Exhibit 10.2
Execution Copy
STRUCTURING AND CONTRIBUTION AGREEMENT
THIS STRUCTURING AND CONTRIBUTION AGREEMENT (the "Agreement")
is made as of February 13, 2004 by and among STRATEGIC HOTEL FUNDING, L.L.C., a
Delaware limited liability company (the "SHC Funding"); STRATEGIC HOTEL CAPITAL,
L.L.C., a Delaware limited liability company ("SHC LLC"); STRATEGIC HOTEL
CAPITAL LIMITED PARTNERSHIP, a Delaware limited partnership ("SHC LP");
STRATEGIC HOTEL CAPITAL LIMITED PARTNERSHIP-II, a Delaware limited partnership
("SHC XX XX"); SANTA XXXXXX HOTEL ASSOCIATES, LLC, a California limited
liability company ("SMHA"); THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation, PIC REALTY CORPORATION, a Delaware corporation, STRATEGIC
VALUE INVESTORS, LLC, a Delaware limited liability company, PRUDENTIAL ASSETS,
LLC, a Delaware limited liability company, PRUDENTIAL INVESTMENT MANAGEMENT,
INC., a Delaware corporation, (SHC/OLAYAN) REDEMPTION VEHICLE, LLC, a Delaware
limited liability company and SVI (SHC/HOUSTON) REDEMPTION VEHICLE, LLC, a
Delaware limited liability company (together, the "Prudential Entities");
Whitehall Street Real Estate Limited Partnership VII, a Delaware limited
partnership, and Whitehall Street Real Estate Limited Partnership IX, a Delaware
limited partnership (together, "Whitehall"); and ROCKMARK CORPORATION, a
Delaware corporation, on its own behalf and as the Investor Representative (as
defined in the Fourth Amended and Restated Agreement of Limited Partnership of
SHC LP) ("Rockmark") (SHC LLC, SHC LP, SHC XX XX, SMHA, the Prudential Entities,
Whitehall and Rockmark each, an "Interested Party" and collectively, "Interested
Parties").
WHEREAS, SHC LLC has formed Strategic Hotel Capital, Inc., a
Maryland corporation ("SHC Inc."), to be the sole managing member of SHC
Funding;
WHEREAS, in connection with the initial public offering (the
"IPO") of the common stock, par value $.01 per share (the "Common Stock"), of
SHC Inc. pursuant to a registration statement to be filed on Form S-11 with the
Securities and Exchange Commission, the parties hereto desire to effect certain
formation and structuring transactions outlined in Exhibit A hereto (the
"Formation and Structuring Transactions") under the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, SHC Funding and the
Interested Parties agree as follows:
ARTICLE I.
STRUCTURING TRANSACTIONS
1.1 Consent and Waiver. Subject to the terms and conditions of
this Agreement, SHC Funding and each of the Interested Parties hereby (i)
consent to each of the Formation and Structuring Transactions, (ii) waive any
restrictions set forth under any agreement to which it is party and rights that
it may have to object to any of the Formation and Structuring Transactions and
(iii) agree to take all actions reasonably necessary or advisable to consummate
the Formation and Structuring Transactions.
1.2 Unit Transactions. Subject to the terms and conditions of
this Agreement, SHC Funding and each of the Interested Parties hereby agree to
perform the following transactions (the "Unit Transactions") with respect to the
issuance, distribution or exchange of membership units of SHC Funding ("SHC
Funding Units") as an integral part of the Formation and Structuring
Transactions:
(a) Hotel Contributions. SHC LP is a 99% partner in the
Poydras Plaza Joint Venture, which owns the property and improvements commonly
known as the Hyatt Regency New Orleans, and is a 100% equity member of SHC
Lincolnshire Preferred, L.L.C., which has a leasehold interest in the property
and improvements commonly known as the Marriott Lincolnshire Resort (together,
the "Contributed Hotel Interests"). SHC LP shall contribute, transfer, assign
and convey to SHC Funding, and SHC Funding shall (i) acquire and accept from SHC
LP all right, title and interest of SHC LP in the Contributed Hotel Interests
and (ii) deliver to SHC LP an aggregate number of SHC Funding Units equal to
26.6% of the SHC Funding units initially owned by SHC LLC, which units are
exchangeable into Common Stock on a one-to-one basis;
(b) Distribution Transactions.
(i) As contemplated by step (4) of Exhibit A, SHC LLC, as sole
managing member of SHC Funding, shall own SHC Funding Units, which
units are exchangeable into Common Stock on a one-to-one basis;
(ii) As contemplated by steps (8) and (13) of Exhibit A, SHC
LLC shall distribute all of SHC Funding Units it owns to its beneficial
owners on a pro rata basis.
(c) Exchange Transactions. As contemplated by steps (11) and
(14) of Exhibit A, Whitehall and the Prudential Entities each shall
exchange all of SHC Funding Units that they receive in the
distributions from SHC LLC for Common Stock; and
(d) Amendment to Operating Agreement. SMHA and SHC Funding
shall amend the Amended and Restated Operating Agreement of SHCI Santa Xxxxxx
Beach Hotel, L.L.C. (the "Santa Xxxxxx Operating Agreement") such that:
(i) the Class A Units held by SMHA shall be convertible into
SHC Funding Units, rather than membership units of SHC LLC, and such
SHC Funding Units shall be exchangeable into Common Stock on a
one-to-one basis; and
(ii) the allocation of Net Income to SMHA as set forth in
Section 6.1(a)(ii)(A) of the Santa Xxxxxx Operating Agreement shall be
based on the amount of net income allocated to SHC Funding Units,
rather than membership units of SHC LLC.
1.3 Simultaneous Closing. The Unit Transactions shall close
simultaneously with the closing of the IPO (the "Closing").
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1.4 Further Acts. SHC Funding and the Interested Parties shall
perform, execute, and deliver or cause to be performed, executed, and delivered
at the Closing or after the Closing, any and all further acts, instruments, and
agreements and provide such further assurances as the other parties may
reasonably require to consummate the Formation and Structuring Transactions
contemplated hereunder.
ARTICLE II.
CONDITIONS TO CLOSING
2.1 Conditions to Closing. The obligations of each Interested
Party and SHC Funding hereunder are subject to the satisfaction of the
conditions set forth below on or before the Closing. If for any reason any of
the conditions set forth in this Section 2.1 are not satisfied or waived by each
party entitled to the benefit of such conditions at or prior to the Closing, or
if the Closing shall not have occurred by December 31, 2004, then each party
hereto by written notice given to the other parties hereto shall have the right
to elect to terminate this Agreement and each party shall be released from their
obligations hereunder and shall have no further liability hereunder except that
nothing herein shall relieve any party from liability for any breach of this
Agreement prior to such termination.
(a) Representations and Warranties True and Correct. The
representations and warranties of each other party hereto shall be true and
correct in all material respects as of the date of the Closing;
(b) Closing of Unit Transactions. The closing of each of the
Unit Transactions applicable to each other party hereto shall occur
simultaneously therewith and all obligations of each other party hereto shall
have been performed or complied with in all material respects; and
(c) Closing of IPO. The IPO shall have been consummated
simultaneously with the closing of the Unit Transactions therewith.
(d) Registration Rights. SHC Inc. shall have assumed the
obligations of SHC LLC relating to registration rights under those certain
Transfer and Registration Agreements, each dated as of October 31, 1999, by and
among SHC LLC and the parties thereto (the "Registration Rights Agreements"),
such that the parties thereto have the same registration rights in respect of
their SHC Funding Units and shares of Common Stock as they currently have in
respect of their equity interests in SHC LLC under the Registration Rights
Agreements with conforming adjustments. SHC Inc. shall use its reasonable
efforts to file beginning one year after the IPO and continuously maintain a
shelf registration on behalf of the Prudential Entities, Whitehall, and Rockmark
(including the parties for whom Rockmark is the Investor Representative).
Rockmark (and the respective parties for whom Rockmark is the Investor
Representative) shall be entitled to utilize that registration statement until
all registrable securities of Rockmark and each of the respective parties for
whom Rockmark is the Investor Representative may be immediately sold under the
Resale Rules (as defined in the Registration Rights Agreement).
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2.2 Abandonment of IPO. If at any time SHC Inc. determines in
good faith to abandon the IPO, SHC Funding shall so advise each Interested Party
in writing and thereupon each party shall be released from its obligations
hereunder and shall have no further liability hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations by SHC Funding. SHC Funding hereby
represents and warrants to the Interested Parties that each and every one of the
following statements is true, correct, and complete in every material respect as
of the date of this Agreement and will be true, correct, and complete as of the
date of Closing:
(a) Organization and Power. SHC Funding is duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and has full right, power, and authority to enter into this Agreement and to
assume and perform all of its obligations under this Agreement. The execution,
delivery and performance of this Agreement have been duly authorized by SHC
Funding, and this Agreement constitutes the legal, valid and binding obligation
of SHC Funding, enforceable against SHC Funding in accordance with its terms,
subject to bankruptcy, reorganization, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity.
(b) Litigation. There is no action, suit, or proceeding,
pending or known to be threatened, against SHC Funding in any court or before
any arbitrator or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality that could
materially and adversely affect the business, financial position, or results of
operations of SHC Funding or the ability of SHC Funding to perform its
obligations hereunder.
(c) Consents. Each consent, approval, authorization, order,
license, certificate, permit, registration, designation, or filing by or with
any governmental agency or body necessary for the execution, delivery, and
performance of this Agreement or the transactions contemplated hereby by SHC
Funding will be obtained as of Closing.
3.2 Representations by Interested Parties. Each Interested
Party hereby severally and not jointly represents and warrants to SHC Funding
that each and every one of the following statements is true, correct, and
complete in every material respect as of the date of this Agreement and/or will
be true, correct, and complete as of the date of Closing:
(a) Organization and Power. Such Interested Party is duly
organized, validly existing and in good standing under the laws of the state of
its formation and has full right, power, and authority to enter into this
Agreement and to assume and perform all of its obligations under this Agreement.
The execution, delivery and performance of this Agreement have been duly
authorized by such Interested Party, and this Agreement constitutes the legal,
valid and binding obligation of such Interested Party, enforceable against such
Interested Party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity.
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(b) Litigation. There is no action, suit, claim, or proceeding
pending or, to the Interested Party's knowledge, threatened against such
Interested Party or such Interested Party's interests in any court, before any
arbitrator, or before or by any governmental body or other regulatory authority
that would materially and adversely affect the ability of such Interested Party
to perform its obligations hereunder or otherwise delay the consummation of any
of the transactions contemplated hereby. Such Interested Party is not subject to
any judgment, decree, injunction, rule, or order of any court relating to such
Interested Party's participation in the transactions contemplated by this
Agreement.
(c) No Consents. No authorization, consent, approval, permit,
or license of, or filing with, any governmental or public body or authority, or
any other person or entity is required to authorize, or is required in
connection with, the execution, delivery, and performance of this Agreement on
the part of such Interested Party other than as may be required under the
provisions the following agreements, which shall be deemed to have been provided
pursuant to Section 1.1 hereof: (i) Amended and Restated Limited Liability
Company Agreement of Strategic Hotel Capital, L.L.C., (ii) Fourth Amended and
Restated Agreement of Limited Partnership of Strategic Hotel Capital Limited
Partnership, (iii) Second Amended and Restated Agreement of Limited Partnership
of Strategic Hotel Capital Limited Partnership-II and (iv) Amended and Restated
Operating Agreement of SHCI Santa Xxxxxx Beach Hotel, L.L.C.
(d) Securities Law Matters. (i) In acquiring SHC Funding Units
and/or Common Stock, such Interested Party is not relying upon any
representations made to it by SHC Funding or SHC Inc., or any of their officers,
employees, or agents that are not contained herein. The Interested Party is
aware of the risks involved in investing in SHC Funding Units and/or Common
Stock. Such Interested Party has had an opportunity to ask questions of, and to
receive answers from SHC Funding and SHC Inc., or a person or persons authorized
to act on their behalf, concerning the terms and conditions of this investment
and the financial condition, affairs, and business of SHC Inc., including SHC
Inc.'s intent to qualify as a real estate investment trust under federal income
tax laws and the associated restrictions that will apply to holders of the
Common Stock under federal tax laws and under SHC Inc.'s charter and bylaws.
Such Interested Party confirms that all documents, records, and information
pertaining to its investment in SHC Funding Units and/or Common Stock that have
been requested by it, have been made available or delivered to it prior to the
date hereof.
(ii) Such Interested Party understands that SHC Funding Units
and/or Common Stock issuable to such Interested Party hereunder has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws and is instead being offered and sold in reliance
on an exemption from such registration requirements. SHC Funding Units and/or
Common Stock issuable to such Interested Party is being acquired solely for the
Interested Party's own account, for investment, and is not being acquired with a
view to, or for resale in connection with, any distribution, subdivision, or
fractionalization thereof, in violation of such laws, and such Interested Party
does not have any present intention to enter into any contract, undertaking,
agreement, or arrangement with respect to any such resale. The Prudential
Entities and Whitehall understand that the certificates representing the Common
Stock issuable to such Interested Party will contain appropriate legends
reflecting the requirement that the Common Stock not be resold by such
Interested Party without registration under such laws or the availability of an
exemption from such registration.
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(e) Investment Decision. Such Interested Party is capable of
making an informed investment decision based on its knowledge, sophistication
and experience in financial and business matters together with the business and
financial experience of those persons, if any, retained by it, and other
relevant information it may have received with respect to the matters set forth
in this Agreement.
(f) Brokers. Such Interested Party has not engaged the
services of any agent, broker, finder or any other person or entity for any
brokerage or finder's fee, commission or other amount with respect to the
transactions described herein.
3.3 Additional Representations by SHC LP--Good Title. SHC LP
hereby represents and warrants to SHC Funding that it holds the equity interests
in the Contributed Hotel Interests free and clear of all liens, encumbrances,
security interests, prior assignments or conveyances, conditions, restrictions,
and any other adverse right, interest, charge or claim of any kind whatsoever
other than the transfer restrictions set forth under Section 7.12 of the Fourth
Amended and Restated Agreement of Limited Partnership of SHC LP.
ARTICLE IV.
MISCELLANEOUS
4.1 Survival and Indemnity. The representations and warranties
contained herein shall survive the Closing. Each Interested Party, severally and
not jointly, agrees to indemnify, defend and hold harmless SHC Funding and each
other party hereto and SHC Funding agrees to indemnify, defend and hold harmless
each Interested Party from and against all costs, expenses, losses and damages
(including, without limitation, reasonable attorney's fees and expenses, but
excluding consequential damages) incurred by SHC Funding or such other party
resulting from any misrepresentation or breach of warranty made by it.
4.2 Entire Agreement; Modifications and Waivers; Cumulative
Remedies. This Agreement supersedes any existing letter of intent between the
parties, constitutes the entire agreement among the parties hereto and may not
be modified or amended except by instrument in writing signed by the parties
hereto, and no provisions or conditions may be waived other than by a writing
signed by the party waiving such provisions or conditions. No delay or omission
in the exercise of any right or remedy accruing to SHC Funding or an Interested
Party upon any breach under this Agreement shall impair such right or remedy or
be construed as a waiver of any such breach theretofore or thereafter occurring.
The waiver by SHC Funding or an Interested Party of any breach of any term,
covenant, or condition herein stated shall not be deemed to be a waiver of any
other breach, or of a subsequent breach of the same or any other term, covenant,
or condition herein contained. All rights, powers, options, or remedies afforded
to SHC Funding or an Interested Party either hereunder or by law shall be
cumulative and not alternative, and the exercise of one right, power, option, or
remedy shall not bar other rights, powers, options, or remedies allowed herein
or by law, unless expressly provided to the contrary herein.
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4.3 Notices. Any notice provided for by this Agreement and any
other notice, demand, or communication which any party may wish to send to
another shall be in writing and either delivered in person (including by
confirmed facsimile transmission) or sent by registered or certified mail or
overnight courier, return receipt requested, in a sealed envelope, postage
prepaid, and addressed to the party for which such notice, demand or
communication is intended at such party's address as set forth in this Section.
SHC Funding's address for all purposes under this Agreement shall be as follows:
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax No: (000) 000-0000
The address of each of the Interested Parties for all purposes under this
Agreement shall be as follows:
SHC LLC:
Attn: General Counsel
Strategic Hotel Capital, L.L.C.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax No: (000) 000-0000
SHC LP:
Attn: General Counsel
Strategic Hotel Capital Limited Partnership
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax No: (000) 000-0000
SHC XX XX:
Attn: General Counsel
Strategic Hotel Capital Limited Partnership-II
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax No: (000) 000-0000
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SMHA:
Attn: General Counsel
Santa Xxxxxx Hotel Associates, Ltd.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Prudential Entities:
c/o The Prudential Insurance Company of America
0 Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Whitehall:
Whitehall Street Real Estate Limited Partnership VII
c/o 00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Whitehall Street Real Estate Limited Partnership IX
c/o 00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Rockmark:
Rockmark Corporation
c/o Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Any address or name specified above may be changed by a notice
given by the addressee to the other parties. Any notice, demand or other
communication shall be deemed given and effective as of the date of delivery in
person or receipt set forth on the return receipt. The inability to deliver
because of changed address of which no notice was given, or rejection or other
refusal to accept any notice, demand or other communication, shall be deemed to
be receipt of the notice, demand or other communication as of the date of such
attempt to deliver or rejection or refusal to accept.
4.4 Exhibits. All exhibits referred to in this Agreement and
attached hereto are hereby incorporated in this Agreement by reference.
4.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflicts of laws principles.
4.6 Severability. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein.
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4.7 Successors and Assigns. This Agreement may not be assigned
by SHC Funding or any Interested Party without the prior approval of SHC Funding
or Interested Party, as applicable; provided, however, that SHC Funding may
assign its rights under this Agreement (but not its obligations) to a direct or
indirect wholly-owned subsidiary of SHC Funding without the prior approval of
the Interested Parties. This Agreement shall be binding upon, and inure to the
benefit of, SHC Funding, the Interested Parties, and their respective legal
representatives, successors, and permitted assigns.
4.8 Headings. Article headings and article and section numbers
are inserted herein only as a matter of convenience and in no way define, limit,
or prescribe the scope or intent of this Agreement or any part hereof and shall
not be considered in interpreting or construing this Agreement.
4.9 Recitals. The recital and introductory paragraphs hereof
are a part hereof, form a basis for this Agreement and shall be considered prima
facie evidence of the facts and documents referred to therein.
4.10 Counterparts. This Agreement may be executed in any
number of counterparts and by any party hereto on a separate counterpart, each
of which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute but one and the same instrument. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts.
4.11 Specific Performance. Each party to this Agreement agrees
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Each party to this Agreement agrees that each other
party hereto will be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the provisions of this
Agreement in any federal or state court located in the State of New York (as to
which each party to this Agreement agrees to submit to jurisdiction for purposes
of such action), this being in addition to any other remedies to which such
party may be entitled under this Agreement or otherwise at law or in equity.
4.12 Time of the Essence. Time is of the essence with respect
to all obligations of each party under this Agreement.
[Signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
STRATEGIC HOTEL FUNDING, L.L.C.
By: Strategic Hotel Capital, L.L.C.,
its sole member
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
STRATEGIC HOTEL CAPITAL, L.L.C.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
STRATEGIC HOTEL CAPITAL LIMITED PARTNERSHIP
By: Strategic Hotel Funding, L.L.C.,
its general partner
By: Strategic Hotel Capital, L.L.C.,
its sole member
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
STRATEGIC HOTEL CAPITAL LIMITED PARTNERSHIP - II
By: Strategic Hotel Funding, L.L.C.,
its general partner
By: Strategic Hotel Capital, L.L.C.,
its sole member
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
SANTA XXXXXX HOTEL ASSOCIATES, LLC
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
PIC REALTY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
STRATEGIC VALUE INVESTORS, LLC
By: Prudential Investment Management, Inc.,
its Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
PRUDENTIAL ASSETS, LLC
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Manager
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PRUDENTIAL INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
(SHC/OLAYAN) REDEPTION VEHICLE, LLC
By: Prudential Investment Management, Inc., its
Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
SVI (SHC/HOUSTON) REDEPTION VEHICLE, LLC
By: Prudential Investment Management, Inc.,
its Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
By: WH Advisors, L.L.C. VII, general partner
By: /s/ Xxxx X. Xxxx
-----------------------------
Name: Xxxx X. Xxxx
Title: Vice President
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP IX
By: WH Advisors, L.L.C. IX, general partner
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
ROCKMARK CORPORATION, on its own
behalf and as the Investor
Representative
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
EXHIBIT A(1)
1. Each of the Prudential Entities will convert its limited partnership
interests in SHC LP and SHC XX XX into membership units in SHC LLC
pursuant to Section 4.2 of the Fourth Amended and Restated Agreement of
Limited Partnership SHC LP, as amended, and the Second Amended and
Restated Agreement of Limited Partnership of SHC XX XX, as amended. As
a result, the Prudential Entities will receive 31,961,982 membership
units in SHC LLC and SHC LLC will have a total of 100,449,681
membership units outstanding.
2. SHC XX XX will be merged with and into SHC LP with SHC LP being the
surviving entity. The Fourth Amended and Restated Agreement of Limited
Partnership of SHC LP will be amended and restated to reflect:
o SHC Funding, as the general partner, and the limited partners
(other than the Prudential Entities) that are limited partners
in SHC LP and SHC XX XX immediately prior to the merger, as
the limited partners;
o that the limited partners in SHC LP will have the same
indirect interest in the SHC Funding Units held by SHC LP as
such limited partners would have had if (i) such limited
partners would have converted their limited partnership
interests in SHC LP and SHC XX XX into membership units of SHC
LLC, (ii) SHC LLC would have received all SHC Funding Units
received by SHC LP and SHC LLC, and (iii) SHC LLC would have
distributed such SHC Funding Units received by it in
accordance with steps (8) and (13) below.
o that the limited partners in SHC LP will have no right to
share in a distribution of SHC Funding Units by SHC LLC;
o existing tax protection provisions in SHC LP and SHC XX XX
applicable to Rockmark and the investors it represents will be
retained in SHC LP;
o the contribution of the Lincolnshire Marriott Resort and the
New Orleans Hyatt Regency to SHC Funding will be specifically
permitted.
3. SHC Funding and SHC LP will refinance their existing debt ($1.29
billion) so that the debt follows the assets with the debt separately
allocated to the Private Pool Properties (as defined below) ($725.0
million) and the Public Pool Properties (as defined below) ($402.6
million).
--------------------
1 Except as otherwise indicated, each transaction shall be consummated
contemporaneously on the closing date for the initial public offering
of the Common Stock.
4. SHC Funding will adopt a limited liability company operating agreement
in substantially the same form as that included in Exhibit H to the
Amended and Restated Limited Liability Company Agreement of SHC LLC
(dated as of September 1999), with such changes as necessary to permit
the transactions described herein, including the distribution by SHC
Funding to SHC LLC of:
o SHC Funding's general partnership interests in SHC LP,
o SHC Funding's interests in the Private Pool Properties and
related assets,
o All cash and cash equivalents, other than the restricted cash
and cash equivalents held at the hotel property level.
Under the SHC Funding limited liability company agreement, SHC LLC will
own SHC Funding Units, which units are exchangeable for Common Stock on
a one-to-one basis.
5. SHC Funding will distribute to SHC LLC its general partnership
interests in SHC LP, the Private Pool Properties and related assets and
all cash and cash equivalents, other than the restricted cash and cash
equivalents held at the hotel property level. The Private Pool
Properties will include:
o Hyatt Regency San Francisco
o Park Hyatt San Francisco
o Loews Xxxxxxx Hills
o Xxxx-Xxxxxxx, Laguna Niguel
o Westin Santa Xxxxx
x Xxxxxx Essex House
o Marriott East Side
6. SHC LP will contribute the Lincolnshire Marriott Resort and the New
Orleans Hyatt Regency to SHC Funding in exchange for an aggregate
number of SHC Funding Units equal to 26.6% of the SHC Funding units
owned by SHC LLC, which units are exchangeable for Common Stock on a
one-to-one basis.
7. SHC Funding's interests in the Public Pool Properties will be
restructured to allow SHC Inc. to qualify as a REIT for U.S. Federal
income tax purposes. The Public Pool Properties will include:
o Embassy Suites Lake Buena Vista
o Four Seasons Mexico City
o Four Seasons Punta Xxxx
x Xxxxxx Burbank Airport
o Hyatt Regency La Jolla
o Hyatt Regency New Orleans
o Hyatt Regency Phoenix
o Intercontinental Prague
o Loews Santa Xxxxxx
o Marriott Lincolnshire Resort
o Marriott Rancho Las Palmas
o Marriott Schaumburg
o Marriott Champs Elysees
o Xxxxxxxx Xxxxxxx
0. SHC LLC will distribute all of the SHC Funding Units it owns (except
for an amount of SHC Funding Units necessary for it to include in the
pro rata distribution any holders of SHC LLC convertible debentures who
convert their debentures for SHC LLC membership units in step (13)
below) to its beneficial owners on a pro rata basis. As described
above, partners in SHC LP will not participate in this distribution.
9. The Amended and Restated Operating Agreement of SHCI Santa Xxxxxx Beach
Hotel, L.L.C. will be amended to provide (i) for the non-managing
membership interests to be exchangeable for SHC Funding Units with a
value of $1.2 million based on the IPO price, which are exchangeable
for Common Stock on a one-to-one basis, rather than membership units of
SHC LLC and (ii) for the allocation of net income to non-managing
membership interests to be calculated with respect to SHC Funding Units
rather than membership units of SHC LLC.
10. SHC Inc. will complete its IPO and contribute the net proceeds (after
deducting the underwriters' compensation) to SHC Funding in exchange
for SHC Funding Units.
11. Whitehall and the Prudential Entities will exchange the SHC Funding
Units that they receive in the distribution outlined in step (8) for
Common Stock.
12. Upon completion of SHC Inc.'s IPO, SHC LLC will deliver a redemption
notice to holders of its convertible debentures, calling for a
redemption 60 days later.
13. 60 days following the delivery of the redemption notice, SHC LLC will
redeem any outstanding convertible debenture holders who did not
convert from cash on hand and distribute the remaining SHC Funding
Units as follows:
o to debenture holders who converted into SHC LLC membership
units an amount that equals their aggregate pro rata share of
SHC Funding Units from the earlier distribution in step (8);
o any remaining SHC Funding Units to all the beneficial owners
of SHC LLC (including debenture holders who converted) on a
pro rata basis.
14. Whitehall and the Prudential Entities will exchange SHC Funding Units
that they receive in the distribution outlined in step (13) for shares
of Common Stock.
