SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement"), is made and entered
into as of April 7, 2005 among WHSHC, L.L.C., a Delaware limited liability
company, and W9/WHSHC, L.C.C. I, a Delaware limited liability company
(individually a "Shareholder" and collectively the "Shareholders") and Strategic
Hotel Capital, Inc., a Maryland corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Company and the Shareholders are parties to an Observer
Agreement, dated as of June 29, 2004 (the "Observer Agreement"), pursuant to
which, among other things, the Shareholders are entitled to appoint observers to
attend meetings of the Board of Directors of the Company and to receive certain
information on a confidential basis regarding the Company, all subject to the
terms set forth in the Observer Agreement;
WHEREAS, pursuant to a letter agreement dated the date hereof, the
parties have agreed to replace the Observer Agreement with this Agreement as
provided herein; and
WHEREAS, the Shareholders and the Company wish to record their
understanding regarding certain matters relating to the management of the
Company and certain other matters.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. In addition to the terms defined in the
preamble to this Agreement and elsewhere herein, the following terms shall have
the meanings set forth herein for the purposes of this Agreement:
"Affiliate" shall mean, with respect to a Person (as hereinafter
defined), any other Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
such Person.
"Board of Directors" shall mean the Board of Directors of the Company
in office at the applicable time as elected in accordance with the provisions of
the Maryland General Corporation Law, the Charter and the Bylaws.
"Bylaws" shall mean the bylaws of the Company, as amended from time to
time.
"Charter" shall mean the charter of the Company, as amended from time
to time.
"Common Stock" shall mean the shares of common stock, par value $0.01
per share, of the Company.
"Common Stock Deemed Outstanding" shall mean, as of any date, the total
number of shares of Common Stock outstanding as of such date plus the total
number of shares of Common Stock which may be acquired upon exercise or
conversion of all options, warrants or other securities or rights convertible
into or exercisable for shares of Common Stock which were outstanding as of such
date, whether or not convertible or exercisable within 60 days of such date.
"Deemed Beneficial Ownership" shall mean, with respect to the
Shareholders as of any date, the percentage obtained by dividing (a) the total
number of shares of Common Stock owned of record or beneficially by the
Shareholders as of such date plus the total number of shares of Common Stock
which may be acquired by the Shareholders upon exercise or conversion of all
options, warrants or other securities or rights convertible into or exercisable
for shares of Common Stock which were held by the Shareholders as of such date,
whether or not convertible or exercisable within 60 days of such date, by (b)
the Common Stock Deemed Outstanding as of such date.
"Person" shall mean an individual, corporation, partnership, trust,
joint venture, limited liability company, unincorporated organization or other
legal entity, or a government or any agency or political subdivision thereof.
ARTICLE II
BOARD REPRESENTATION
Section 2.1 Right to Nominee. The Shareholders shall collectively have
the right to nominate one person (such person, the "Shareholder Nominee"), as a
director (such person, the "Shareholder Director") to the Board of Directors so
long as the Deemed Beneficial Ownership of the Shareholders is not less than 10%
in the aggregate. The Shareholders shall not name any person as the Shareholder
Nominee if: (a) such person is not reasonably experienced in business, financial
and lodging industry matters; (b) such person has been convicted of, or has pled
nolo contendere to, a felony; (c) the election of such person would violate any
law; or (d) any event required to be disclosed pursuant to Item 401(f) of
Regulation S-K of the Exchange Act has occurred with respect to such person.
Section 2.2 Election of Directors. The Company hereby covenants and
agrees that, during such time as the Shareholders have the right to nominate the
Shareholder Nominee pursuant to Section 2.1, the Company shall use its best
efforts to cause the election of the Shareholder Nominee.
Section 2.3 Shareholders' Meeting. Immediately upon execution of this
Agreement by all parties hereto, the Shareholders may by written notice identify
the Shareholder Nominee, who will be nominated by the Board of Directors for
election at the next annual meeting of shareholders to elect directors of the
Company in accordance with Sections 2.1 and 2.2 hereof. The Shareholder Director
will not be entitled to receive compensation as a director of the Company;
provided the Shareholder Director will be reimbursed for reasonable
out-of-pocket expenses incurred in connection with such director's services on
the Board of Directors to the same extent as other non-employee directors and
will be named as a covered insured and a
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beneficiary on the same basis as other non-employee directors under any
directors' and officers' insurance policy maintained by the Company for its
directors.
Section 2.4 Resignation, etc., of Directors. In the event of the death,
disability, removal or resignation of the Shareholder Director, the Shareholders
collectively shall notify the Company, within 30 days after such death,
disability, removal or resignation, of a successor Shareholder Nominee who shall
be promptly appointed by the remaining directors then in office to serve the
unexpired term of such former Shareholder Director whose departure created the
vacancy.
ARTICLE III
MISCELLANEOUS
Section 3.1 Amendment. This Agreement may be amended, modified or
supplemented but only in writing signed by each of the parties hereto.
Section 3.2 Expenses. Except as otherwise specifically provided in this
Agreement, each party hereto shall bear its own costs and expenses with respect
to the negotiation of this Agreement and the termination of the Observer
Agreement contemplated hereby.
Section 3.3 Notices. Any notice, request, instruction or other
communication to be given hereunder by a party hereto shall be dated and 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, directed at the following addresses:
(a) If to the Company, addressed as follows:
Strategic Hotel Capital, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
(b) If to WHSHC, L.L.C., addressed as follows:
WHSHC, L.L.C.
c/o Whitehall Street Real Estate Limited Partnership VII
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
(c) If to W9/WHSHC, L.L.C. I, addressed as follows:
Whitehall Street Real Estate Limited Partnership IX
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attention: General Counsel
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
Section 3.4 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.
Section 3.5 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.
Section 3.6 Interpretation. The headings preceding the text of Articles
and Sections included in 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.
Section 3.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 3.8 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 the other parties hereto.
Section 3.9 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 other third parties any remedy, claim, liability,
reimbursement, cause of action or other right.
Section 3.10 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.
Section 3.11 Remedies Cumulative. The remedies provided in this
Agreement shall be cumulative and shall not preclude the assertion or exercise
of any other rights or remedies available by law, in equity or otherwise.
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Section 3.12 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.
Section 3.13 Termination. This Agreement shall terminate (i) on the
first date upon which the Deemed Beneficial Ownership of the Shareholders is
less than 10% or (ii) immediately upon delivery of written notice of termination
by the Shareholders to the Company, which notice may be given at any time at the
sole discretion of the Shareholders.
Section 3.14 Effectiveness; Replacement of Observer Agreement. The
Company has agreed that it will nominate a Shareholder Nominee for election at
its 2005 annual meeting of shareholders. This Agreement shall become effective
immediately upon election of such Shareholder Nominee at such meeting and the
Observer Agreement shall immediately be replaced by this Agreement and,
thereafter, the terms of the Observer Agreement shall have no further force or
effect. In the event that such Shareholder Nominee is not elected at the
Company's 2005 annual meeting of shareholders, this Agreement shall not become
effective and the Observer Agreement shall remain in full force and effect.
Notwithstanding the foregoing, the confidentiality obligations set forth in
Section 3.11 of the Observer Agreement shall survive the replacement of the
Observer Agreement in accordance with the terms thereof.
Section 3.15 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
STRATEGIC HOTEL CAPITAL, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxxx X. Xxxxxx
President and Chief Executive Officer
WHSHC, L.L.C.
By: Whitehall Street Real Estate Limited
Partnership VII
By: WH Advisors, L.P. VII, General Partner
By: WH Advisors, Inc., VII,
General Partner
By: /s/ Xxxx Xxxx
------------------------------------
Name: Xxxx Xxxx
Title: Vice President
W9/WHSHC, L.L.C. I
By: Whitehall Real Estate Limited Partnership IX
By: WH Advisors, L.L.C. IX, General Partner
By: /s/ Xxxx Xxxx
------------------------------------------------
Name: Xxxx Xxxx
Title: Vice President
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