, 2006

 

 

Morgan Stanley & Co. Incorporated

Merrill Lynch, Pierce, Fenner & Smith Incorporated

As representatives of the several Underwriters
Named in Schedule I hereto

 

c/o   Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

 

Dear Sirs and Mesdames:

 

Morgans Hotel Group Co., a Delaware corporation (the “ Company ”), Morgans Hotel Group LLC, a Delaware limited liability company (“ MHG ”), and Morgans Group LLC, a Delaware limited liability company (the “ Operating Company ”), each confirms its agreement with each of the several Underwriters named in Schedule I hereto (the “ Underwriters ”), for whom Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as representatives (the “ Representatives ”), whereby the Company and certain shareholders of the Company (the “ Selling Shareholders ”) named on Schedule II hereto severally propose to sell to the several Underwriters an aggregate of                                shares of the common stock, $.01 par value per share, of the Company (the “ Firm Shares ”), of which                        shares are to be issued and sold by the Company and                        shares are to be sold by the Selling Shareholders, each Selling Shareholder selling the amount set forth opposite such Selling Shareholder’s name in Schedule II hereto.  The Company also proposes to issue and sell to the several Underwriters not more than an additional                              shares of its common stock, $.01 par value per share (the “ Additional Shares ”), if and to the extent that you, as Representatives, shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 4 hereof.  The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “ Shares .”  The shares of common stock, $.01 par value per share, of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the “ Common Stock .”  The Company and the Selling Shareholders are hereinafter sometimes collectively referred to as the “Sellers”.

 

At or before the Closing Date (as defined below), the Company, the Operating Company, MHG, NorthStar Partnership, L.P. (“ NorthStar ”) and RSA Associates, L.P. (“ RSA ”) and certain other members of MHG will complete a series of transactions described in the Prospectus (as defined below) under the caption “Formation and Structuring Transactions” (such transactions being

 

 

hereinafter called the “ Formation Transactions ”). As part of the Formation Transactions, (1) MHG will form the Operating Company and contribute certain assets and related liabilities and rights described in the Prospectus (the “ Initial Contributed Assets ”) to the Operating Company for no consideration, (2) MHG will distribute all of its membership units in the Operating Company ( “OC Units” ) held at the time of the contribution of the Initial Contributed Assets to its members on a pro rata basis, (3) MHG will contribute all of the membership interests in Morgans Hotel Group Management LLC (the “ Management Company Contribution ” and, together with the Initial Contributed Assets, the “ Contributed Assets ”) to the Operating Company in exchange for additional OC Units, (4) NorthStar and RSA will transfer to the Company all of their respective OC Units in exchange for an equal number of shares of Common Stock, respectively, and (5) the Company will contribute to the Operating Company the net proceeds of the sale of the Shares by the Company in exchange for a number of OC Units equal to the number of Shares issued and sold by the Company.

 

On the Closing Date but prior to the Formation Transactions, Morgans Hotel Group Management LLC (“ MHG Management Company ”) will enter into an $80,000,000 Secured Term Loan Facility (the “ Term Loan Facility ”) evidenced by a credit agreement (the “ Term Loan Credit Agreement ” and, together with any security documents and other agreements relating to the Term Loan Facility, the “ Term Loan Documents ”) among MHG Management Company, as borrower, Citicorp North America, Inc., as administrative agent and a syndicate of lenders.  On the Closing Date, the Operating Company will enter into a $125,000,000 Secured Revolving Credit Facility (the “ Revolving Credit Facility ” and, together with the Term Loan Facility, the “ Credit Facilities ”) evidenced by a credit agreement (the “ Revolving Credit Facility Agreement ” and, together with any security documents and other agreements relating to the Revolving Credit Facility, the “ Revolving Credit Loan Documents ”) among the Operating Company, as borrower, the Company, Citicorp North America, Inc., as administrative agent and a syndicate of lenders.  As used in this Agreement, the term “ Loan Documents ” refers to: (1) the Term Loan Documents and (2) the Revolving Credit Loan Documents.

 

As used in this Agreement, the term “ Formation Agreements ” collectively refers to: (1) the Formation and Structuring Agreement, by and among the Operating Company, MHG, NorthStar Hospitality LLC, NorthStar, RSA and certain individuals, dated as of October 25, 2005 (the “ Formation and Structuring Agreement ”) and (2) the Limited Liability Company Agreement of the Operating Company, dated             , 2006 (the “ OC Agreement ”).

 

The Company has filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement, including a prospectus, relating to the Shares.  The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “ Securities Act ”), is hereinafter referred to as the

 

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“ Registration Statement ”; the prospectus in the form first used to confirm sales of Shares (or in the form first made available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “ Prospectus .” If the Company has filed an abbreviated registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the “ Rule 462 Registration Statement ”), then any reference herein to the term “ Registration Statement ” shall be deemed to include such Rule 462 Registration Statement.

 

For purposes of this Agreement, “ free writing prospectus ” has the meaning set forth in Rule 405 under the Securities Act, “ Time of Sale Prospectus ” means the preliminary prospectus identified on Schedule III hereto, together with the free writing prospectuses, if any, identified on Schedule III hereto and any other information identified in Schedule III hereto, and “ broadly available road show ” means a “ bona fide electronic road show ” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person.  As used herein, the terms “Registration Statement,” “preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein.  The terms “ supplement ,” “ amendment ,” and “ amend ” as used herein with respect to the Time of Sale Prospectus or any free writing prospectus shall include all documents subsequently filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), that are incorporated by reference therein.

 

1.  Representations and Warranties of the Company and the Operating Company .  The Company and the Operating Company jointly and severally represent and warrant to and agree with each of the Underwriters that:

 

(a)  The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the knowledge of the Company or the Operating Company, threatened by the Commission.

 

(b)  (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Time of Sale Prospectus does not, as of the date hereof and at the Closing Date (as defined in Section 6), the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iv) each broadly available road show, if any, and any

 

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issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (v) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement, the Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act (and to which the Underwriters have not objected in accordance with the provisions of Section 8(c) of this Agreement), or the Prospectus based upon information furnished to the Company in writing by such Underwriter through you expressly for use therein.

 

(c)  Any statistical and market-related data included in the Registration Statement, the Time of Sale Prospectus or the Prospectus are in all material respects based on or derived from sources that the Company believes to be reliable and accurate.

 

(d)  Prior to the date of this Agreement, neither the Company nor the Operating Company has conducted any material business other than in connection with the Formation Transactions.

 

(e)  The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under the Securities Act.  Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder.  Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder.  Except for the free writing prospectuses, if any, identified in Schedule III hereto, and electronic road shows, if any, furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use or refer to, any free writing prospectus.

 

(f)  The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, and, after giving effect to the Formation Transactions, will have the necessary corporate power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus.  The Company is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which, after giving effect to the Formation Transactions, the conduct of its business or its ownership

 

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or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the financial condition, business or results of operations of the Company and its subsidiaries, taken as a whole (a “ Material Adverse Effect ”).

 

(g)  The Operating Company has been duly organized, is validly existing as a limited liability company in good standing under the laws of the State of Delaware, and, after giving effect to the Formation Transactions, will have the necessary power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus.  The Operating Company is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which, after giving effect to the Formation Transactions, the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.

 

(h)  The Contributed Assets consist of direct or indirect ownership interests in all material assets and related liabilities described in the Time of Sale Prospectus as constituting the hotel business (the “ Morgans Hotel Business ”) of MHG and its subsidiaries.  Each entity (each an “ MHG Business Entity ”) whose ownership interests are to be contributed to the Company in the Formation Transactions is set forth on Schedule IV hereto.  Each MHG Business Entity has been duly organized, is validly existing as a corporation, limited liability company or limited partnership in good standing under the laws of the jurisdiction of its organization, has the power and authority to own its property and to conduct its business as currently conducted and is duly qualified to transact business and is in good standing in each jurisdiction in which, after giving effect to the Formation Transactions, the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that a failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect; all of the issued shares of capital stock, membership interests or partnership interests of each MHG Business Entity that, after giving effect to the Formation Transactions, either will be a wholly-owned subsidiary of the Company (as in the case of each MHG Business Entity set forth on Schedule IV hereto other than 495 Geary LLC, SC London LLC and SC Restaurant LLC) or consolidated within the financial statements of the Company, have been duly and validly authorized and issued, are fully paid and non-assessable and are owned by MHG and, after giving effect to the Formation Transactions, except as disclosed in the Time of Sale Prospectus, will be owned by the Operating Company, free and clear of all liens, encumbrances, security interests or similar claims.  The Operating Company and the MHG Business Entities whose operations are consolidated in the combined financial statements of the Company are collectively referred to herein as the “ Subsidiaries ”.

 

(i)  The issuance of the OC Units pursuant to the Formation Transactions as described in the Time of Sale Prospectus has been duly authorized and upon

 

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issuance, in accordance with the OC Agreement, the OC Units described in the Time of Sale Prospectus will be validly issued.  None of the OC Units will be issued in violation of the preemptive or other similar rights of any security holder in the Operating Company.

 

(j)  The Company, after giving effect to the transactions being consummated on the Closing Date, will be the managing member of the Operating Company and the holder of OC Units representing an aggregate ownership interest in the Operating Company in the percentage set forth in the Prospectus under the caption “Formation and Structuring Transactions,” free and clear of any lien, encumbrance, security interest or similar claim.

 

(k)  The authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained in each of the Time of Sale Prospectus and the Prospectus.

 

(l)  The shares of Common Stock outstanding prior to the issuance of the Shares to be sold by the Company have been duly authorized and are validly issued, fully paid and non-assessable and the shares of Common Stock (including the Shares to be sold by the Selling Shareholders) to be issued to NorthStar and RSA have been duly authorized and, when issued and delivered in accordance with the Formation Agreements, will be validly issued, fully paid and non-assessable.

 

(m)  The Shares to be issued and sold by the Company to the Underwriters hereunder have been duly authorized and, when issued and delivered against payment therefor as provided herein, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights.

 

(n)  Each of the Company and the Operating Company has the power and authority to execute and deliver this Agreement, each Formation Agreement and the Revolving Credit Loan Documents to which it is a party and to consummate the transactions described herein and therein.

 

(o)  This Agreement has been duly authorized, executed and delivered by each of the Company and the Operating Company.

 

(p)  The Formation Agreements and the Revolving Credit Loan Documents have been duly authorized by the Company (to the extent a party thereto) and the Operating Company (to the extent a party thereto) and, upon execution and delivery thereof on or prior to the Closing Date, will have been duly executed and delivered and be legal, valid and binding agreements of the Company (to the extent a party thereto) and the Operating Company (to the extent a party thereto) enforceable against each of the Company (to the extent a party thereto) and the Operating Company (to the extent a party thereto) in accordance with their respective terms, except as may be limited by bankruptcy, insolvency,

 

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reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general equitable principles, and except to the extent that any indemnification and contribution provisions in such agreements may be limited by U.S. federal or state securities laws and public policy considerations in respect thereof.

 

(q)  Except for restrictions imposed by agreements disclosed in the Time of Sale Prospectus, the Operating Company is not prohibited or restricted from making distributions with respect to the OC Units or from repaying to the Company or any other subsidiary of the Company any amounts which may from time to time become due under any loans or advances to the Operating Company.

 

(r)  Neither the Company nor any Subsidiary is in breach of or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) its respective organizational documents, or in the performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which it is a party or by which it or any of its properties or assets may be bound, except for such breaches and defaults which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(s)  The execution, delivery and performance of this Agreement, the Formation Agreements, the Loan Documents and the consummation of the transactions contemplated herein and therein will not (A) conflict with, or result in any breach of, or constitute a default under nor constitute any event which (with notice, lapse of time, or both) would constitute a breach of, or default under:  (1) any provision of the organizational documents of the Company or any Subsidiary, (2) any provision of any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their assets or properties may be bound or affected, (3) any law or regulation binding upon or applicable to the Company or any Subsidiary or any of their respective properties or assets or (4) any decree, judgment or order applicable to the Company or any Subsidiary; or (B) result in the creation or imposition of any lien, security interest or similar claim upon any property or assets of the Company or any Subsidiary, except in each case described in clauses (A)(2) through (4) of this sentence for such conflicts, breaches, defaults and violations as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and in the case described in clause (B) of this sentence for liens, security interests or similar claims in connection with certain indebtedness described in the Time of Sale Prospectus under the caption “Mortgage and Other Indebtedness Outstanding After This Offering.”

 

(t)  The Formation Transactions comply in all material respects with the requirements of Section 6.10(c) of the Fifth Amended and Restated Limited Liability Company Agreement of MHG, including without limitation, clauses

 

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(i) through (x) of such section, regarding certain consent provisions with respect to an “IPO Transaction”.

 

(u)  No consent, approval, authorization or order of or filing, registration or qualification with, any governmental body or agency is required in connection with the Company’s or the Operating Company’s execution, delivery and performance of this Agreement, the consummation of the transactions contemplated herein by the Company or the Operating Company, including the Company’s issuance of the Shares, or in connection with the execution, delivery and performance of the Formation Agreements or the consummation of the transactions contemplated therein by the Company or the Operating Company, other than (A) such as have been obtained and made or will have been obtained and made on or prior to the Closing Date, (B) any necessary qualification under the securities or “blue sky” laws of the various jurisdictions in which the Shares are being offered by the Underwriters, or (C) the absence of which would not reasonably be expected to have a Material Adverse Effect.

 

(v)  Each of the Company and the Subsidiaries has, and will have upon consummation of the Formation Transactions, all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any U.S. federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct its business as described in the Time of Sale Prospectus, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; neither the Company nor any of the Subsidiaries is in violation of, in default under, or has received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any U.S. federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Company or any Subsidiary, other than any such violations, defaults, or revocations that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(w)  Upon consummation of the Formation Transactions, the Company and its subsidiaries will have good and marketable title in fee simple to, or a valid leasehold interest in, all real property described in the Time of Sale Prospectus as owned by them (the “ Company Properties ”), and ownership of all material personal property described in the Time of Sale Prospectus as owned by them (or to be owned upon the consummation of the Formation Transactions), in each case free and clear of all liens, encumbrances, security interests, similar claims and defects in such title (collectively, the “ Encumbrances ”), except such Encumbrances that are disclosed in the Time of Sale Prospectus or would not reasonably be expected to materially and adversely affect the value of such property or materially interfere with the use made or proposed to be made of such property by the Company and the Subsidiaries; and any real or personal property

 

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held under lease by the Company and the Subsidiaries constituting a portion of Contributed Assets are held by them under valid, subsisting and enforceable leases (such leases, the “ Company Leases ”) with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property.  Neither the Company nor any of its subsidiaries is in default under any of the Company Leases, relating to, or any agreement evidencing an Encumbrance on, any Company Property that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and neither the Company nor any of the Subsidiaries knows of any event, which but for the passage of time or the giving of notice, or both, would constitute a default under any of such documents or agreements that would reasonably be expected to have a Material Adverse Effect.

 

(x)  Assuming the accuracy of the representations, warranties and agreements of NorthStar, RSA and the other members of MHG contained in the Formation and Structuring Agreement, the issuance of the OC Units pursuant to the Formation and Structuring Agreement will be exempt from registration or qualification under the Securities Act and state securities laws.

 

(y)  Each parcel of real property leased or owned or to be leased or owned upon consummation of the Formation Transactions by the Company or the Subsidiaries complies with all applicable zoning laws, ordinances, regulations and deed restrictions or other covenants in all material respects, except such failure to comply, which does not materially and adversely affect the value of any such property and will not result in a forfeiture or reversion of title; neither the Company nor any Subsidiary has received from any governmental authority any written notice of any condemnation of or zoning change affecting any such property or any part thereof, and none of the Company or the Operating Company knows of any such condemnation or zoning change which is threatened and which, individually or in the aggregate, if consummated would reasonably be expected to have a Material Adverse Effect.

 

(z)  There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the financial condition, or in the earnings, business or operations of the Morgans Hotel Business from that set forth in the Time of Sale Prospectus.

 

(aa)  There are no legal or governmental proceedings pending or, to the Company’s knowledge, threatened to which the Company or any Subsidiary is a party or to which any of the properties of the Company or any of its subsidiaries is subject (i) other than (A) proceedings accurately described in all material respects in the Time of Sale Prospectus or (B) proceedings that would not reasonably be expected to have a Material Adverse Effect, (ii) that would have a material adverse effect on the power or ability of the Company to perform its obligations under this Agreement or to consummate the Formation Transactions, or (iii) that are required to be described in the Registration Statement or the Time of Sale Prospectus and are not so described; and there are no statutes, regulations,

 

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contracts or other documents that are required to be described in the Registration Statement or the Time of Sale Prospectus or to be filed as exhibits to the Registration Statement that are not so described in all material respects or filed as required.

 

(bb)  Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.

 

(cc)  The Company is not, and after giving effect to the Formation Transactions, the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(dd)  Except as would not be reasonably expected to have a Material Adverse Effect, (i) none of the Company, the Subsidiaries or, to the knowledge of the Company and the Subsidiaries, any director, officer, agent, employee or other person (in each case, while acting on behalf of the Company or the Subsidiaries) is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “ FCPA ”), (ii) the Company and the Subsidiaries have conducted their businesses in compliance with the FCPA, and (iii) the Company and the Subsidiaries have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(ee)  Except as would not be reasonably expected to have a Material Adverse Effect, (i) the operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”) and (ii) no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or the Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(ff)  The Company and the Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“ Environmental Laws ”), (ii) have received all permits, licenses or other approvals required of them under

 

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applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(gg)  There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(hh)  All U.S. federal, state and other income tax returns of the Company and its subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid or provision has been made for their payment, except for any such tax or other assessment that (i) is currently being contested in good faith, or (ii) would not have, or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(ii)  Except as disclosed in the Time of Sale Prospectus, there are no persons with registration or other similar rights to have any equity or debt securities, including securities that are convertible into or exchangeable for equity securities, registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act.

 

(jj)  Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Company and the Subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and the Subsidiaries, except in each case as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, respectively.

 

(kk)  The Company and the Subsidiaries own or possess, or can acquire on reasonable terms, all material licenses, inventions, copyrights, know-how (including trade secrets and other confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them, except such as the failure to own, possess or be able to acquire on reasonable terms would not reasonably be expected to have a Material Adverse Effect, and neither the

 

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Company nor any of the Subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to have a Material Adverse Effect.

 

(ll)  No material labor dispute with the employees of the Company or any of the Subsidiaries exists, except as described in the Time of Sale Prospectus, or, to the knowledge of the Company or the Operating Company, as the case may be, is imminent; and neither the Company nor the Operating Company is aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors which would reasonably be expected to have a Material Adverse Effect.

 

(mm)  The Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes are prudent and customary in the businesses in which they are engaged; and neither the Company nor any of the Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse Effect, except as described in the Time of Sale Prospectus.

 

(nn)  Each of the Company and the Subsidiaries maintains a system of internal controls over financial reporting sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as described in the Time of Sale Prospectus, since the end of the Company’s most recent audited fiscal year, there has been no material weakness in the Company’s internal control over financial reporting (whether or not remediated).

 

(oo)  The Company has taken all necessary actions to ensure that, upon the effectiveness of the Registration Statement, it will be in compliance with all provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder or implementing the provisions thereof (the “ Sarbanes-Oxley Ac t”) that are then in effect and which the Company is required to comply with as of the effectiveness of the Registration Statement, and is taking steps to ensure that it will be in compliance with other provisions of the Sarbanes-Oxley Act not currently in