the closing bid and asked prices as furnished by
any member of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose, or, if no
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such prices are furnished, the fair market value of the security as determined
in good faith by the board of directors of the Company, which determination
shall be based upon recent issuances or current offerings pursuant to bona fide
private offerings of the same class of security by the Company; provided,
however, that any determination of the "Closing Price" of any security hereunder
shall be based on the assumption that such security is freely transferable
without registration under the Securities Act.
"Commission": the Securities and Exchange Commission or any other
applicable Federal agency at the time administering the Securities Act.
"Company": as defined in the preamble, and shall include, where the
context requires any Person into which the Company is merged or with which the
Company is consolidated.
"Demand Registration": an effective registration pursuant to a request
made by an Investor pursuant to Section 2.1.
"Exchange Act": the Securities Exchange Act of 1934, as amended.
"First Effective Date": the effective date of the First Registration
Statement in the event of a Proration.
"First Registration Statement": in the event of a Proration, the
registration statement initially filed in which all securities sought to be
included were not so included.
"Investor": means each of Whitehall and Prudential including each
member of the Whitehall Group and the SVI Group; provided that if (i) any member
of the SVI Group liquidates all of its assets by distributing such assets to its
members, investors or beneficial owners ("distributees") and (ii) there is no
Shelf Registration or other effective registration statement that would permit
such member of the SVI Group to distribute Securities that are not subject to
restrictions on transfer under the Exchange Act or the Securities Act to such
distributees then such distributees shall be included in the definition of
"Investor" hereunder.
"Membership Units": any membership interests in Strategic Hotel
Funding, L.L.C., a Delaware limited liability company.
"Overhang Risk": a substantial risk that the sale of some or all of the
Shares sought to be sold will substantially reduce the proceeds or price per
unit to be derived from such sale.
"Person": an individual, partnership, corporation, company (including a
limited liability company), trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Proration": any reduction pursuant to Section 2.1(b) in the number of
securities to be included in a Demand Registration.
"Requesting Investor": as defined in Section 2.1.
"Resale Rules": as defined in Section 4.3.
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"Rockmark Registration Rights Agreement": the Registration Rights
Agreement of even date herewith between the Company, the Investors identified on
the signature pages thereto, and Rockmark Corporation, as Investor
Representative.
"Saleable Amount": the greatest number of securities which would not
create an Overhang Risk.
"Securities": the Shares and the Membership Units owned by any
Investor.
"Securities Act": the Securities Act of 1933, as amended.
"Selling Period": for purposes of a Proration pursuant to a Demand
Registration, the period beginning with the First Effective Date and ending 90
days after the First Effective Date (unless a shorter period is agreed to by the
managing underwriter for such offering).
"Shares": the shares of common stock of the Company and any other
securities that subsequently may be issued or issuable by the Company upon
conversion or exchange of any convertible or exchangeable securities (including
any Membership Units) or as a result of a stock split or dividend or other
similar transaction involving the Shares by the Company and any securities into
which the Shares may thereafter be changed or exchanged as a result of the
reincorporation of the Company or merger, consolidation, recapitalization or
other similar transaction.
"Shelf Registration": an effective registration under Rule 415 of the
Securities Act pursuant to Section 3.1.
"Shelf Takedown": as defined in Section 3.1.
"SVI Group": Prudential, together with SVI, any direct or indirect
wholly-owned subsidiary of Prudential Financial, Inc. and any "Redemption
Vehicle" of SVI or Strategic Value Investors International, LLC, a Delaware
limited liability company, that is managed by Prudential or any of its
affiliates, as "Redemption Vehicle" is defined in the Investment Advisory
Agreement, dated as of October 7, 1997, by and among SVI and the parties
thereto, as amended and as in effect on March 19, 2003, and the Operating
Agreement of Strategic Value Investors International, LLC, dated as of October
7, 1997, as amended and as in effect on March 19, 2003.
"Unincluded Securities": any securities sought to be registered but
which are not registered due to a Proration.
"Violation": as defined in Section 4.2(a).
"Whitehall Group": Whitehall and any entity that is an Affiliate of
Whitehall (if and for so long as such entity remains and Affiliate).
2. DEMAND REGISTRATION.
2.1 Demand Registration. Subject to any limitations set forth in
Section 2.1(d) and to any applicable standstill agreement to which the Company
and any Investor is a party, from and after the date hereof and until June 29,
2005 (and for such additional period during which the Company fails to file or
maintain a Shelf Registration pursuant to Article 3), each Investor may
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request (a "Requesting Investor") registration of all or any portion of its
Shares. The request shall state that the Investor intends to dispose of such
securities through a registered public offering. The Company will effect the
registration of such Shares under the Securities Act, in accordance with the
remaining provisions of this Article 2.
(a) Company's Ability to Postpone. The Company shall have the
privilege to postpone the filing of a registration statement under this
Section 2.1 for a reasonable period of time (not exceeding 90 days) if the
Company furnishes the Requesting Investor with a certificate signed by the
Chairman of the Board or the Chief Executive Officer of the Company stating
that, in its good faith judgment, the Company's board of directors has
determined that effecting the registration at such time would adversely
affect a material financing, acquisition, disposition of assets or shares,
merger or other comparable transaction or would require the Company to make
public disclosure of information the public disclosure of which would have
a material adverse effect upon the Company. The Company shall only be
entitled to exercise its rights under this Section 2.1(a) on one occasion
during any 12-month period as to any Investor.
(b) Overhang Risk. If the managing underwriter for the Requesting
Investor (and the other Investors pursuant to Section 2.3) advises that the
number of Shares sought to be included in such registration would create an
Overhang Risk, then the number of securities to be registered by the
Investors participating in such registration shall be reduced to the number
of Shares recommended by the managing underwriter as set forth in Section
2.1(e) below.
(c) Required Inclusion in Underwritten Offering. If a Demand
Registration is an underwritten offering, the Requesting Investor shall
(together with the Company as provided in Section 2.4(g) and the other
Investors), enter into an underwriting agreement in customary and usual
form with the underwriter or underwriters selected for such underwriting by
the Requesting Investor.
(d) Number of Demand Registrations. Each of Whitehall 7 and Prudential
Insurance shall be entitled to two Demand Registrations (such Demand
Registrations being assignable to, and divisible among, any Person who is
an "Investor" as defined in this Agreement), provided that such Investor
continues to own at least $50 million of Securities (based on the Closing
Price) on the date the registration is requested; provided, however, that
in the event of a Proration, each Investor shall be entitled to one
additional Demand Registration (which shall not be subject to such $50
million requirement). In the event of a Proration: (i) upon the expiration
of the Selling Period, the Company shall be obligated to file an additional
registration statement (which registration statement shall contain a
current prospectus) relating to the Unincluded Securities; (ii) the Company
shall use its reasonable efforts to effect the registration of the
Unincluded Securities as promptly as practicable thereafter; and (iii) an
Investor may withdraw its Unincluded Securities from such additional
registration without cost or penalty at any time prior to the effective
date of such additional registration statement.
(e) Limitation. If the number of securities to be registered in any
Demand Registration is to be reduced as described in Section 2.1(b), then
the amount of securities to be offered by the participating Investors shall
be allocated pro rata among all
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participating Investors on the basis of the number of securities such
Investors have requested to be included in such Demand Registration.
(f) Black-Out Period. During the period beginning on either (x) the
effective date of a Demand Registration or (y) the effective date of a
registration statement filed pursuant to the exercise of registration
rights granted to other holders of securities of the Company and ending 90
days thereafter (unless a shorter period is agreed to by the managing
underwriter for such offering), each Investor agrees that it will not
request that the Company register any of its Shares pursuant to this
Article 2; provided, however, that the Company may only utilize clause (y)
above to postpone an Investor's right to require the Company to file a
registration statement under Section 2.1 on one occasion only as to each
Demand Registration.
2.2 Option to Acquire. In the event that the Company has received a
request for a Demand Registration from an Investor pursuant to Section 2.1, the
Company or any non-Requesting Investor (in proportion to their percentage
ownership of Shares) shall have the option, for a period of 30 days from the
date of the Requesting Investor's request, to acquire all of the Shares sought
to be included in a Demand Registration at a per share price equal to the
average Closing Price of the Shares during the 20-day period beginning 10 days
prior to receipt of the Investor's request and ending 10 days thereafter. The
Requesting Investor shall have the absolute right to withdraw its request for a
Demand Registration at any time prior to the expiration of such 20-day period.
In the event that the Company or the non-requesting Investors elect not to
purchase all of the Shares covered by the Investor's request, the Company shall
proceed with the registration of the Shares pursuant to this Article 2.
2.3 Participation Rights of Other Investors. Whenever the Company shall
be requested by an Investor pursuant to Section 2.1 to effect the registration
of any of its Shares under the Securities Act, and the Company or a
non-requesting Investor shall not have exercised its rights under Section 2.2,
the Company shall:
(a) promptly (but not later than 10 days after such request) give
written notice of such proposed registration to the other Investors (which
notice shall inform Investors that they have 15 days to notify the Company
that they wish to participate in such registration and which notice shall
also be sent to each investor pursuant to the Rockmark Registration Rights
Agreement);
(b) as expeditiously as possible (but not later than 45 days after
such request) file a registration statement under the Securities Act with
respect to:
(1) those Shares which the Company has been requested to register
pursuant to Section 2.1; and
(2) all other Shares (subject to Section 2.1(e)) held by the
other Investors (including the investors requesting inclusion pursuant
to Section 2.3(a)) included by such Investors in written request to
the Company for registration thereof within 15 days after the Company
has given written notice to such Investors; and
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(c) use its reasonable efforts to effect such registration as quickly
as practicable.
2.4 Registration Procedures. If and whenever the Company is required by
any of the provisions of this Article 2 to effect the registration of any of the
Shares under the Securities Act, the Company will (except as otherwise provided
in this Agreement) use its reasonable efforts to as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its reasonable efforts to cause such
registration statement to become effective and remain effective for as long
as shall be necessary to complete the distribution of the Shares so
registered;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all securities covered by
such registration statement whenever the Investors shall desire to sell or
otherwise dispose of the same;
(c) furnish to the Investors such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as the
Investors may reasonably request in order to facilitate the public sale or
other disposition of the securities covered by such registration statement;
(d) use its reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as the Investors shall request, and do any
and all other acts and things reasonably requested by the Investors to
assist them to consummate the public sale or other disposition in such
jurisdictions of the securities owned by the Investors, except that the
Company shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service of process;
(e) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, beginning with the first fiscal
quarter beginning after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act;
(f) use its reasonable efforts to list such securities on any
securities exchange or interdealer quotation system on which any shares of
the Company are then listed, if the listing or quotation of such securities
is then permitted under the rules of such exchange or interdealer quotation
system;
(g) enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter or
underwriters of such
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underwritten offering, including, without limitation, to obtain an opinion
of counsel to the Company and a "comfort letter" from the independent
public accountants to the Company in the usual and customary form for such
underwritten offering;
(h) notify the Investors, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered
under the Securities Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in such registration
statement, as then in effect, contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing;
(i) with respect to a single Demand Registration by each Investor,
make the Company's executive officers available for a total of five
business days to participate in "road show" presentations in New York City,
Boston, Philadelphia, Baltimore, Washington D.C. and Chicago and, with
respect to any other Demand Registrations by an Investor, make the
Company's executive officers available at the Company's principal executive
offices to discuss the affairs of the Company at times that may be mutually
and reasonably agreed upon; and
(j) upon the request of any Investor, take any and all other actions
which may be reasonably necessary to complete the registration and
thereafter to complete the distribution of the Shares so registered.
3. SHELF REGISTRATION RIGHTS.
3.1 Shelf Registration. Beginning on June 30, 2005, the Company shall
file and use its reasonable efforts to continuously maintain a registration
statement relating to the resale of the Investors' Shares pursuant to Rule 415
under the Securities Act. Any Investor shall be entitled, upon 15 days' prior
written notice to the Company and each other Investor, to sell such number of
Shares as are then registered pursuant to such registration statement (each, a
"Shelf Takedown"). The selling Investor shall also give the Company and each
other Investor prompt written notice of the consummation of such Shelf Takedown.
No Investor shall have the right to cause the Company to register its Shares
under this Section 3.1 if the number of Shares requested to be so registered may
be immediately sold pursuant to the Resale Rules.
(a) Company's Ability to Postpone. The Company shall have the
privilege to postpone, on one occasion only as to each Shelf Registration
to which a party is entitled, each filing of a registration statement under
this Section 3.1 and each proposed Shelf Takedown by an Investor under an
effective Shelf Registration, for a reasonable period of time (not
exceeding 90 days) if the Company furnishes the Investor with a certificate
signed by the Chairman of the Board or the Chief Executive Officer of the
Company stating that, in its good faith judgment, the Company's board of
directors has determined that effecting the registration at such time would
adversely affect a material financing, acquisition, disposition of assets
or stock, merger or other comparable transaction or would require the
Company to make public disclosure of information the public disclosure of
which would have a material adverse effect upon the Company; provided,
however, that notwithstanding anything herein to the contrary, the Company
shall only be
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entitled to exercise its rights under this Section 3.1(a) on one occasion
during any 12-month period as to any Investor.
(b) Overhang Risk. If a Shelf Takedown is an underwritten offering and
the managing underwriter for the Requesting Investor (and the other
Investors pursuant to Section 3.2) advises that the number of Shares sought
to be included in such underwritten Shelf Takedown would create an Overhang
Risk, then the number of securities to be registered by the Investors
participating in such registration shall be reduced to the number of Shares
recommended by the managing underwriter as set forth in Section 3.1(d)
below.
(c) Required Inclusion in Underwritten Offering. If a Shelf Takedown
is an underwritten offering, the Requesting Investor shall (together with
the Company as provided in Section 3.3(g) and the other Investors), enter
into an underwriting agreement in customary and usual form with the
underwriter or underwriters selected for such underwriting by the
Requesting Investor.
(d) Limitation. If the number of securities proposed to be sold in a
Shelf Takedown is to be reduced as described in Section 3.1(b), then the
amount of securities to be offered by the participating Investors shall be
allocated pro rata among the all participating Investors on the basis of
the number of securities such Investors have requested to be included in
such Shelf Takedown.
3.2 Participation Rights of Other Investors. Whenever the Company shall
be requested by an Investor pursuant to Section 3.1 to effect the Shelf Takedown
of any of its Shares under the Securities Act, the Company shall:
(a) promptly (but not later than 5 days after such request) give
written notice of such proposed Shelf Takedown to the other Investors
(which notice shall inform Investors that they have 5 days to notify the
Company that they wish to participate in such Shelf Takedown and which
notice shall also be sent to each investor pursuant to the Rockmark
Registration Rights Agreement); and
(b) use its reasonable efforts to include all other Shares (subject to
Section 3.1(d)) held by the other Investors requesting inclusion pursuant
to Section 3.2(a) included in such Shelf Takedown.
3.3 Registration Procedures. If and whenever the Company is required by
any of the provisions of this Article 3 to use its reasonable efforts to effect
the registration of any of the Shares pursuant to Rule 415 under the Securities
Act, the Company shall:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its reasonable efforts to cause such
registration statement to become effective and remain effective for as long
as shall be necessary to complete the distribution of the Shares so
registered;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for so long as shall be necessary to
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complete the distribution of the Shares so registered and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement
whenever the Investor shall desire to sell or otherwise dispose of the
same;
(c) furnish to the Investor such numbers of copies of such
registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement, including any
preliminary prospectus, and any amendments or supplement thereto, and such
other documents, as the Investor may reasonably request in order to
facilitate the sale or other disposition of the Shares owned by the
Investor;
(d) use its reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as the Investor shall reasonably request,
and do any and all other acts and things reasonably requested by the
Investor to assist the Investor to consummate the sale or other disposition
in such jurisdictions of the securities owned by the Investor, except that
the Company shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service of process;
(e) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, beginning with the first fiscal
quarter beginning after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act;
(f) use its reasonable efforts to list such securities on any
securities exchange or interdealer quotation system on which any stock of
the Company is then listed, if the listing or quotation of such securities
is then permitted under the rules of such exchange or interdealer quotation
system;
(g) if the Investor intends to dispose of its securities through an
underwritten public offering, enter into and perform its obligations under
an underwriting agreement, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering, including,
without limitation, to obtain an opinion of counsel to the Company and a
"comfort letter" from the independent public accountants to the Company in
the usual and customary form for such underwritten offering;
(h) notify the Investor, at any time when a prospectus relating to
such registration statement is required to be delivered under the
Securities Act, of the happening of any event of which it has knowledge as
a result of which the prospectus included in such registration statement,
as then in effect, contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing;
(i) with respect to a single Shelf Takedown in the form of an
underwritten offering by each Investor, make the Company's executive
officers available for a total of
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five business days to participate in "road show" presentations in New York
City, Boston, Philadelphia, Baltimore, Washington D.C. and Chicago and,
with respect to any other underwritten Shelf Takedowns by an Investor, make
the Company's executive officers available at the Company's principal
executive offices to discuss the affairs of the Company at times that may
be mutually and reasonably agreed upon; and (j) upon the request of the
Investor, take any and all other actions which may be reasonably necessary
to complete the registration and thereafter to complete the distribution of
the Shares so registered.
3.3 Dribble Out. From and after the time that an Investor's Shares are
registered under an effective registration statement under this Article 3, such
Investor shall not in any calendar quarter sell, transfer or assign through the
facilities of any exchange or quotation system on which the Shares are then
listed or quoted a number of Shares to another Person if the aggregate number of
Shares so sold, transferred or assigned in such calendar quarter would exceed 5%
of the Shares of the Company then outstanding. The foregoing provisions of this
Section 3.3 shall not restrict a block (as defined pursuant to Rule 10b-18(a)(5)
under the Exchange Act) sale of the Investor's Shares, the transfer of Shares to
an Affiliate or any sale of Shares by the Investor pursuant to an underwritten
offering.
3.4 Black-Out Period. During the period beginning on the date of each
subsequently filed prospectus or prospectus supplement with respect to a Shelf
Takedown in the form of an underwritten offering and ending 90 days thereafter
(unless a shorter period is agreed to by the managing underwriter for such
offering), each Investor agrees that it will not request that the Company
register any of its Shares pursuant to this Article 3. The Company may postpone,
on one occasion only, each filing of a registration statement under this Article
3 if registration rights granted pursuant to any other holders of securities of
the Company have been exercised and the distribution thereto not completed. The
period during which the Company may postpone such filing shall commence on the
date such registration rights have been commenced and shall terminate 90 days
after the effective date of such registration statement; provided, however, that
the Company may only utilize this provision to postpone an Investor's right to
require the Company to file a registration statement under this Article 3 on one
occasion as to each Shelf Registration.
4. PROVISIONS APPLICABLE TO REGISTRATION RIGHTS.
4.1 Expenses.
(a) Except as set forth in Section 4.1(b), the expenses specified in
the following sentence incurred in any Shelf Registration or Demand
Registration (or any attempted Shelf Registration or Demand Registration
that is not consummated) of an Investor's Shares under this Agreement shall
be paid by the Investor. The expenses referred to in the preceding sentence
shall be limited to underwriters' discounts or commissions or fees or fees
of placement agents, the expenses of printing and distributing the
registration statement and the prospectus used in connection therewith and
any amendment or supplement thereto, fees and disbursements of counsel for
the Investor.
(b) All other expenses incurred in any Shelf Registration or Demand
Registration (or any attempted Shelf Registration or Demand Registration
that is not
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consummated) shall be paid by the Company, including, without limitation,
(i) the expenses of its internal counsel (and/or, if the Company chooses,
its outside counsel) including fees and expenses related to the preparation
of the registration statement and the prospectus used in connection
therewith and any amendment or supplement thereto, (ii) any necessary
accounting expenses, including any special audits which shall be necessary
to comply with governmental requirements in connection with any such
registration, including the expense related to any comfort letters and
(iii) expenses of complying with the securities or blue sky laws of any
jurisdictions.
4.2 Indemnification. In the event any Investor's Shares are included in
a registration statement under Article 2 or Article 3:
(a) Indemnity by Company. Without limitation of any other indemnity
provided to an Investor, to the extent permitted by law, the Company will
indemnify and hold harmless each Investor, the Affiliates, officers,
directors and partners of each Investor, each underwriter (as defined in
the Securities Act), and each Person, if any, who controls an Investor or
underwriter (within the meaning of the Securities Act), against any losses,
claims, damages, liabilities and expenses (joint or several) to which they
may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, liabilities
and expenses (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statements (including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto), (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (iii) any other violation or
alleged violation by the Company of the Securities Act, the Exchange Act,
any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law, and the
Company will reimburse each Investor and its Affiliates, officers,
directors or partners, underwriter and controlling person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, expense
or action; provided, however, that the Company shall not be liable to any
Investor in any such case for any such loss, claim, damage, liability,
expense or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by such Investor or any Affiliate, officer, director, partner
or controlling person thereof.
(b) Indemnity by Investors. In connection with any registration
statement in which any Investor is participating, the participating
Investor(s) will furnish to the Company in writing such reasonably
necessary information and affidavits as the Company reasonably requests for
use in connection with any such registration statement or prospectus and,
to the extent permitted by law, will indemnify the Company, its directors
and officers and each Person who controls the Company (within the meaning
of the Securities Act or Exchange Act) against any losses, claims, damages,
liabilities and expenses resulting from any Violation, but only to the
extent that such Violation is contained in any information or affidavit so
furnished in writing to the Company by such Investor stated to be
specifically for use in such registration statement or prospectus (the
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furnishing of such reasonably necessary information or affidavit by the
Investor being a condition precedent to the Company's obligation to cause
the registration statement to become effective); provided, that the
obligation to indemnify will be several and not joint with any other Person
and will be limited to the net amount received by the Investor from the
sale of Shares, pursuant to such registration statement.
(c) Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Section 4.2 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 4.2, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, if the indemnifying party agrees in writing that it
will be responsible for any costs, expenses, judgments, damages and losses
incurred by the indemnified party with respect to such claim, jointly with
any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party,
if the indemnified party reasonably believes that representation of such
indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in
such proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall
relieve such indemnifying party of any liability to the indemnified party
under this Section 4.2 only if and to the extent that such failure is
prejudicial to its ability to defend such action, and the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party other than under this
Section 4.2.
(d) Contribution. If the indemnification provided for in this Section
4.2 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other hand in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or
by the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. Notwithstanding the foregoing, the amount an Investor shall be
obligated to contribute pursuant to this Section 4.2(d) shall be limited to
an amount equal to the proceeds to the Investor of the Shares sold pursuant
to the registration statement which gives rise to such obligation to
contribute (less the aggregate amount of any damages which the Investor has
otherwise been required to pay in respect of such loss,
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claim, damage, liability or action or any substantially similar loss,
claim, damage, liability or action arising from the sale of such Shares).
(e) Survival of Indemnity. The indemnification provided by this
Section 4.2 shall be a continuing right to indemnification and shall
survive the registration and sale of any securities by any Person entitled
to indemnification hereunder and the expiration or termination of this
Agreement.
4.3 Rule 144. In order to permit each Investor to sell the Shares it
holds, if it so desires, from time to time pursuant to Rule 144 promulgated by
the Commission or any successor to such rule or any other rule or regulation of
the Commission that may at any time permit each Investor to sell its Shares to
the public without registration ("Resale Rules"), the Company will:
(a) comply with all rules and regulations of the Commission applicable
in connection with use of the Resale Rules;
(b) make and keep adequate and current public information available,
as those terms are understood and defined in the Resale Rules, at all
times;
(c) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act;
(d) furnish to each Investor so long as it owns any Shares, forthwith
upon request (i) a written statement by the Company that it has complied
with the reporting requirements of the Resale Rules, the Securities Act and
the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and any other reports and documents so filed by the Company,
and (iii) such other information as may be reasonably requested in availing
an Investor of any rule or regulation of the Commission which permits the
selling of any such Shares without registration; and
(e) take any action (including cooperating with each Investor to cause
the transfer agent to remove any restrictive legend on certificates
evidencing the Shares) as shall be reasonably requested by the Investor or
which shall otherwise facilitate the sale of Shares from time to time by
the Investor pursuant to the Resale Rules.
4.4 Investor Status and Responsibilities. Each Investor acknowledges
the limitations that may be imposed upon the Investor under Section 10 of the
Exchange Act and the rules and regulations thereunder in connection with the
Investor's sale or transfer of Shares and agrees to sell or transfer any such
shares only subject to any such applicable limitations.
4.5 Limitations on Other Registration Rights. Except as otherwise set
forth in this Agreement, the Company shall not, without the prior written
consent of each Investor include in any registration in which an Investor has a
right to participate pursuant to this Agreement any securities of any Person.
4.6 Piggyback Registration Rights. Nothing contained in this Agreement
shall confer upon any holder of securities of the Company any right to include
any or all of such holder's securities in a registration statement filed by the
Company under the Securities Act for the sale of
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such securities for the Company's own account or in any registration statement
filed on behalf of another Investor pursuant to Article 3.
5. MISCELLANEOUS.
5.1 Amendment. This Agreement may be amended, modified or supplemented
but only in writing signed by each of the parties hereto.
5.2 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (a) when received if given in person or by courier or a courier
service, (b) on the date of transmission if sent by telex, facsimile or other
wire transmission or (c) three Business Days after being deposited in the U.S.
mail, certified or registered mail, postage prepaid:
If to the Company, addressed as follows:
Strategic Hotel Capital, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attention: General Counsel
Facsimile No.: (312) 658-5000
with a copy to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attention: Robert W. Downes
Facsimile No.: (212) 558-3588
If to Whitehall 7 or Whitehall 9, addressed as follows:
c/o Whitehall Street Real Estate Limited Partnership
85 Broad Street
New York, New York 10004
Attention: David M. Weil
Facsimile No.: (212) 357-5505
with a copy to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attention: Joseph C. Shenker
Facsimile No.: (212) 558-3588
If to Prudential or SVI, addressed as follows:
The Prudential Insurance Company of America
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8 Campus Drive, 4th Floor
Parsippany, New Jersey 07054
Attention: SVI Portfolio Manager
Facsimile No.: (973) 683-1797
with a copy to:
Goodwin, Procter LLP
599 Lexington Avenue, 40th Floor
New York, New York 10022
Attention: Robert S. Insolia
Facsimile No.: (212) 355-3333
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
5.3 Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
5.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
5.5 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Exhibits and Schedules
attached to this Agreement are for convenience only and shall not be deemed part
of this Agreement or be given any effect in interpreting this Agreement. The use
of the masculine, feminine or neuter gender herein shall not limit any provision
of this Agreement. The use of the terms "including" or "include" shall in all
cases herein mean "including, without limitation" or "include, without
limitation," respectively. Underscored references to Articles, Sections,
Subsections, Exhibits or Schedules shall refer to those portions of this
Agreement.
5.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.7 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Except as otherwise specifically provided in this Agreement, no assignment of
any rights or obligations shall be made by any party without the written consent
of each of SVI and Whitehall. Notwithstanding the foregoing, each of the members
of the Whitehall Group and each of the members of the SVI Group shall be
entitled to assign its rights under this Agreement to any Investor (as such term
is defined herein).
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5.8 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and no provision of this Agreement shall be deemed
to confer upon any third parties any remedy, claim, liability, reimbursement,
cause of action or other right.
5.9 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
5.10 Entire Understanding. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
set forth herein and supersedes any and all prior agreements, arrangements and
understandings among the parties.
5.11 Specific Performance. Each of the parties acknowledges that the
obligations undertaken by it pursuant to this Agreement are unique and that the
other parties will not have an adequate remedy at law if it shall fail to
perform any of its obligations hereunder, and each party therefore confirms that
the right of each other party hereto to specific performance of the terms of
this Agreement is essential to protect the rights and interests of such parties.
Accordingly, in addition to any other remedies that the parties may have at law
or in equity, each party shall have the right to have all obligations,
covenants, agreements and other provisions of this Agreement specifically
performed by each other party, and shall have the right to obtain preliminary
and permanent injunctive relief to secure specific performance and to prevent a
breach or contemplated breach of this Agreement by each other party.
5.12 Reorganization. In connection with any merger, consolidation, sale
of all or substantially all of the Company's assets, the Company will use its
best efforts to take such actions, or to cause the other party to such
transaction to take such actions, to ensure that the parties hereto have,
immediately after consummation of such transaction, substantially the same
rights in respect of such other Person or the Company, as applicable, as they
may have immediately prior to consummation of such transaction in respect of the
Company under this Agreement.
* * * * *
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date and year first above written.
STRATEGIC HOTEL CAPITAL, INC.
By: /S/ DAVID E. SIMS
-----------------------------------------
Name: David E. Sims
Title: Senior Vice President
WHSHC, L.L.C.
By: Whitehall Street Real Estate Limited
Partnership VII
By: WH Advisors, L.L.C. VII, general
partner
By: /S/ TODD GIANNOBLE
------------------------------------
Name: Todd Giannoble
Title: Vice President
W9/WHSHC, L.L.C. I
By: Whitehall Street Real Estate Limited
Partnership IX
By: WH Advisors, L.L.C. IX, general
partner
By: /S/ TODD GIANNOBLE
------------------------------------
Name: Todd Giannoble
Title: Vice President
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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: Prudential Investment Management, Inc.,
Its Attorney-in-Fact
By: /S/ ROBERT M. FALZON
------------------------------------
Name: Robert M. Falzon
Title: Vice President
PIC REALTY CORPORATION
By: Prudential Investment Management, Inc.,
its Attorney-in-Fact
By: /S/ ROBERT M. FALZON
------------------------------------
Name: Robert M. Falzon
Title: Vice President
STRATEGIC VALUE INVESTORS, LLC
By: Prudential Investment Management, Inc.
its Attorney-in-fact
By: /S/ ROBERT M. FALZON
------------------------------------
Name: Robert M. Falzon
Title: Vice President
18
</TEXT>
</DOCUMENT>