EXHIBIT 2.1
-----------
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WIND HOTELS HOLDINGS INC.,
WIND HOTELS ACQUISITION INC.
AND
WYNDHAM INTERNATIONAL, INC.
DATED AS OF JUNE 14, 2005
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER...............................................2
SECTION 1.1 THE MERGER...............................................2
SECTION 1.2 CLOSING..................................................2
SECTION 1.3 EFFECTIVE TIME...........................................3
SECTION 1.4 EFFECTS OF THE MERGER....................................3
SECTION 1.5 CERTIFICATE OF INCORPORATION.............................3
SECTION 1.6 BYLAWS...................................................3
SECTION 1.7 DIRECTORS................................................3
SECTION 1.8 OFFICERS.................................................3
SECTION 1.9 OTHER TRANSACTIONS.......................................3
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK....................4
SECTION 2.1 CONVERSION OF CAPITAL STOCK..............................4
SECTION 2.2 SURRENDER OF CERTIFICATES................................5
SECTION 2.3 STOCK OPTIONS AND RESTRICTED UNIT AWARDS.................7
SECTION 2.4 DISSENTING SHARES........................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............8
SECTION 3.1 ORGANIZATION AND POWER...................................9
SECTION 3.2 FOREIGN QUALIFICATIONS...................................9
SECTION 3.3 CORPORATE AUTHORIZATION..................................9
SECTION 3.4 ENFORCEABILITY...........................................9
SECTION 3.5 ORGANIZATIONAL DOCUMENTS................................10
SECTION 3.6 MINUTE BOOKS............................................10
SECTION 3.7 SUBSIDIARIES............................................10
SECTION 3.8 GOVERNMENTAL AUTHORIZATIONS.............................10
SECTION 3.9 NON-CONTRAVENTION.......................................11
SECTION 3.10 CAPITALIZATION; OPTIONS.................................12
SECTION 3.11 VOTING..................................................14
SECTION 3.12 SEC REPORTS.............................................14
SECTION 3.13 FINANCIAL STATEMENTS....................................15
SECTION 3.14 LIABILITIES.............................................15
SECTION 3.15 ABSENCE OF CERTAIN CHANGES..............................15
SECTION 3.16 LITIGATION..............................................16
SECTION 3.17 CONTRACTS...............................................16
SECTION 3.18 BENEFIT PLANS...........................................18
SECTION 3.19 EXECUTIVE AND DIRECTOR LOANS............................21
SECTION 3.20 LABOR RELATIONS.........................................22
SECTION 3.21 TAXES...................................................22
SECTION 3.22 ENVIRONMENTAL MATTERS...................................23
SECTION 3.23 INTELLECTUAL PROPERTY...................................24
SECTION 3.24 REAL PROPERTY...........................................25
i
PAGE
SECTION 3.25 PERSONAL PROPERTY.......................................27
SECTION 3.26 PERMITS; COMPLIANCE WITH LAWS...........................27
SECTION 3.27 INSURANCE...............................................28
SECTION 3.28 TAKEOVER STATUTES.......................................28
SECTION 3.29 INTERESTED PARTY TRANSACTIONS...........................28
SECTION 3.30 OPINION OF FINANCIAL ADVISOR............................29
SECTION 3.31 RIGHTS AGREEMENT........................................29
SECTION 3.32 BROKERS AND FINDERS.....................................29
SECTION 3.33 INFORMATION SUPPLIED....................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT................30
SECTION 4.1 ORGANIZATION AND POWER..................................30
SECTION 4.2 CORPORATE AUTHORIZATION.................................30
SECTION 4.3 ENFORCEABILITY..........................................30
SECTION 4.4 GOVERNMENTAL AUTHORIZATIONS.............................30
SECTION 4.5 NON-CONTRAVENTION.......................................31
SECTION 4.6 INTERIM OPERATIONS OF MERGER SUB........................32
SECTION 4.7 CAPITAL RESOURCES.......................................32
SECTION 4.8 ABSENCE OF LITIGATION...................................32
SECTION 4.9 BROKERS.................................................32
SECTION 4.10 GUARANTEE...............................................33
SECTION 4.11 PROXY STATEMENT.........................................33
ARTICLE V COVENANTS...............................................33
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY......................33
SECTION 5.2 OTHER ACTIONS...........................................36
SECTION 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY..................36
SECTION 5.4 NO SOLICITATION.........................................37
SECTION 5.5 NOTICES OF CERTAIN EVENTS...............................39
SECTION 5.6 COMPANY PROXY STATEMENT.................................40
SECTION 5.7 COMPANY STOCKHOLDERS MEETING............................41
SECTION 5.8 EMPLOYEES; BENEFIT PLANS................................41
SECTION 5.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE..43
SECTION 5.10 BEST EFFORTS............................................44
SECTION 5.11 CONSENTS; FILINGS; FURTHER ACTION.......................44
SECTION 5.12 PUBLIC ANNOUNCEMENTS....................................46
SECTION 5.13 STOCK EXCHANGE DE-LISTING...............................46
SECTION 5.14 FEES, EXPENSES AND CONVEYANCE TAXES.....................46
SECTION 5.15 TAKEOVER STATUTES.......................................46
SECTION 5.16 TAX MATTERS.............................................46
SECTION 5.17 RIGHTS PLAN.............................................47
SECTION 5.18 FINANCING...............................................47
SECTION 5.19 RESIGNATIONS............................................48
SECTION 5.20 SUMMERFIELD.............................................48
ARTICLE VI CONDITIONS..............................................49
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER..............................................49
ii
PAGE
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB......49
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY.................50
SECTION 6.4 FRUSTRATION OF CLOSING CONDITIONS.......................51
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.......................51
SECTION 7.1 TERMINATION BY MUTUAL CONSENT...........................51
SECTION 7.2 TERMINATION BY EITHER PARENT OR THE COMPANY.............51
SECTION 7.3 TERMINATION BY PARENT...................................51
SECTION 7.4 TERMINATION BY THE COMPANY..............................52
SECTION 7.5 EFFECT OF TERMINATION...................................53
SECTION 7.6 EXPENSES FOLLOWING TERMINATION..........................53
SECTION 7.7 AMENDMENT...............................................54
SECTION 7.8 EXTENSION; WAIVER.......................................54
SECTION 7.9 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION
OR WAIVER...............................................55
ARTICLE VIII MISCELLANEOUS...........................................55
SECTION 8.1 CERTAIN DEFINITIONS.....................................55
SECTION 8.2 INTERPRETATION..........................................58
SECTION 8.3 SURVIVAL................................................59
SECTION 8.4 GOVERNING LAW...........................................59
SECTION 8.5 SUBMISSION TO JURISDICTION..............................59
SECTION 8.6 WAIVER OF JURY TRIAL....................................59
SECTION 8.7 NOTICES.................................................60
SECTION 8.8 ENTIRE AGREEMENT........................................61
SECTION 8.9 NO THIRD-PARTY BENEFICIARIES............................61
SECTION 8.10 SEVERABILITY............................................61
SECTION 8.11 RULES OF CONSTRUCTION...................................61
SECTION 8.12 ASSIGNMENT..............................................61
SECTION 8.13 REMEDIES................................................61
SECTION 8.14 SPECIFIC PERFORMANCE....................................62
SECTION 8.15 COUNTERPARTS; EFFECTIVENESS.............................62
iii
INDEX OF DEFINED TERMS
------------------------------------------------------- ------------------------
Active Employees Section 5.8(a)
------------------------------------------------------- ------------------------
Affiliate Section 8.1(a)
------------------------------------------------------- ------------------------
Agreement Preamble
------------------------------------------------------- ------------------------
AMEX Section 8.1(b)
------------------------------------------------------- ------------------------
Bear Xxxxxxx Section 4.7
------------------------------------------------------- ------------------------
Business Day Section 8.1(c)
------------------------------------------------------- ------------------------
Capitalization Date Section 3.10(a)
------------------------------------------------------- ------------------------
Certificate of Merger Section 1.3
------------------------------------------------------- ------------------------
Certificates Section 2.1(c)(5)
------------------------------------------------------- ------------------------
Class A Common Stock Recitals
------------------------------------------------------- ------------------------
Class B Common Stock Recitals
------------------------------------------------------- ------------------------
Closing Section 1.2
------------------------------------------------------- ------------------------
Closing Date. Section 1.2
------------------------------------------------------- ------------------------
Club Documents Section 3.24(g)
------------------------------------------------------- ------------------------
COBRA Section 3.18(g)
------------------------------------------------------- ------------------------
Code Section 2.2(e)
------------------------------------------------------- ------------------------
Commitment Letter Section 4.7
------------------------------------------------------- ------------------------
Common Stock Recitals
------------------------------------------------------- ------------------------
Company Preamble
------------------------------------------------------- ------------------------
Company Assets Section 3.9(b)
------------------------------------------------------- ------------------------
Company Benefit Plans. Section 3.18(a)
------------------------------------------------------- ------------------------
Company Board Recommendation Section 3.3
------------------------------------------------------- ------------------------
Company Contracts Section 3.9(c)
------------------------------------------------------- ------------------------
Company Disclosure Letter Article III
------------------------------------------------------- ------------------------
Company Employee Section 3.18(a)
------------------------------------------------------- ------------------------
Company Financial Advisor Section 3.30
------------------------------------------------------- ------------------------
Company Marks Section 8.1(d)
------------------------------------------------------- ------------------------
Company Material Adverse Effect Section 8.1(e)
------------------------------------------------------- ------------------------
Company Organizational Documents Section 3.5
------------------------------------------------------- ------------------------
Company Permits Section 3.26(a)
------------------------------------------------------- ------------------------
Company Proxy Statement Section 3.8(b)
------------------------------------------------------- ------------------------
Company Rights Section 3.10(a)
------------------------------------------------------- ------------------------
Company SEC Reports Section 3.12
------------------------------------------------------- ------------------------
Company Stock Section 2.1(c)(5)
------------------------------------------------------- ------------------------
Company Stock Award Section 2.3
------------------------------------------------------- ------------------------
Company Stock Award Plans Section 3.10(c)
------------------------------------------------------- ------------------------
Company Stockholders Meeting Section 3.8(b)
------------------------------------------------------- ------------------------
Company Termination Fee Section 7.6(b)
------------------------------------------------------- ------------------------
Confidentiality Agreement Section 5.3(b)
------------------------------------------------------- ------------------------
Continuation Period Section 5.8(a)
------------------------------------------------------- ------------------------
Contracts Section 8.1(f)
------------------------------------------------------- ------------------------
iv
------------------------------------------------------- ------------------------
Debt Financing Section 4.7
------------------------------------------------------- ------------------------
DGCL Section 1.1
------------------------------------------------------- ------------------------
Dissenting Shares Section 2.4(a)
------------------------------------------------------- ------------------------
Effective Time Section 1.3
------------------------------------------------------- ------------------------
End Date Section 7.2(a)
------------------------------------------------------- ------------------------
Environmental Costs Section 3.22(b)(ii)
------------------------------------------------------- ------------------------
Environmental Laws Section 3.22(a)(ii)
------------------------------------------------------- ------------------------
Environmental Matters Section 3.22(a)(i)
------------------------------------------------------- ------------------------
Equity Funding Letter Section 4.7
------------------------------------------------------- ------------------------
ERISA Section 3.18(a)
------------------------------------------------------- ------------------------
Exchange Act Section 3.8(b)
------------------------------------------------------- ------------------------
Excluded Shares Section 2.1(b)
------------------------------------------------------- ------------------------
Expenses Section 5.14
------------------------------------------------------- ------------------------
Financing Section 4.7
------------------------------------------------------- ------------------------
Foreign Competition Laws Section 3.8(e)
------------------------------------------------------- ------------------------
Franchise Agreement Documents Section 3.24(e)
------------------------------------------------------- ------------------------
GAAP Section 3.13(b)
------------------------------------------------------- ------------------------
Governmental Entity Section 3.8
------------------------------------------------------- ------------------------
Guarantee Recitals
------------------------------------------------------- ------------------------
Guarantor Recitals
------------------------------------------------------- ------------------------
Hazardous Substances Section 8.1(g)
------------------------------------------------------- ------------------------
HSR Act Section 3.8(d)
------------------------------------------------------- ------------------------
Indebtedness Section 3.17(a)(iv)
------------------------------------------------------- ------------------------
Indemnified Parties Section 5.9(a)
------------------------------------------------------- ------------------------
Intellectual Property Section 3.23
------------------------------------------------------- ------------------------
IRS Section 3.18(b)
------------------------------------------------------- ------------------------
XX Xxxxxx Section 6.2(f)
------------------------------------------------------- ------------------------
Knowledge Section 8.1(h)
------------------------------------------------------- ------------------------
Laws Section 8.1(i)
------------------------------------------------------- ------------------------
LBREP Section 5.20
------------------------------------------------------- ------------------------
Lease Documents Section 3.24(b)
------------------------------------------------------- ------------------------
Leased Properties Section 3.24(b)
------------------------------------------------------- ------------------------
Legal Actions Section 3.16
------------------------------------------------------- ------------------------
Liabilities Section 3.14
------------------------------------------------------- ------------------------
Licensed Intellectual Property Section 3.23
------------------------------------------------------- ------------------------
Liens Section 8.1(j)
------------------------------------------------------- ------------------------
Management Agreement Documents Section 3.24(d)
------------------------------------------------------- ------------------------
Material Contracts Section 3.17(a)(xv)
------------------------------------------------------- ------------------------
Maximum Premium Section 5.9(c)
------------------------------------------------------- ------------------------
Merger Recitals
------------------------------------------------------- ------------------------
Merger Consideration Section 2.1(c)(3)
------------------------------------------------------- ------------------------
Merger Sub Preamble
------------------------------------------------------- ------------------------
New Plans Section 5.8(c)
------------------------------------------------------- ------------------------
Notice Date Section 1.2
------------------------------------------------------- ------------------------
Old Plans Section 5.8(c)
------------------------------------------------------- ------------------------
v
------------------------------------------------------- ------------------------
OP Units Section 3.10(a)
------------------------------------------------------- ------------------------
Orders Section 8.1(k)
------------------------------------------------------- ------------------------
Owned Hotels Section 3.24(a)
------------------------------------------------------- ------------------------
Owned Intellectual Property Section 3.23
------------------------------------------------------- ------------------------
Owned Real Properties Section 3.24(a)
------------------------------------------------------- ------------------------
P.R. Treasury Section 3.18(b)
------------------------------------------------------- ------------------------
PAHLP Section 5.20
------------------------------------------------------- ------------------------
Parent Preamble
------------------------------------------------------- ------------------------
Parent Assets Section 4.5(b)
------------------------------------------------------- ------------------------
Parent Contracts Section 4.5(c)
------------------------------------------------------- ------------------------
Parent Disclosure Letter Article IV
------------------------------------------------------- ------------------------
Parent Material Adverse Effect Section 8.1(l)
------------------------------------------------------- ------------------------
Paying Agent Section 2.2(a)
------------------------------------------------------- ------------------------
Payment Fund Section 2.2(b)
------------------------------------------------------- ------------------------
Permits Section 3.26(a)
------------------------------------------------------- ------------------------
Permitted Liens Section 3.24(a)
------------------------------------------------------- ------------------------
Person Section 8.1(m)
------------------------------------------------------- ------------------------
Post-Signing Returns Section 5.16(a)
------------------------------------------------------- ------------------------
Preferred Stock Section 3.10(a)
------------------------------------------------------- ------------------------
PRIRC Section 3.18(a)
------------------------------------------------------- ------------------------
Properties Section 3.24(a)
------------------------------------------------------- ------------------------
Recapitalization and Merger Agreement Recitals
------------------------------------------------------- ------------------------
Recapitalization Merger Recitals
------------------------------------------------------- ------------------------
Recapitalization Merger Effective Time Recitals
------------------------------------------------------- ------------------------
Representatives Section 8.1(n)
------------------------------------------------------- ------------------------
Requisite Company Vote Section 8.1(o)
------------------------------------------------------- ------------------------
Rights Plan Section 3.31
------------------------------------------------------- ------------------------
SEC Section 3.8(b)
------------------------------------------------------- ------------------------
Securities Act Section 3.12
------------------------------------------------------- ------------------------
Series A Preferred Stock Recitals
------------------------------------------------------- ------------------------
Series B Preferred Stock Recitals
------------------------------------------------------- ------------------------
Series C Participating Preferred Stock, Section 3.10(a)
------------------------------------------------------- ------------------------
Series C Preferred Stock Section 3.10(a)
------------------------------------------------------- ------------------------
Settlement Agreement Section 3.17(a)(xiii)
------------------------------------------------------- ------------------------
Stock Award Consideration Section 2.3
------------------------------------------------------- ------------------------
Subsidiary Section 8.1(p)
------------------------------------------------------- ------------------------
Superior Proposal Section 8.1(q)
------------------------------------------------------- ------------------------
Surviving Bylaws Section 1.6
------------------------------------------------------- ------------------------
Surviving Charter Section 1.5
------------------------------------------------------- ------------------------
Surviving Corporation Section 1.1
------------------------------------------------------- ------------------------
Takeover Proposal Section 8.1(r)
------------------------------------------------------- ------------------------
Tax Returns Section 8.1(t)
------------------------------------------------------- ------------------------
Taxes Section 8.1(s)
------------------------------------------------------- ------------------------
Termination Expenses Section 7.6(b)
------------------------------------------------------- ------------------------
Third Party Flag Agreements Section 3.24(c)
------------------------------------------------------- ------------------------
vi
------------------------------------------------------- ------------------------
Treasury Regulations Section 8.1(u)
------------------------------------------------------- ------------------------
Voting Agreement Recitals
------------------------------------------------------- ------------------------
Wachovia Section 4.7
------------------------------------------------------- ------------------------
WARN Section 3.20(b)
------------------------------------------------------- ------------------------
vii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 14, 2005 (this
"AGREEMENT"), by and among Wind Hotels Holdings Inc., a Delaware corporation
("PARENT"), Wind Hotels Acquisition Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB" ), and Wyndham International,
Inc., a Delaware corporation (the "COMPANY" ).
RECITALS
(a) The Company and certain of its stockholders are parties to the
Recapitalization and Merger Agreement, dated as of April 14, 2005 (the
"RECAPITALIZATION AND MERGER AGREEMENT"), providing for, among other things, the
merger of a wholly owned subsidiary of the Company with and into the Company
(the "RECAPITALIZATION MERGER"), and by virtue of the Recapitalization Merger,
the conversion of (i) each share of Class A Common Stock, par value $0.01 per
share, of the Company ("CLASS A COMMON STOCK"), and Class B Common Stock, par
value $0.01 per share, of the Company ("CLASS B COMMON STOCK") that is issued
and outstanding immediately prior to the effective time of the Recapitalization
Merger (the "RECAPITALIZATION MERGER EFFECTIVE TIME") into one share of a new
class of common stock, par value $0.01 per share, of the Company ("COMMON
STOCK") and (ii) each share of Series A Preferred Stock, par value $0.01 per
share, of the Company ("SERIES A PREFERRED STOCK"), and Series B Preferred
Stock, par value $0.01 per share, of the Company ("SERIES B PREFERRED STOCK"),
that is issued and outstanding immediately prior to the Recapitalization Merger
Effective Time into that number of shares of Common Stock equal to the exchange
ratio specified therefor in the Recapitalization and Merger Agreement.
(b) The respective boards of directors of Merger Sub and the
Company have approved and declared advisable, and the board of directors of
Parent has approved, this Agreement and the merger of Merger Sub with and into
the Company (the "MERGER") upon the terms and subject to the conditions set
forth in this Agreement.
(c) So long as this Agreement has not been terminated in
accordance with its terms, the Recapitalization Merger shall not be consummated.
(d) Concurrently with the execution of this Agreement, and as
a condition to the willingness of Parent to enter into this Agreement, certain
stockholders of the Company are entering into a voting agreement with Parent
under which, among other things, those stockholders have agreed, subject to the
terms thereof, to (i) vote their shares of Company Stock in favor of adoption of
this Agreement and (ii) take other actions in furtherance of the transactions
contemplated by this Agreement (the "VOTING AGREEMENT").
(e) Concurrently with the execution of this Agreement, and as
a condition to the willingness of the Company to enter into this Agreement,
Blackstone Real Estate Partners IV L.P. ("GUARANTOR") is entering into a
guarantee with the Company which, among other things, Guarantor has agreed to
(i) guarantee certain obligations of
1
Parent and Merger Sub under this Agreement and (ii) take certain other actions
in furtherance of the transactions contemplated by this Agreement (the
"GUARANTEE").
(f) Certain capitalized terms used in this Agreement have the
meanings specified in Section 8.1.
Accordingly, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, the parties to
this Agreement, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), at the Effective Time,
(a) Merger Sub shall be merged with and into the Company, (b) the separate
corporate existence of Merger Sub shall cease and the Company shall continue its
corporate existence under Delaware law as the surviving corporation in the
Merger (the "SURVIVING CORPORATION") and (c) the Surviving Corporation shall
become a wholly-owned subsidiary of Parent.
Section 1.2 CLOSING. Subject to the satisfaction or waiver of all
of the conditions to closing contained in Article VI, the closing of the Merger
(the "CLOSING") shall take place (a) at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx LLP, 1285 Avenue of the Americas, New York, New York, at
10:00 a.m. on the third Business Day after the day on which the last of those
conditions (other than any conditions that by their nature are to be satisfied
at the Closing) is satisfied or waived in accordance with this Agreement or (b)
at such other place and time or on such other date as Parent and the Company may
agree in writing. The date on which the Closing occurs is referred to as the
"CLOSING DATE." Notwithstanding the foregoing, if at any time after the date
hereof all of the conditions contained in Article VI have been satisfied or
waived (other than those which by their terms are to be satisfied on the Closing
Date), but the approvals set forth in Section 1.2 of the Company Disclosure
Letter have not been obtained, Parent shall be entitled, by delivery of written
notice (the date of such notice, the "NOTICE DATE") to the Company within three
Business Days following receipt of a Satisfaction Notice (as defined below) from
the Company, to delay the Closing to the earlier of (x) the fifth Business Day
following the date on which all such approvals shall have been obtained and (y)
December 15, 2005; PROVIDED, HOWEVER, that from and after the Notice Date, and
notwithstanding anything to the contrary, (1) the conditions set forth in
Section 6.2(a) or 6.2(c) of this Agreement shall be deemed satisfied (and waived
by Parent and Merger Sub) for all purposes under this Agreement, (2) the
condition set forth in Section 6.2(d) shall be modified such that the officer's
certificate referred to therein shall no longer be required to provide any
certification as to the matters in Section 6.2(a) or Section 6.2(c) and (3)
neither Parent nor Merger Sub shall be entitled to assert that the condition set
forth in Section 6.2(b) was not satisfied with respect to periods on or prior to
the Notice Date. On any date upon which the conditions set forth in Sections 6.1
and 6.2(a), 6.2(b)
2
and 6.2(c) (with references in Sections 6.2(a), 6.2(b) and 6.2(c) to the
"Closing Date" being deemed to be references to such date) are satisfied (or
waived by Parent), the Company shall deliver written notice (a "Satisfaction
Notice") to Parent certifying to the satisfaction (or waiver) of such conditions
as of such date.
Section 1.3 EFFECTIVE TIME. At the Closing, Parent and the
Company shall cause a certificate of merger (the "CERTIFICATE OF MERGER") to be
executed, signed, acknowledged and filed with the Secretary of State of the
State of Delaware as provided in Section 251 of the DGCL. The Merger shall
become effective when the Certificate of Merger has been duly filed with the
Secretary of State of the State of Delaware or at such other subsequent date or
time as Parent and the Company may agree and specify in the Certificate of
Merger in accordance with the DGCL (the "EFFECTIVE TIME").
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.5 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Company shall, at the Effective Time, be amended to read in
its entirety as set forth on Exhibit A and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation (the "SURVIVING
CHARTER") until amended as provided in the Surviving Charter or by applicable
Laws.
Section 1.6 BYLAWS. The bylaws of the Company in effect
immediately prior to the Effective Time shall be, from and after the Effective
Time, the bylaws of the Surviving Corporation (the "SURVIVING BYLAWS") until
amended as provided in the Surviving Charter, in the Surviving Bylaws or by
applicable Laws.
Section 1.7 DIRECTORS. The parties shall take all requisite
action so that the directors of Merger Sub immediately prior to the Effective
Time shall be, from and after the Effective Time, the directors of the Surviving
Corporation until their successors are duly elected and qualified or until their
earlier death, resignation or removal in accordance with the Surviving Charter,
the Surviving Bylaws and the DGCL.
Section 1.8 OFFICERS. The officers of the Merger Sub immediately
prior to the Effective Time shall be, from and after the Effective Time, the
officers of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Charter, the Surviving Bylaws and the DGCL.
Section 1.9 OTHER TRANSACTIONS. Parent shall have the option, in
its sole discretion and without requiring the further consent of the Company or
the board of directors or stockholders of the Company, upon reasonable notice to
the Company, to request that the Company, immediately prior to the Closing, (a)
convert one or more Subsidiaries that are organized as corporations into limited
liability companies and one or more Subsidiaries that are organized as limited
partnerships into limited liability companies, on the basis of organizational
documents as reasonably requested by Parent, and (b) sell all of the stock,
limited partnership interests or limited liability interests
3
owned, directly or indirectly, by the Company in one or more Subsidiaries at a
price designated by Parent; PROVIDED, however, that (i) the Company shall not be
required to take any action in contravention of any organizational document or
other Material Contract relating to any applicable Subsidiary, (ii) any such
actions or transactions shall be contingent upon the receipt by the Company of a
written notice from Parent confirming that all of the conditions set forth in
Section 6.1 and 6.2 have been satisfied or waived and that Parent and Merger Sub
are prepared to proceed immediately with the Closing (it being understood that
in any event the transactions described in clauses (a) and (b) will be deemed to
have occurred prior to the Closing), and (iii) such actions (or the inability to
complete such actions) shall not affect or modify in any respect the obligations
of Parent or Merger Sub under this Agreement, including payment of the Merger
Consideration. Parent shall, promptly upon request by the Company, reimburse the
Company for all reasonable out-of-pocket costs incurred by the Company in
connection with any actions taken by the Company in accordance with this Section
1.9. Parent and Merger Sub shall, on a joint and several basis, indemnify and
hold harmless the Company and its Representatives for and against any and all
liabilities, losses, damages, claims, costs, expenses, interest, awards,
judgments and penalties suffered or incurred by them in connection with such
actions. Without limiting the foregoing, none of the representations, warranties
or covenants of the Company shall be deemed to apply to, or deemed breached or
violated by, any of the transactions contemplated by this Section 1.9.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
Section 2.1 CONVERSION OF CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, Merger
Sub, the Company or the holder of any shares of capital stock of Merger Sub or
the Company:
(a) CONVERSION OF MERGER SUB CAPITAL STOCK. Each share of common
stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and non-assessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
share of Company Stock owned by the Company or any of its wholly-owned
Subsidiaries or by Parent or any of its wholly-owned Subsidiaries immediately
prior to the Effective Time (collectively, the "EXCLUDED SHARES") shall be
canceled automatically and shall cease to exist, and no consideration shall be
paid for those Excluded Shares.
(c) CONVERSION OF COMPANY STOCK.
(1) Each share of Series A Preferred Stock and Series B
Preferred Stock issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive an amount in cash, without
interest, equal to
4
the quotient obtained by dividing (a) $1,195,033,723 by (b) the aggregate number
of issued and outstanding shares of Series A Preferred Stock and Series B
Preferred Stock immediately prior to the Effective Time (rounded to the nearest
cent); provided, that the per share Merger Consideration for each share of
Preferred Stock shall in no event exceed $72.17 per share;
(2) Each share of Class A Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive $1.15 in cash, without interest;
(3) Each share of Class B Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive $1.15 in cash, without interest;
in the case of clauses (1)-(3), above, other than Excluded Shares and Dissenting
Shares (the applicable consideration to be paid pursuant to either Section
2.1(c) is referred to herein as the "MERGER CONSIDERATION"); and
(4) All accrued and unpaid dividends on issued and
outstanding shares of Series A Preferred Stock and Series B Preferred Stock if
any, shall, as of the Effective Time, be cancelled without any consideration
being payable in respect thereof.
(5) All shares of Common Stock, Class A Common Stock,
Class B Common Stock, Series A Preferred Stock and Series B Preferred Stock
(collectively, "COMPANY STOCK") that have been converted pursuant to Section
2.1(c) shall be canceled automatically and shall cease to exist, and the holders
of certificates which immediately prior to the Effective Time represented those
shares ("CERTIFICATES") shall cease to have any rights with respect to those
shares, other than the right to receive the Merger Consideration upon surrender
of their Certificates in accordance with Section 2.2.
Section 2.2 SURRENDER OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent shall (i)
select a bank or trust company, satisfactory to the Company in its reasonable
discretion, to act as the paying agent in the Merger (the "PAYING AGENT") and
(ii) enter into a paying agent agreement with the Paying Agent, the terms and
conditions of which are satisfactory to the Company in its reasonable
discretion.
(b) PAYMENT FUND. Promptly following the Effective Time, on the
Closing Date, Parent shall provide funds to the Paying Agent in amounts
necessary for the payment of the aggregate Merger Consideration payable under
Section 2.1(c) upon surrender of Certificates. Such funds provided to the Paying
Agent are referred to as the "PAYMENT FUND."
5
(c) PAYMENT PROCEDURES.
(i) LETTER OF TRANSMITTAL. Promptly after the Effective
Time, Parent shall cause the Paying Agent to mail to each holder of
record of a Certificate (A) a letter of transmittal in customary form,
specifying that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of
Certificates to the Paying Agent and (B) instructions for surrendering
Certificates.
(ii) SURRENDER OF CERTIFICATES. Upon surrender of a
Certificate for cancellation to the Paying Agent, together with a duly
executed letter of transmittal and any other documents reasonably
required by the Paying Agent, the holder of that Certificate shall be
entitled to receive in exchange therefor the Merger Consideration
payable in respect of that Certificate less any required withholding of
Taxes. Any Certificates so surrendered shall be canceled immediately.
No interest shall accrue or be paid on any amount payable upon
surrender of Certificates.
(iii) UNREGISTERED TRANSFEREES. If any Merger Consideration
is to be paid to a Person other than the Person in whose name the
surrendered Certificate is registered, then the Merger Consideration
may be paid to such a transferee so long as (A) the surrendered
Certificate is accompanied by all documents required to evidence and
effect that transfer and (B) the Person requesting such payment (1)
pays any applicable transfer Taxes or (2) establishes to the
satisfaction of Parent and the Paying Agent that any such Taxes have
already been paid or are not applicable.
(iv) NO OTHER RIGHTS. Until surrendered in accordance with
this Section 2.2(c), each Certificate shall be deemed, from and after
the Effective Time, to represent only the right to receive the
applicable Merger Consideration. Any Merger Consideration paid upon the
surrender of any Certificate shall be deemed to have been paid in full
satisfaction of all rights pertaining to that Certificate and the
shares of Company Stock formerly represented by it.
(d) NO FURTHER TRANSFERS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of the shares of Company Stock that were outstanding
immediately prior to the Effective Time.
(e) REQUIRED WITHHOLDING. Parent, the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from any Merger
Consideration payable under this Agreement such amounts as may be required to be
deducted or withheld therefrom under (i) the Internal Revenue Code of 1986 (the
"CODE"), (ii) any applicable state, local or foreign Tax Laws or (iii) any other
applicable Laws. To the extent that any amounts are so deducted and withheld,
those amounts shall be treated as
6
having been paid to the Person in respect of whom such deduction or withholding
was made for all purposes under this Agreement.
(f) NO LIABILITY. None of Parent, the Surviving Corporation or the
Paying Agent shall be liable to any holder of Certificates for any amount
properly paid to a public official under any applicable abandoned property,
escheat or similar Laws.
(g) INVESTMENT OF PAYMENT FUND. The Paying Agent shall invest the
Payment Fund as directed by Parent. Any interest and other income resulting from
such investment shall become a part of the Payment Fund, and any amounts in
excess of the amounts payable under Section 2.1(c) shall be paid promptly to
Parent.
(h) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund
that remains unclaimed by the holders of Certificates one year after the
Effective Time shall be delivered by the Paying Agent to Parent upon demand.
Thereafter, any holder of Certificates who has not complied with this Article II
shall look only to Parent for payment of the applicable Merger Consideration.
(i) LOST, STOLEN OR DESTROYED CERTIFICATES. If any Certificate is
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and the posting
by such Person of a bond in the form and amount reasonably required by Parent as
indemnity against any claim that may be made against Parent on account of the
alleged loss, theft or destruction of such Certificate, the Paying Agent shall
pay the applicable Merger Consideration to such Person in exchange for such
lost, stolen or destroyed Certificate.
Section 2.3 STOCK OPTIONS AND RESTRICTED UNIT AWARDS. The Company
shall take all requisite action so that, as of the Effective Time, each
restricted unit award and each option to acquire shares of Class A Common Stock
or Common Stock, as applicable (each, a "COMPANY STOCK AWARD"), outstanding
immediately prior to the Effective Time, whether or not then exercisable or
vested, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holder of that Company Stock Award, shall be
converted into the right to receive an amount in cash, without interest, equal
to the Stock Award Consideration multiplied by the aggregate number of shares of
Class A Common Stock or Common Stock, as applicable in respect of such
restricted unit awards and options, immediately prior to the Effective Time.
"STOCK AWARD CONSIDERATION" means (x) in the case of an option, the excess, if
any, of the Merger Consideration payable in respect of Common Stock or Class A
Common Stock, as applicable, over the per share exercise or purchase price of
the applicable Company stock option and (y) in the case of a restricted unit
award, Merger Consideration payable in respect of Common Stock or Class A Common
Stock, as applicable, as the same is required to be paid in respect of the
restricted unit award in accordance with the terms thereof. The payment of the
Stock Award Consideration to the holder of a Company Stock Award shall be
reduced by any income or employment Tax withholding required under (i) the Code,
(ii) any applicable state, local or foreign Tax Laws or (iii) any other
applicable Laws. To the extent that any amounts are so withheld, those amounts
shall be treated as having been paid to the holder of that Company Stock Award
for all purposes
7
under this Agreement. All Company Stock Awards shall be cancelled and all
Company Stock Award Plans shall terminate at the Effective Time.
Section 2.4 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Stock outstanding immediately prior to the
Effective Time for which the holder thereof (i) has not voted in favor of the
Merger or consented to it in writing and (ii) has demanded the appraisal of such
shares in accordance with, and has complied in all respects with, Section 262 of
the DGCL (collectively, the "DISSENTING SHARES") shall not be converted into the
right to receive the Merger Consideration in accordance with Section 2.1(c). At
the Effective Time, (x) all Dissenting Shares shall be cancelled and cease to
exist and (y) the holder or holders of Dissenting Shares shall be entitled only
to such rights as may be granted to them under Section 262 of the DGCL.
(b) Notwithstanding the provisions of Section 2.4(a), if any
holder of Dissenting Shares effectively withdraws or loses such appraisal rights
(through failure to perfect such appraisal rights or otherwise), then that
holder's shares (i) shall no longer be deemed to be Dissenting Shares and (ii)
shall be treated as if they had been converted automatically at the Effective
Time into the right to receive the Merger Consideration, without interest
thereon, upon surrender of the Certificate formerly representing such shares in
accordance with Section 2.2.
(c) The Company shall give Parent (i) prompt notice of any demands
for appraisal of any shares of Company Stock, the withdrawals of such demands,
and any other instrument served on the Company under the provisions of Section
262 of the DGCL and (ii) the right to participate in all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
shall not offer or agree to make or make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands without the prior
written consent of Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter (with reference to the
section of this Agreement to which the information stated in such disclosure
letter relates; provided that any fact or condition disclosed in any section of
such disclosure letter in such a way as to make its relevance to another section
of such disclosure letter that relates to a representation or representations
made elsewhere in Article III of this Agreement reasonably apparent shall be
deemed to be an exception to such representation or representations
notwithstanding the omission of a reference or cross reference thereto)
delivered by the Company to Parent prior to the execution of this Agreement (the
"COMPANY DISCLOSURE LETTER"), the Company represents and warrants to Parent and
Merger Sub that:
8
Section 3.1 ORGANIZATION AND POWER. Each of the Company and its
Subsidiaries is a corporation, limited liability company or other legal entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of the Company and its Subsidiaries has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as now conducted.
Section 3.2 FOREIGN QUALIFICATIONS. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation, limited liability company or other legal entity and is in good
standing in each jurisdiction where the character of the assets and properties
owned, leased or operated by it or the nature of its business makes such
qualification or license necessary, except where failures to be so qualified or
licensed or in good standing would not have a Company Material Adverse Effect.
Section 3.3 CORPORATE AUTHORIZATION. The Company has all
necessary corporate power and authority to enter into and perform its
obligations under this Agreement and, subject to adoption of this Agreement by
the Requisite Company Vote, to consummate the transactions contemplated by this
Agreement. The board of directors of the Company has adopted resolutions: (a)
approving and declaring advisable the Merger, this Agreement and the
transactions contemplated by this Agreement; (b) declaring that it is in the
best interests of the stockholders of the Company that the Company enters into
this Agreement and consummate the Merger upon the terms and subject to the
conditions set forth in this Agreement; (c) directing that adoption of this
Agreement be submitted to a vote at a meeting of the stockholders of the
Company; and (d) recommending to the stockholders of the Company that they adopt
this Agreement (collectively, the "COMPANY BOARD RECOMMENDATION"). The Company
Board Recommendation was adopted prior to the execution of this Agreement
unanimously by those directors present at the meeting at which this Agreement
was adopted. The Class B Directors (as defined in the Restated Certificate of
Incorporation of the Company) have unanimously voted to determine that none of
the execution, delivery or performance of this Agreement or the Voting Agreement
or the consummation of the transactions contemplated hereby or thereby shall
constitute a "Change in Control" for purposes of the Certificate of Designation
of the Company's Series A Convertible Preferred Stock or the Certificate of
Designation of the Company's Series B Convertible Preferred Stock. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of the Company, subject to the Requisite Company Vote.
Section 3.4 ENFORCEABILITY. This Agreement has been duly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Parent and Merger Sub, constitutes a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency (including all
9
laws related to fraudulent transfers), reorganization, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity.
Section 3.5 ORGANIZATIONAL DOCUMENTS. The Company has made
available to Parent correct and complete copies of the certificates of
incorporation and bylaws (or the equivalent organizational documents), each as
amended to date, of the Company and each of its material Subsidiaries, in each
case as in effect on the date of this Agreement (collectively, the "COMPANY
ORGANIZATIONAL DOCUMENTS"). Neither the Company nor any Subsidiary is, nor has
the Company been, in violation of any of the Company Organizational Documents in
any material respect.
Section 3.6 MINUTE BOOKS. The Company has made available to
Parent correct and complete copies of the minutes of all meetings of the
stockholders, the boards of directors and each committee of the boards of
directors of the Company and each of its Subsidiaries held since January 1,
2003; provided that the Company shall not be obligated to make available any
minutes of meetings to the extent they relate to other bidders in connection
with any potential sale of the Company or any of its material assets or
otherwise related to deliberations by the board of directors of the Company with
respect to the consideration of strategic alternatives.
Section 3.7 SUBSIDIARIES. A correct and complete list of all
Subsidiaries of the Company and other Persons in which the Company owns,
directly or indirectly, capital stock or other equity interests, together with
their respective jurisdictions of organization and the percentage of the
outstanding capital stock or other equity interests of each such Subsidiary or
other Person that is held by the Company or any Subsidiary of the Company is set
forth in Section 3.7 of the Company Disclosure Letter. Except as set forth in
Section 3.7 of the Company Disclosure Letter, (a) each of the Subsidiaries of
the Company is wholly-owned by the Company, directly or indirectly, free and
clear of any Liens and (b) the Company does not own, directly or indirectly, any
capital stock or other equity interest of, or any other securities convertible
or exchangeable into or exercisable for capital stock or other equity interest
of, any Person other than the Subsidiaries of the Company.
Section 3.8 GOVERNMENTAL AUTHORIZATIONS. Except as set forth in
Section 3.8 of the Company Disclosure Letter, the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement (other than the
Recapitalization Merger) do not and will not require any consent, approval or
other authorization of, or filing with or notification to, any international,
national, federal, state, provincial or local governmental, regulatory or
administrative authority, agency, commission, court, tribunal, arbitral body or
self-regulated entity, whether domestic or foreign (each, a "GOVERNMENTAL
ENTITY"), other than:
(a) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware;
10
(b) the filing with the Securities and Exchange Commission (the
"SEC") of (i) an amendment to the Company's proxy statement/prospectus filed
with the SEC in connection with the Recapitalization Merger (the "COMPANY PROXY
STATEMENT"), so that it will also relate to the special meeting of the
stockholders of the Company to be held to consider the adoption of this
Agreement (the "COMPANY STOCKHOLDERS Meeting") and (ii) any other filings and
reports that may be required in connection with this Agreement and the
transactions contemplated by this Agreement under the Securities Exchange Act of
1934 (the "EXCHANGE ACT") or the Securities Act;
(c) compliance with the AMEX rules and regulations;
(d) the pre-merger notification required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX");
(e) compliance with applicable foreign competition laws
(collectively, "FOREIGN COMPETITION LAWS");
(f) any applicable state, federal or foreign Laws governing gaming
activities or the sale of liquor; and
(g) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have a Company Material Adverse Effect.
Notwithstanding anything to the contrary in this Agreement, the failure to
obtain approvals, consents or authorizations in respect of or related to the
matters referred to in Section 3.8(f) shall not be a condition to the Closing or
be deemed, individually or in the aggregate, to have, result in, or cause a
Company Material Adverse Effect.
Section 3.9 NON-CONTRAVENTION. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement do not and will not:
(a) contravene or conflict with, or result in any violation or
breach of, any provision of the Company Organizational Documents;
(b) contravene or conflict with, or result in any violation or
breach of, any Laws or Orders applicable to the Company or any of its
Subsidiaries or by which any assets of the Company or any of its Subsidiaries,
including Intellectual Property ("COMPANY ASSETS"), are bound (in each case,
assuming that all consents, approvals, authorizations, filings and notifications
described in Section 3.8 have been obtained or made), other than as would not
have a Company Material Adverse Effect;
(c) result in any violation or breach of, or constitute a default
(with or without notice or lapse of time or both) or result in a material loss
of a material benefit under, any Contracts to which the Company or any of its
Subsidiaries is a party or by which any Company Assets are bound (collectively,
"COMPANY CONTRACTS") or any
11
Company Permit, other than as set forth in Section 3.9(c) of the Company
Disclosure Letter or as would not have a Company Material Adverse Effect;
(d) require any consent, approval or other authorization of, or
filing with or notification to, any Person under any Company Contracts or any
Company Permits, other than as set forth in Section 3.9(d) of the Company
Disclosure Letter or as would not have a Company Material Adverse Effect;
(e) give rise to any termination, cancellation, amendment,
modification or acceleration of any rights or obligations or give rise to a
right or obligation to purchase or sell assets or securities under any Company
Contracts, other than as set forth in Section 3.9(e) of the Company Disclosure
Letter or as would not have a Company Material Adverse Effect; or
(f) cause the creation or imposition of any Liens on any Company
Assets, other than as set forth in Section 3.9(f) of the Company Disclosure
Letter or as would not have a Company Material Adverse Effect.
Section 3.10 CAPITALIZATION; OPTIONS.
(a) As of the date of this Agreement, the Company's authorized
capital stock consists solely of 750,000,000 shares of Class A Common Stock,
750,000,000 shares of Class B Common Stock, and 150,000,000 shares of preferred
stock, par value $.0l per share (the "PREFERRED STOCK"). As of June 9, 2005 (the
"CAPITALIZATION DATE"), 172,791,295 shares of Class A Common Stock were issued
and outstanding, an additional 4,931,692 shares of restricted stock issued under
the Company Stock Award Plans were subject to vesting restrictions as of such
date, no shares of the Company's Class B Common Stock were issued and
outstanding and 16,181,124.78 shares of Preferred Stock were issued and
outstanding, of which 74,167.71 shares are designated Series A Preferred Stock
and 16,106,957.07 shares are designated Series B Preferred Stock. As of the
Capitalization Date, (i) options to purchase 8,230,037 shares of Class A Common
Stock at a weighted average per share exercise price of $5.07 were outstanding
and 16,305,874 shares of Class A Common Stock were available for future issuance
in connection with stock options under the Company Stock Award Plans (including
8,230,037 shares reserved pursuant to outstanding options), (ii) there were
320,910 partnership units in Patriot American Hospitality Partnership, L.P. or
Wyndham International Operating Partnership, L.P. outstanding (collectively, the
"OP UNITS") and 320,910 shares of Class A Common Stock are reserved for issuance
upon the redemption of the OP Units and (iii) there were 11,000,000 shares of
Class A Common Stock reserved for issuance in connection with the Stipulation of
Settlement, dated as of February 28, 2005 relating to In re: Patriot American
Hospitality, Inc. Securities Litigation. Under the Company's Rights Plan, the
board of directors of the Company created a series of 5,000,000 shares of
preferred stock designated as the "SERIES C PARTICIPATING PREFERRED Stock," par
value $0.01 per share (the "SERIES C PREFERRED STOCK"), which are issuable in
connection with the rights to purchase those shares (the "COMPANY RIGHTS")
issued under the Rights Plan. No Company Stock is held in the treasury of the
Company or by any Subsidiary. Since the Capitalization Date through the
12
date of this Agreement, other than in connection with the issuance of shares of
Class A Common Stock pursuant to the exercise of, or lapse of restrictions
under, Company Stock Awards outstanding as of the Capitalization Date, there has
been no change in the number of shares of outstanding capital stock of the
Company or the number of outstanding Company Stock Awards. Except as set forth
above or as set forth in Section 3.10(a) of the Company Disclosure Letter, as of
the date hereof, there are no shares of capital stock or securities convertible
into or exchangeable for or rights to acquire shares of capital stock of the
Company authorized, issued, outstanding or reserved for issuance. Assuming the
Recapitalization Merger Effective Time had occurred immediately prior to the
execution and delivery of this Agreement, the holders of Class A Common Stock
would hold an aggregate of 172,791,295 shares of Common Stock, the holders of
Series A Preferred Stock would hold an aggregate of 4,763,086.67 shares of
Common Stock, the holders of Series B Preferred Stock would hold an aggregate of
1,034,396,672.33 shares of Common Stock and no shares of Common Stock would be
issued in respect of Class B Common Stock, in each case, subject to the exercise
of applicable dissenter rights. As of the date of this Agreement, the shares of
Series A Preferred Stock, in the aggregate, (i) had an aggregate Liquidation
Preference (as such term is defined in the Certificate of Designation of Series
A Preferred Stock of the Company) equal to $7,919.628 and (ii) were convertible
into an aggregate of 863,312.14 shares of Class A Common Stock. As of the date
of this Agreement, the shares of Series B Preferred Stock, in the aggregate, (i)
had an aggregate Liquidation Preference (as such term is defined in the
Certificate of Designation of Series B Preferred Stock of the Company) equal to
$1,719,900,876 and (ii) were convertible into an aggregate of 187,484,980.30
shares of Class B Common Stock.
(b) All shares of Company Stock that are outstanding are, and all
shares of Company Stock (including all shares of Common Stock to be issued in
the Recapitalization Merger) that are subject to issuance, upon issuance prior
to the Effective Time upon the terms and subject to the conditions specified in
the instruments under which they are issuable will be, duly authorized, validly
issued, fully paid and non-assessable and not subject to any pre-emptive rights.
(c) The Company has made available to Parent correct and complete
copies of all stock award plans set forth on Section 3.10(c) of the Company
Disclosure Letter (the "COMPANY STOCK AWARD PLANS") and all forms of options and
other stock-based awards issued under those Company Stock Award Plans.
(d) Each outstanding share of capital stock, each limited
liability company membership interest and each partnership interest of each
Subsidiary of the Company is duly authorized, validly issued, fully paid and
non-assessable and not subject to any pre-emptive rights, other than as set
forth in Section 3.10(d) of the Company Disclosure Letter.
(e) Except as set forth in this Section 3.10 and as set forth in
Section 3.10(e) of the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries (i) to
repurchase, redeem or
13
otherwise acquire any shares of Company Stock or capital stock of any Subsidiary
of the Company or (ii) to provide any funds to, make any investment in (whether
in the form of a loan, capital contribution or otherwise) or provide any
guarantee with respect to (A) any Subsidiary of the Company or (B) any other
Person.
(f) As of the date of this Agreement, the only outstanding
Indebtedness for borrowed money of the Company and the Subsidiaries is set forth
in Section 3.10(f) of the Company Disclosure Letter.
Section 3.11 VOTING.
(a) The Requisite Company Vote is the only vote of the holders of
any class or series of the capital stock of the Company or any of its
Subsidiaries necessary (under the Company Organizational Documents, the DGCL,
other applicable Laws or otherwise) to approve and adopt this Agreement, the
Merger and the transactions contemplated thereby, except as may be required
under the Recapitalization and Merger Agreement.
(b) Except as set forth in Section 3.11(b) of the Company
Disclosure Letter, there are no stockholders agreements, registration rights
agreements, voting trusts, proxies or similar agreements, arrangements or
commitments to which the Company or any of its Subsidiaries is a party or of
which the Company has Knowledge with respect to any shares of capital stock or
other equity interests of the Company or any of its Subsidiaries or any other
Contract relating to disposition, voting or dividends with respect to any equity
securities of the Company or of any Subsidiary, other than the Voting Agreement.
There are no bonds, debentures, notes or other instruments of Indebtedness of
the Company or any of its Subsidiaries that have the right to vote, or that are
convertible or exchangeable into or exercisable for securities having the right
to vote, on any matters on which stockholders of the Company may vote.
Section 3.12 SEC REPORTS. The Company has timely filed with the
SEC, and has made available to Parent correct and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed by the
Company with the SEC since January 1, 2002 (collectively, the "COMPANY SEC
REPORTS"). The Company SEC Reports (a) were prepared in accordance with the
requirements of the Securities Act of 1933 (the "SECURITIES ACT"), the Exchange
Act and other applicable Laws and (b) did not, at the time they were filed, or
if amended or restated, at the time of such later amendment or restatement,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which such statements were
made, not misleading. No Subsidiary of the Company is subject to the periodic
reporting requirements of the Exchange Act or is otherwise required to file any
forms, reports, schedules, statements or other documents with the SEC, any
foreign Governmental Entity that performs a similar function to that of the SEC
or any securities exchange or quotation service. The Company has made available
to Parent copies of all material correspondence between the SEC, on the one
hand, and the Company and any of the Subsidiaries, on the other hand, since
January 1, 2003 through the date of this Agreement.
14
Section 3.13 FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company and its consolidated Subsidiaries included or incorporated by
reference in the Company SEC Reports (including, in each case, any notes
thereto):
(a) complied in all material respects with applicable accounting
requirements and the rules and regulations of the SEC;
(b) were prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated in the notes to those financial statements); and
(c) fairly present the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments). Except as set forth in Section 3.13(c) of the Company
Disclosure Letter, all of the Subsidiaries are consolidated for accounting
purposes.
Section 3.14 LIABILITIES. There are no liabilities or obligations
of any kind, whether accrued, contingent, absolute, inchoate or otherwise
(collectively, "LIABILITIES") of the Company or any of its Subsidiaries which
are required to be recorded or reflected on a balance sheet, including the
footnotes thereto, under GAAP, other than:
(a) Liabilities disclosed in the consolidated balance sheet of the
Company and its consolidated Subsidiaries as of March 31, 2005 or the footnotes
thereto set forth in the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2005;
(b) Liabilities incurred since March 31, 2005 in the ordinary
course of business consistent with past practices that would not have a Company
Material Adverse Effect; and
(c) Liabilities set forth in Section 3.14(c) of the Company
Disclosure Letter.
Section 3.15 ABSENCE OF CERTAIN CHANGES. Except as set forth in
Company SEC Reports filed at least two Business Days prior to the date of this
Agreement, since March 31, 2005, the Company and each of its Subsidiaries have
conducted their business in the ordinary course consistent with past practices
and:
(a) there has not been any Company Material Adverse Effect; and
(b) neither the Company nor any of its Subsidiaries has taken any
action which, if taken after the date of this Agreement, would be prohibited by
Section 5.1, other than as set forth in Section 3.15 of the Company Disclosure
Letter or any action described in clause (ii) of Section 5.1(k).
15
Section 3.16 LITIGATION. Except as set forth in Company SEC
Reports filed at least two Business Days prior to the date of this Agreement,
and except as set forth in Section 3.16 of the Company Disclosure Letter, there
are no legal actions, claims, demands, arbitrations, hearings, charges,
complaints, investigations, examinations, indictments, litigations, suits or
other civil, criminal, administrative or investigative proceedings
(collectively, "LEGAL ACTIONS") pending or, to the Knowledge of the Company,
threatened against (a) the Company or any of its Subsidiaries or the Company
Assets or (b) any director, officer or employee of the Company or any of its
Subsidiaries or other Person for whom the Company or any of its Subsidiaries may
be liable, in each case other than Legal Actions that would not have a Company
Material Adverse Effect. There are no Orders outstanding against the Company or
any of its Subsidiaries or the Company Assets other than Orders that would not
have a Company Material Adverse Effect. Other than pursuant to Company
Organizational Documents or as set forth in Section 3.18(a) of the Company
Disclosure Letter, no Contract between the Company or any Subsidiary and any
current or former director or officer exists that provides for indemnification.
Section 3.17 CONTRACTS.
(a) Section 3.17(a) of the Company Disclosure Letter contains a
list of the following Company Contracts as of the date hereof:
(i) any lease of real or personal property, with third
parties other than the Company or any Subsidiaries, providing for annual
rentals of $500,000 or more;
(ii) any Contract, with the exception of the management
agreements set forth in Section 3.24(c) or (d) of the Company Disclosure
Letter and the franchise agreements set forth in Section 3.24(c) or (e) of
the Company Disclosure Letter, for the purchase of materials, supplies,
goods, services, equipment or other assets that is not terminable without
material penalty on 90 days notice by the Company or the Subsidiaries and
that provides for or is reasonably likely to require either (A) annual
payments from the Company and the Subsidiaries of $500,000 or more, or (B)
aggregate payments from the Company and the Subsidiaries of $5,000,000 or
more;
(iii) any partnership, limited liability company agreement,
joint venture or other similar agreement or arrangement relating to the
formation, creation, operation, management or control of any partnership or
joint venture which is not a wholly-owned Subsidiary of the Company;
(iv) any Contract (other than among consolidated
Subsidiaries) under which Indebtedness for borrowed money is (including
guarantees) outstanding or may be incurred or pursuant to which any
property or asset of the Company or any of its Subsidiaries is mortgaged,
pledged or otherwise subject to a Lien, or any Contract restricting the
incurrence of Indebtedness or the incurrence of Liens or restricting the
payment of
16
dividends or the transfer of any Property (except, with respect to the
transfer of Leased Properties, restrictions contained in the Lease
Documents). "INDEBTEDNESS" means, without duplication, (A) indebtedness for
borrowed money (excluding any interest thereon), secured or unsecured, (B)
obligations under conditional sale or other title retention Contracts
relating to purchased property, (C) capitalized lease obligations, (D)
obligations under interest rate cap, swap, collar or similar transactions
or currency hedging transactions (valued at the termination value thereof),
and (E) guarantees of any Indebtedness of the foregoing of any other
person;
(v) any Contract currently required to be filed as an
exhibit to the Company's Annual Report on Form 10-K pursuant to Item
601(b)(10) of Regulation S-K under the Securities Act;
(vi) any Contract that purports to limit in any material
respect the right of the Company or the Subsidiaries (A) to engage in any
line of business, or (B) to compete with any person or operate in any
location;
(vii) any Contract providing for the sale or exchange of,
or option to sell or exchange, any Property, or for the purchase or
exchange of, or option to purchase or exchange, any real estate entered
into in the past 18 months or in respect of which the applicable
transaction had not been consummated;
(viii) any Contract entered into in the past 18 months or in
respect of which the applicable transaction had not been consummated for
the acquisition or disposition, directly or indirectly (by merger or
otherwise), of assets (other than Contracts referenced in clause (vii) of
this Section 3.17(a)) or capital stock or other equity interests of another
person for aggregate consideration in excess of $500,000, in each case
other than in the ordinary course of business and in a manner consistent
with past practice;
(ix) any Contract pursuant to which the Company or any of
its Subsidiaries manages any real property;
(x) other than Contracts for ordinary repair and
maintenance, any Contract relating to the development or construction of,
or additions or expansions to, the Properties, under which the Company or
any of its Subsidiaries has, or expects to incur, an obligation in excess
of $1,000,000 in the aggregate that has not been satisfied as of the date
hereof;
(xi) any advertising or other promotional Contract
providing for payment by the Company or any Subsidiary of $750,000 or more;
17
(xii) the Recapitalization and Merger Agreement or any
related Contract with any of the parties thereto;
(xiii) any Contract to which the Company or any of its
Subsidiaries has continuing indemnification obligations (other than
Contracts entered into in the ordinary course of business) or potential
liability under any purchase price adjustment that, in each case, could
reasonably be expected to result in future payments of more than $1,000,000
or any Contract (a "SETTLEMENT AGREEMENT") relating to the settlement or
proposed settlement of any Legal Action, which involves the issuance of
equity securities or the payment of an amount, in any such case, having a
value of more than $1,000,000;
(xiv) any license, royalty or other Contract concerning
Intellectual Property which is material to the Company and its
Subsidiaries; and
(xv) any Contract (other than Contracts referenced in
clauses (i) through (xiv) of this Section 3.17(a)) which by its terms calls
for payments by the Company and the Subsidiaries in excess of $5,000,000
(the Contracts described in clauses (i) through (xv) and those required to
be identified in Sections 3.17(c), 3.18(a), 3.19, 3.20(a), 3.24(b),
3.24(c), 3.24(d) and 3.24(e) and 3.24(h) of the Company Disclosure Letter,
in each case together with all exhibits and schedules thereto being, the
"MATERIAL CONTRACTS");
(b) Except as would not have a Company Material Adverse Effect,
(i) neither the Company nor any Subsidiary is and, to the Company's Knowledge,
no other party is in breach or violation of, or default under, any Material
Contract, (ii) none of the Company or any of the Subsidiaries has received any
claim of default under any such Material Contract, and (iii) to the Company's
Knowledge, no event has occurred which would result in a breach or violation of,
or a default under, any Material Contract (in each case, with or without notice
or lapse of time or both). Except as would not have a Company Material Adverse
Effect, each Material Contract is valid, binding and enforceable in accordance
with its terms and is in full force and effect. The Company has made available
to Parent true and complete copies of all Material Contracts, including any
amendments thereto.
(c) Except as disclosed in the Company's Registration Statement on
Form S-4 filed May 2, 2005, there are no Contracts or material transactions
between the Company or any Subsidiary, on the one hand, and any (i) officer or
director of the Company or any Subsidiary, (ii) record or beneficial owner of
five percent or more of the voting securities of the Company, or (iii) associate
(as defined in Rule 12b-2 under the Exchange Act) or affiliate of any such
officer, director or record or beneficial owner, on the other hand, except those
of a type available to employees generally or as set forth in Section 3.18 of
the Company Disclosure Letter.
Section 3.18 BENEFIT PLANS.
18
(a) Section 3.18(a) of the Company Disclosure Letter contains a
correct and complete list of (i) each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), including multiemployer plans within the meaning of Section 3(37) of
ERISA and (ii) each other stock purchase, stock option, severance, employment,
consulting, change-of-control, collective bargaining, bonus, incentive, deferred
compensation and other benefit plan, agreement, program, policy, commitment or
other arrangement, whether or not subject to ERISA (including any related
funding mechanism now in effect or required in the future), whether formal or
informal, oral or written, legally binding or not, under which (A) any past or
present director, officer, employee or consultant of the Company (each a
"COMPANY EMPLOYEE") has any present or future right to benefits or (B) the
Company has any present or future Liabilities. All such plans, agreements,
programs, policies, commitments and arrangements (whether or not set forth in
Section 3.18(a) of the Company Disclosure Letter) are collectively referred to
as the "COMPANY BENEFIT PLANS." All references to the "Company" in this Section
3.18 shall refer to the Company and any member of its "controlled group" within
the meaning of Section 414 of the Code and Section 1028 of the Puerto Rico
Internal Revenue Code ("PRIRC").
(b) With respect to each Company Benefit Plan, if applicable, the
Company has made available to Parent correct and complete copies of: (i) all
plan texts and agreements and related trust agreements (or other funding
vehicles); (ii) the most recent summary plan descriptions and material employee
communications; (iii) the most recent annual report (including all schedules);
(iv) the most recent actuarial valuation report (if any), annual audited
financial statements and opinion; (v) the Form 5500 and attached schedules; (vi)
if the plan is intended to qualify under Section 401(a) of the Code, the most
recent determination letter received from the Internal Revenue Service (the
"IRS"); (vii) under Section 1165(a) of the PRIRC, the most recent determination
letter received from the Puerto Rico Treasury Department (the "P.R. TREASURY");
(viii) if the plan is intended to qualify under Section 1046 of the PRIRC, the
most recent determination letter from the P.R. Treasury; and (ix) all material
communications with any Governmental Entity given or received within the past
three years.
(c) All amounts properly accrued as liabilities or expenses of any
Company Benefit Plan have been properly reflected in the most recent financial
statements contained in the Company SEC Reports, to the extent required by GAAP.
Since the date of such financial statements, there has been no amendment or
change in interpretation by the Company relating to any Company Benefit Plan
which would materially increase the cost of such Company Benefit Plan.
(d) The Company Disclosure Letter, the Company does not maintain
or contribute to, and has not within the preceding five years maintained or
contributed to, or had during such period the obligation to maintain or
contribute to, nor does the Company have any unsatisfied obligation with respect
to, any Company Benefit Plan that constitutes a "single employer plan" within
the meaning of Section 4001(a)(15) of ERISA. Except as would not, individually
or in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect, the Company does not maintain or
19
contribute to, and has not within the preceding five years maintained or
contributed to, or had during such period the obligation to maintain or
contribute to, or have any unsatisfied obligation with respect to, any
"multiemployer plan" (within the meaning of Section 4001(a)(3) of ERISA) or any
"multiple employer plan" (within the meaning of the Code or ERISA).
(e) Each Company Benefit Plan has been established and
administered in compliance in all material respects with its terms and all
applicable Laws. Each Company Benefit Plan that requires registration with a
Governmental Entity has been so registered. Except as set forth in Section
3.18(e) of the Company Disclosure Letter, with respect to each Company Benefit
Plan which is intended to qualify under Section 401(a) of the Code or 1165 of
the PRIRC, as the case may be, (i) such plan has been issued a favorable
determination letter by the IRS and P.R. Treasury, as the case may be, with
respect to such qualification, (ii) its related trust has been determined to be
exempt from taxation under Section 501(a) of the Code and under Section 1165 of
the PRIRC and (iii) no event has occurred since the date of such qualification
or exemption that would adversely affect such qualification or exemption. With
respect to each Company Benefit Plan, except as set forth in Section 3.18(e)(z)
of the Company Disclosure Letter, which is intended to qualify under Section
1046 of the PRIRC, such plan has been issued the corresponding approval from the
P.R. Treasury. With respect to each Company Benefit Plan, (x) no Legal Actions
(other than routine claims for benefits in the ordinary course) are pending or,
to the Knowledge of the Company, threatened, (y) no facts or circumstances exist
that could reasonably be expected to give rise to any such Legal Actions, and
(z) no administrative investigation, audit or other administrative proceeding by
the Department of Labor, the PBGC, the Internal Revenue Service or other
Governmental Entities are pending, in progress or, to the Knowledge of the
Company, threatened (including any routine requests for information from the
PBGC).
(f) Each Company Benefit Plan which is a "group health plan"
within the meaning of Section 607(1) of ERISA is in compliance in all material
respects with the provisions of the Consolidated Omnibus Budget Recommendation
Act of 1985 ("COBRA"), the Health Insurance Portability and Accountability Act
of 1996 and other applicable Laws.
(g) Except as set forth in Section 3.18(g) of the Company
Disclosure Letter, there are no: (i) Company Benefit Plans under which welfare
benefits are provided to Company Employees beyond their retirement or other
termination of service, other than coverage mandated by COBRA, Section 4980B of
the Code, Title I of ERISA or any similar state group health plan continuation
Laws (collectively, "COBRA"), the cost of which is fully paid by such Company
Employees or their dependents; or (ii) unfunded Company Benefit Plan obligations
with respect to any Company Employees that are not fairly reflected by reserves
shown on the most recent financial statements contained in the Company SEC
Reports. The provision of postretirement welfare benefits under any Company
Benefit Plan (other than those required to be provided under COBRA or any
employment agreement set forth in Section 3.18(a) of the Company
20
Disclosure Letter) may be terminated at any time by the Company without
Liability to the Company.
(h) Except as set forth in Section 3.18(h) of the Company
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
combination with another event) (i) result in any payment becoming due, or
increase the amount of any compensation due, to any Company Employee; (ii)
increase any benefits otherwise payable under any Company Benefit Plan; (iii)
result in the acceleration of the time of payment or vesting of any such
compensation or benefits; (iv) result in a non-exempt "prohibited transaction"
within the meaning of Section 406 of ERISA or section 4975 of the Code, (v)
cause the Company to record additional compensation expense on its income
statement with respect to any outstanding stock option or other equity based
award, or (vi) result in the payment of any amount that could, individually or
in combination with any other such payment, constitute an "excess parachute
payment," as defined in section 280G(b)(1) of the Code.
(i) Neither the Company nor any Company Benefit Plan, nor to the
Knowledge of the Company any "disqualified person" (as defined in Section 4975
of the Code) or "party in interest" (as defined in Section 3(18) of ERISA), has
engaged in any non-exempt prohibited transaction (within the meaning of Section
4975 of the Code or Section 406 of ERISA) which, individually or in the
aggregate, has resulted or could reasonably be expected to result in any
material liability to the Company or any of its Subsidiaries.
(j) Except as provided in Section 3.18(j) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to
any Contract providing a future obligation, or has communicated any intention to
any Company Employee, to create any additional Company Benefit Plans or to
modify any existing Company Benefit Plan.
(k) Except as disclosed in Section 3.18(k) of the Company
Disclosure Letter, no capital stock or other securities of the Company or any of
its Subsidiaries forms or has formed a material part of the assets of any
Company Benefit Plan.
(l) Except as set forth in Section 3.18(l) of the Company
Disclosure Letter, no Company Benefit Plan is maintained outside the
jurisdiction of the United States or Puerto Rico or covers Company Employees
outside of the United States and Puerto Rico.
Section 3.19 EXECUTIVE AND DIRECTOR LOANS. Except as set forth in
Section 3.19 of the Company Disclosure Letter, there are no outstanding loans
made by the Company or any of its Subsidiaries to any executive officer (within
the meaning of Rule 3b-7 under the Exchange Act) or director of the Company.
Since the enactment of the Xxxxxxxx-Xxxxx Act of 2002, neither the Company nor
any of its Subsidiaries has made any loans to any such executive officers or
directors.
21
Section 3.20 LABOR RELATIONS.
(a) Except as set forth in Section 3.20(a) (i) of the Company
Disclosure Letter, none of the employees of the Company or its Subsidiaries is
represented by a union and, to the Knowledge of the Company, no union organizing
efforts have been conducted within the last three years or are now being
conducted. Except as set forth in Section 3.20(a) (ii) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to any
collectively bargaining agreement or other labor contract. Neither the Company
nor any of its Subsidiaries currently has, nor to the Knowledge of the Company,
is there now threatened, a strike, picket, work stoppage, work slowdown or other
organized labor dispute.
(b) Except as set forth in Section 3.20(b) of the Company
Disclosure Letter, the Company and each of its Subsidiaries is in compliance in
all material respects with all applicable Laws relating to the employment of
labor, including all applicable Laws relating to wages, hours, collective
bargaining, employment discrimination, civil rights, safety and health, workers'
compensation, pay equity and the collection and payment of withholding and/or
social security taxes. Neither the Company nor any of its Subsidiaries has
incurred any liability or obligation under the Worker Adjustment and Retraining
Notification Act ("WARN") or any similar state or local Law within the last six
months which remains unsatisfied.
Section 3.21 TAXES. Except as set forth in Section 3.21 of the
Company Disclosure Letter:
(a) All material Tax Returns required to be filed by or with
respect to the Company or any of its Subsidiaries have been properly prepared
and timely filed, and all such Tax Returns (including information provided
therewith or with respect thereto) are correct and complete in all material
respects, except for Tax Returns as to which the failure to so file or be true,
complete and correct in all material respects would not have a Company Material
Adverse Effect.
(b) The Company and its Subsidiaries have fully and timely paid,
or will timely pay prior to Closing, all material Taxes due and payable, and
have made adequate provision in accordance with GAAP for any Taxes that are not
yet due and payable for all taxable periods, or portions thereof, ending on or
before the date of this Agreement, except for Taxes as to which the failure to
pay or adequately provide for would not have a Company Material Adverse Effect.
(c) There are no outstanding agreements extending or waiving the
statutory period of limitations applicable to any claim for, or the period for
the collection, assessment or reassessment of, Taxes due from the Company or any
of its Subsidiaries for any taxable period and no request for any such waiver or
extension is currently pending, except for such agreements or requests that
would not have a Company Material Adverse Effect.
22
(d) No audit or other proceeding by any Governmental Entity is
pending or, to the Knowledge of the Company, threatened in writing with respect
to any Taxes due from or with respect to the Company or any of its Subsidiaries
except for such audits and proceedings that would not have a Company Material
Adverse Effect.
(e) All deficiencies for Taxes asserted or assessed in writing
against the Company or any of its Subsidiaries have been fully and timely paid,
settled or properly reflected in the most recent financial statements contained
in the Company SEC Reports.
(f) No material claim in writing has been made by a taxing
authority in a jurisdiction where the Company or any of its Subsidiaries does
not file a Tax Return that the Company or such Subsidiary is or may be subject
to Tax in such jurisdiction.
Section 3.22 ENVIRONMENTAL MATTERS. Except as set forth in Section
3.22 of the Company Disclosure Letter or as would not have a Company Material
Adverse Effect:
(a) The Company and each of its Subsidiaries are and have
been continuously in compliance with:
(i) all applicable Laws relating to (A) pollution,
contamination, protection of the environment or public or employee health
and safety, (B) emissions, discharges, disseminations, releases or
threatened releases of Hazardous Substances into the air (indoor or
outdoor), surface water, groundwater, soil, land surface or subsurface,
buildings, facilities, real or personal property or fixtures or (C) the
manufacture, processing, distribution, use, treatment, storage, disposal,
arranging for disposal, transport or handling of Hazardous Substances
(collectively, "ENVIRONMENTAL MATTERS"); and
(ii) all applicable Orders and Permits relating to
Environmental Matters (collectively, "ENVIRONMENTAL LAWS").
(b) To the Knowledge of the Company, there are no past or present
conditions, events, circumstances, facts, activities, practices, incidents or
actions:
(i) that have given rise or could reasonably be expected
to give rise to any Liabilities of the Company or any of its Subsidiaries
under any Environmental Laws;
(ii) that have required or could reasonably be expected to
require the Company or any of its Subsidiaries to incur any actual or
potential cleanup, remediation, removal or other response costs (including
the cost of coming into compliance with Environmental Laws), investigation
costs (including fees of consultants, counsel and other experts in
connection with any environmental investigation, testing, audits or
studies), losses, Liabilities, payments, damages (including any actual,
punitive or consequential damages
23
(A) under any Environmental Laws, contractual obligations or otherwise or
(B) to third parties for personal injury or property damage), civil or
criminal fines or penalties, judgments or amounts paid in settlement, in
each case arising out of or relating to any Environmental Matters
(collectively, "ENVIRONMENTAL COSTS"); or
(iii) that have formed or could reasonably be expected to
form the basis of any Legal Action against or involving the Company or any
of its Subsidiaries arising out of or relating to any Environmental
Matters.
(c) Neither the Company nor any of its Subsidiaries has received
any notice or other communication: (i) that any of them is or may be a
potentially responsible Person or otherwise liable in connection with any waste
disposal site or other location allegedly containing any Hazardous Substances;
(ii) of any failure by any of them to comply with any Environmental Laws or the
requirements of any environmental Permits; or (iii) that any of them is
requested or required by any Governmental Entity or any other Person to perform
or fund any investigatory or remedial activity or other action in connection
with any actual or alleged release or threatened release of Hazardous Substances
or any other Environmental Matters.
This Section 3.22 shall be the only representation made by the Company with
respect to Environmental Laws, Environmental Matters, Hazardous Substances or
Environmental Costs.
Section 3.23 INTELLECTUAL PROPERTY. Except as set forth in Section
3.23 of the Company Disclosure Letter or as would not have a Company Material
Adverse Effect, (i) to the Knowledge of the Company, the conduct of the business
of the Company and its Subsidiaries as currently conducted does not infringe
upon or misappropriate the Intellectual Property rights of any third party, and
no claim has been asserted to the Company or any Subsidiary that the conduct of
the business of the Company and its Subsidiaries as currently conducted
infringes upon or may infringe upon or misappropriates the Intellectual Property
rights of any third party; (ii) the Company or a Subsidiary owns or is licensed
to use or otherwise has the right to use all Intellectual Property as currently
used in the operation of its respective business, in accordance with the terms
of any applicable license agreement governing Licensed Intellectual Property (as
defined below); (iii) the Company or a Subsidiary owns the entire right, title
and interest in and to each item of Intellectual Property purported to be owned
by the Company or a Subsidiary, subject to any Liens, licenses or other rights
granted (the "OWNED INTELLECTUAL PROPERTY"), none of the Owned Intellectual
Property has been adjudged invalid or unenforceable in whole or in part and, to
the Knowledge of the Company, the Owned Intellectual Property is valid and
enforceable; (iv) to the Knowledge of the Company, no person is engaging in any
activity that infringes upon the Owned Intellectual Property; (v) to the
Knowledge of the Company, each license of Intellectual Property licensed to the
Company or a Subsidiary (the "LICENSED INTELLECTUAL PROPERTY") is valid and
enforceable, is binding on all parties to such license, and is in full
24
force and effect; (vi) to the Knowledge of the Company, no party to any license
of the Licensed Intellectual Property is in breach thereof or default
thereunder; (vii) the Company has taken commercially reasonable actions
(including executing non-disclosure and intellectual property assignment
agreements) to protect, preserve and maintain the Owned Intellectual Property;
and (viii) neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby shall adversely affect any of the Company's
rights with respect to the Owned Intellectual Property or the Licensed
Intellectual Property. For purposes of this Agreement, "INTELLECTUAL PROPERTY"
means all U.S., state and foreign (i) patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, trade dress, logos,
trade names, corporate names, domain names and other source identifiers, and
registrations and applications for registration thereof, (iii) copyrightable
works, copyrights, and registrations and applications for registration thereof,
(iv) trade secrets under applicable law, including confidential and proprietary
information and know-how and (v) all substantially similar rights, however such
rights are denominated under applicable law.
Section 3.24 REAL PROPERTY.
(a) Section 3.24(a) of the Company Disclosure Letter lists each
hotel (collectively, the "OWNED HOTELS"), and certain other parcels of real
property currently owned by the Company or any Subsidiary, and sets forth the
Company or the applicable Subsidiary owning such property. The Company has made
available to Parent legal descriptions of each material parcel of real property
(including each of the Owned Hotels) currently owned by the Company or any of
its Subsidiaries (collectively, the "OWNED REAL PROPERTIES"; the Owned Real
Properties together with the Leased Properties (defined below), collectively,
the "PROPERTIES"). The Company or the applicable Subsidiary set forth on Section
3.24(a) of the Company Disclosure Letter owns fee simple title to the Owned Real
Properties, free and clear of all Liens, other than (i) Liens for current real
estate taxes and assessments not yet due and payable or Liens for income and
similar taxes that are being contested in good faith and for which the Company
has made adequate provision in accordance with GAAP, (ii) inchoate mechanics'
and materialmen's Liens for construction in progress, (iii) to the extent such
Liens would not have a Company Material Adverse Effect, (A) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Subsidiary consistent with past practice, (B)
all matters of record, and (C) all Liens and other imperfections of title and
encumbrances that are typical for the applicable property type and locality and
which would not reasonably be expected to materially interfere with the conduct
of the business of the Company or such Subsidiary; and (iv) all matters
disclosed in zoning reports or instruments or agreements of record made
available to the Parent prior to the date of this Agreement (collectively,
"PERMITTED LIENS"). Except as disclosed in Section 3.24(a) of the Company
Disclosure Schedules, none of the Owned Hotels or Leased Properties is subject
to any governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or without payment
of compensation therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed. Neither the Company
25
nor any Subsidiary is in violation of any material covenants, conditions or
restrictions of record affecting any Properties which violations would have a
Company Material Adverse Effect.
(b) Section 3.24(b) of the Company Disclosure Letter lists each
hotel property currently leased or subleased by the Company or any Subsidiary
from a third party other than the Company or any Subsidiary (collectively, the
"LEASED PROPERTIES") and sets forth the Company or the Subsidiary holding such
leasehold interest, the date of the lease and each material amendment, guaranty
or other agreement relating thereto (collectively, the "LEASE DOCUMENTS"). The
Company or the applicable Subsidiary owns a valid leasehold interest in the
Leased Properties, free and clear of all Liens other than Permitted Liens. True,
correct and complete copies of all Lease Documents have been made available to
Parent. Each of the Lease Documents is valid, binding and in full force and
effect as against the Company or the Subsidiaries and, to the Company's
Knowledge, as against the other party thereto. As of the date hereof, to the
Company's Knowledge, neither the Company nor any Subsidiary or other party is in
breach or violation of, or default (in each case, with or without notice or
lapse of time or both) under, any of the Lease Documents and none of the Company
or any of the Subsidiaries has received or given any notice of default under any
such agreement which remains uncured.
(c) Section 3.24(c) of the Company Disclosure Letter lists each
management, franchise, license or other agreement providing for the management
of any Owned Hotel or Leased Property by any party other than the Company or any
Subsidiary and sets forth the Company or any such Subsidiary party to such
agreement, the date of such agreement and each amendment, guaranty, or other
agreement binding on the Company or any Subsidiary and relating thereto
(collectively, "THIRD PARTY FLAG AGREEMENTS"). True, correct and complete copies
of each Third Party Flag Agreement have been made available to Parent. Each
Third Party Flag Agreement is valid, binding and in full force and effect as
against the Company or the Subsidiaries, and, to the Company's Knowledge, as
against the other party thereto.
(d) Section 3.24(d) of the Company Disclosure Letter lists each
management agreement pursuant to which the Company or any Subsidiary manages or
operates any real property on behalf of any third party owner other than the
Company or any Subsidiary, and describes the property that is subject to such
management agreement, the Company or the Subsidiary that is a party, the date of
such management agreement and each material amendment, guaranty or other
agreement binding on the Company or any Subsidiary and relating thereto
(collectively, the "MANAGEMENT AGREEMENT DOCUMENTS"). True, correct and complete
copies of all Management Agreement Documents have been made available to Parent.
Each of the Management Agreement Documents is valid, binding and in full force
and effect as against the Company or the Subsidiaries and, to the Company's
Knowledge, as against the other party thereto.
(e) Section 3.24(e) of the Company Disclosure Letter lists each
agreement pursuant to which the Company or any Subsidiary grants any rights to
any third party (other than the Company or any Subsidiary) to operate any
property utilizing
26
any of the Owned Intellectual Property or the Licensed Intellectual Property,
and describes the property that is subject to such agreement, the Company or the
Subsidiary that is a party, the date of such franchise agreement and each
material amendment, guaranty or other instruments binding on the Company or any
Subsidiary and relating thereto (collectively, the "FRANCHISE AGREEMENT
DOCUMENTS"). True, correct and complete copies of all Franchise Agreement
Documents have been made available to Parent. Each of the Franchise Agreement
Documents is valid, binding and in full force and effect as against the Company
or the Subsidiaries and, to the Company's Knowledge, as against the other party
thereto.
(f) There are no latent defects or adverse physical conditions
affecting any Property or the improvements thereon, other than those that would
not have a Company Material Adverse Effect.
(g) With respect to each private club operated at any of the
Properties, to the Company's Knowledge, all material documents in the possession
of the Company (collectively, the "CLUB DOCUMENTS") have been made available to
Parent. Except as would not reasonably be expected to have a Company Material
Adverse Effect, to the Company's Knowledge, (i) neither the Company nor any
Subsidiary has received any written notice of any default by the Company or any
Subsidiary under the Club Documents, and (ii) no event has occurred which, with
notice or lapse of time or both, would constitute a default by the Company or
any Subsidiary under the Club Documents.
Section 3.25 PERSONAL PROPERTY. Except as set forth in Section
3.25 of the Company Disclosure Letter, the Company and its Subsidiaries have
good and marketable title to, or a valid and enforceable leasehold interest in,
all personal Company Assets owned, used or held for use by them, except as would
not have a Company Material Adverse Effect. Except as set forth in Section 3.25
of the Company Disclosure Letter, neither the Company's nor any of its
Subsidiaries' ownership of or leasehold interest in any such personal property
is subject to any Liens, except for Liens that would not have a Company Material
Adverse Effect.
Section 3.26 PERMITS; COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 3.26 of the Company Disclosure
Letter, each of the Company and its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses (including gaming and liquor
licenses), easements, variances, exceptions, consents, certificates, approvals
and other permits of any Governmental Entity ("PERMITS") necessary for it to
own, lease and operate its properties and assets or to carry on its business as
it is now being conducted (collectively, the "COMPANY Permits"), and all such
Company Permits are in full force and effect, except as would not have a Company
Material Adverse Effect. No suspension or cancellation of any of the Company
Permits is pending or threatened, and no such suspension or cancellation will
result from the transactions contemplated by this Agreement, except as would not
have a Company Material Adverse Effect.
27
(b) Neither the Company nor any of its Subsidiaries is, nor since
January 1, 2002 has been, in conflict with, or in default or violation of, (i)
any Laws applicable to the Company or such Subsidiary or by which any of the
Company Assets is bound or (ii) any Company Permits, except as would not have a
Company Material Adverse Effect.
Section 3.27 INSURANCE. Section 3.27 of the Company Disclosure
Letter sets forth a complete and correct list of all material insurance policies
owned or held by the Company and each Subsidiary, true and complete copies of
which have been made available to Parent. With respect to each such insurance
policy, except as would not have a Company Material Adverse Effect or as set
forth in Section 3.27 of the Company Disclosure Letter: (a) the policy is legal,
valid, binding and enforceable in accordance with its terms and, except for
policies that have expired under their terms in the ordinary course, is in full
force and effect; (b) neither the Company nor any Subsidiary is in breach or
default (including any such breach or default with respect to the payment of
premiums or the giving of notice), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination or modification, under the policy; (c) to the Knowledge of the
Company, as of the date hereof no insurer on the policy has been declared
insolvent or placed in receivership, conservatorship or liquidation; (d) as of
the date hereof no notice of cancellation or termination has been received; and
(e) the policy is sufficient for compliance with all requirements of Law and the
express requirements of all Contracts to which the Company or the Subsidiaries
are parties or otherwise bound. The Company and its Subsidiaries maintain, and
have maintained without interruption, policies or binders of insurance covering
risks and events and in amounts adequate for their respective businesses and
operations to the extent customary in the industry in which they operate. Except
as set forth in Section 3.27 of the Company Disclosure Letter, such policies
will not terminate as a result of the consummation of the transactions
contemplated by this Agreement.
Section 3.28 TAKEOVER STATUTES. The board of directors of the
Company has taken all necessary action to ensure that the restrictions on
business combinations contained in Section 203 of the DGCL will not apply to
this Agreement, the Voting Agreement, the Merger or the other transactions
contemplated by this Agreement, including by approving this Agreement, the
Voting Agreement, the Merger and the other transactions contemplated by this
Agreement. Except as set forth in Section 3.28 of the Company Disclosure Letter,
no other takeover statutes apply or purport to apply to this Agreement, the
Voting Agreement, the Merger or any of the other transactions contemplated by
this Agreement or the Voting Agreement.
Section 3.29 INTERESTED PARTY TRANSACTIONS. Except as set forth on
Section 3.29 of the Company Disclosure Letter, between the date of the Company's
last annual meeting proxy statement filed with the SEC and the date of this
Agreement, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.
28
Section 3.30 OPINION OF FINANCIAL ADVISOR. X.X. Xxxxxx Securities
Inc. (the "COMPANY FINANCIAL ADVISOR") has delivered to the board of directors
of the Company its written opinion to the effect that, as of the date of this
Agreement, the Merger Consideration is fair to the stockholders of the Company
from a financial point of view. The Company has made available to Parent a
complete and correct copy of such opinion. The Company has obtained the
authorization of the Company Financial Advisor to include a copy of such opinion
in the Company Proxy Statement.
Section 3.31 RIGHTS AGREEMENT. The Company has delivered or made
available to the Parent a correct and complete copy of the Rights Agreement
dated as of June 29, 1999, as amended (the "RIGHTS PLAN") between the Company
and American Stock Transfer and Trust Company, including all exhibits thereto.
The Company has taken all necessary action so that neither of the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) cause the Company Rights to become exercisable, (b) cause any
person to become an Acquiring Person (as defined in the Rights Agreement) or (c)
give rise to a Distribution Date or a Triggering Event (each as defined in the
Rights Plan).
Section 3.32 BROKERS AND FINDERS. No broker, finder or investment
banker other than the Company Financial Advisor, Bear Xxxxxxx & Co. Inc., Xxxxxx
Xxxxxxx & Co. Inc. and Eastdil Realty Company, L.L.C. is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries. The Company has
made available to Parent a correct and complete copy of all agreements between
the Company and the Company Financial Advisor under which the Company Financial
Advisor would be entitled to any payment relating to the Merger or such other
transactions.
Section 3.33 INFORMATION SUPPLIED. None of the information
included or incorporated by reference in the Company Proxy Statement will, at
the time it is filed with the SEC, at any time it is amended or supplemented, at
the time it becomes effective under the Securities Act, at the date it is first
mailed to the Company's stockholders or at the time of the Company Stockholders
Meeting or at the time of any amendment or supplement thereof, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or
Merger Sub in connection with the preparation of the Company Proxy Statement for
inclusion or incorporation by reference therein. The Company Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act.
29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the disclosure letter (with specific reference
to the section of this Agreement to which the information stated in such
disclosure letter relates; provided that any fact or condition disclosed in any
section of such disclosure letter in such a way as to make its relevance to
another section of such disclosure letter that relates to a representation or
representations made elsewhere in Article IV of this Agreement reasonably
apparent shall be deemed to be an exception to such representation or
representations notwithstanding the omission of a reference or cross reference
thereto) delivered by Parent to the Company prior to the execution of this
Agreement (the "PARENT DISCLOSURE LETTER"), Parent and Merger Sub represent and
warrant to the Company that:
Section 4.1 ORGANIZATION AND POWER. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each of Parent and Merger Sub has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as now conducted.
Section 4.2 CORPORATE AUTHORIZATION. Each of Parent and Merger
Sub has all necessary corporate power and authority to enter into and perform
its obligations under this Agreement and to consummate the transactions
contemplated by this Agreement. The board of directors of Parent has unanimously
adopted resolutions approving this Agreement and the transactions contemplated
by this Agreement. The board of directors of Merger Sub has unanimously adopted
resolutions approving and declaring advisable this Agreement and the
transactions contemplated by this Agreement. The execution and delivery and
performance of this Agreement by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action on the part of Parent and Merger Sub.
Section 4.3 ENFORCEABILITY. This Agreement has been duly executed
and delivered by each of Parent and Merger Sub and, assuming due authorization,
execution and delivery of this Agreement by the Company, constitutes a legal,
valid and binding agreement of each of Parent and Merger Sub, enforceable
against each of them in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency (including all laws related to fraudulent
transfers), reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to the effect of general principles of equity.
Section 4.4 GOVERNMENTAL AUTHORIZATIONS. The execution, delivery
and performance of this Agreement by Parent and Merger Sub and the consummation
by Parent and Merger Sub of the transactions contemplated by this Agreement do
not and will not require any consent, approval or other authorization of, or
filing with or notification to, any Governmental Entity, other than:
30
(a) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware;
(b) the filing with the SEC of any filings or reports that may be
required in connection with this Agreement and the transactions contemplated by
this Agreement under the Exchange Act or the Securities Act;
(c) the pre-merger notification required under the HSR Act;
(d) compliance with the Foreign Competition Laws;
(e) any applicable state or federal Laws governing gaming
activities or the sale of liquor; and
(f) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have a Parent Material Adverse Effect.
Notwithstanding anything to the contrary in this Agreement, the failure to
obtain approvals, consents or authorizations in respect of or related to the
matters referred to in Section 4.4(e) shall not be a condition to the Closing.
Section 4.5 NON-CONTRAVENTION. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated by this Agreement do not
and will not:
(a) contravene or conflict with, or result in any violation or
breach of, any provision of the Certificate of Incorporation or Bylaws of Parent
or Merger Sub;
(b) contravene or conflict with, or result in any violation or
breach of, any Laws or Orders applicable to Parent or any of its Subsidiaries or
by which any assets of Parent or any of its Subsidiaries ("PARENT ASSETS") are
bound, assuming that all consents, approvals, authorizations, filings and
notifications described in Section 4.4 have been obtained or made other than as
would not have a Parent Material Adverse Effect;
(c) result in any violation or breach of, or constitute a default
(with or without notice or lapse of time or both) under, any Contracts to which
Parent or any of its Subsidiaries is a party or by which any Parent Assets are
bound (collectively, "PARENT CONTRACTS"), other than as set forth in Section
4.5(c) of the Parent Disclosure Letter or as would not have a Parent Material
Adverse Effect; or
(d) require any consent, approval or other authorization of, or
filing with or notification to, any Person under any Parent Contracts, other
than as set forth in Section 4.5(d) of the Parent Disclosure Letter or as would
not have a Parent Material Adverse Effect.
31
Section 4.6 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by this
Agreement.
Section 4.7 CAPITAL RESOURCES. Parent has delivered to the
Company correct and complete copies of (a) an executed commitment letter from
Blackstone Real Estate Partners IV L.P. to provide equity financing in an
aggregate amount of $550,000,000 (the "EQUITY FUNDING LETTER"), and (b) an
executed commitment letter (the "COMMITMENT LETTER") from Bear Xxxxxxx
Commercial Mortgage, Inc. ("BEAR XXXXXXX") and Wachovia Bank, N.A. ("WACHOVIA")
pursuant to which Bear Xxxxxxx and Wachovia have committed to provide Parent and
certain existing or future subsidiaries of Merger Sub with financing in an
aggregate amount of $2,800,000,000 (the "DEBT FINANCING" and together with the
financing referred to in clause (a) being collectively referred to as the
"FINANCING"). The Equity Funding Letter, in the form so delivered, is a legal,
valid and binding obligation of the parties thereto and is in full force and
effect as of the date hereof. The Commitment Letter is in full force and effect
and is a legal, valid and binding obligation of Parent, and to the knowledge of
Parent, the other parties thereto. No event has occurred which, with or without
notice, lapse of time or both, would constitute a default on the part of Parent
under either the Equity Funding Letter or the Commitment Letter. Parent has no
reason to believe that it will be unable to satisfy on a timely basis any term
or condition of closing to be satisfied by it contained in the Equity Funding
Letter or the Commitment Letter. Parent has fully paid any and all commitment
fees and other fees required by the Commitment Letter to be paid as of the date
hereof. Parent shall have at the Closing and at the Effective Time proceeds in
connection with the Financing in an amount equal to up to $3,350,000,000 which
will provide Parent in this Article IV with acquisition financing at the
Effective Time sufficient to consummate the Merger upon the terms contemplated
by this Agreement.
Section 4.8 ABSENCE OF LITIGATION. As of the date of this
Agreement, there is no Action pending or, to the knowledge of the officers of
Parent, threatened, against Parent or any of its affiliates before any
Governmental Entity that would or seeks to materially delay or prevent the
consummation of the Merger or the transactions contemplated thereby. As of the
date of this Agreement, neither Parent nor any of its affiliates is subject to
any continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of the officers of Parent,
continuing investigation by, any Governmental Entity, or any order, writ,
judgment, injunction, decree, determination or award of any Governmental Entity
that would or seeks to materially delay or prevent the consummation of any of
the transactions contemplated hereby.
Section 4.9 BROKERS. The Company will not be responsible for any
brokerage, finder's or other fee or commission to any broker, finder or
investment banker in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of Parent or Merger Sub.
32
Section 4.10 GUARANTEE. Concurrently with the execution of this
Agreement, Parent has caused the Guarantor to deliver to the Company the duly
executed Guarantee in the form attached as Annex I to this Agreement. The
Guarantee is valid and in full force and effect, and no event has occurred
which, with or without notice, lapse of time or both, would constitute a default
on the part of Guarantor under the Guarantee.
Section 4.11 PROXY STATEMENT. The information supplied by Parent or Merger
Sub for inclusion in the Company Proxy Statement shall not at the time filed
with the SEC, at any time it is amended or supplemented, at the time it becomes
effective under the Securities Act, at the time it is mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statement therein, in light
of the circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or by (or reasonably related to effectuating the
terms of) the Recapitalization and Merger Agreement, the Company shall, and
shall cause each of its Subsidiaries to, (x) conduct its operations only in the
ordinary course of business consistent with past practice and (y) use its
reasonable commercial efforts to conduct its operations in compliance with
applicable laws and to maintain and preserve intact its business organization,
to retain the services of its current officers and key employees, to preserve
its assets and properties in good repair and condition, to maintain and protect
its rights in material Intellectual Property used in the business of the Company
and the Subsidiaries and to preserve the good will of its customers, suppliers
and other Persons with whom it has business relationships. Without limiting the
generality of the foregoing, and except as otherwise contemplated by this
Agreement, by (or reasonably related to effectuating the terms of) the
Recapitalization and Merger Agreement or set forth in Section 5.1 of the Company
Disclosure Letter, the Company shall not, and shall not permit any of its
Subsidiaries to take any of the following actions, without the prior written
consent of Parent such consent not to be unreasonably withheld or delayed
(PROVIDED, HOWEVER, that the Company shall only be obligated to cause any
Subsidiary of which it does not own greater than 50% of the equity interests to
take or not to take any action under this Agreement to the extent that the
Company has the power (contractual or otherwise) to cause such entities to take
or not to take such action and in any event subject to the fiduciary duties of
the Company or any of its representatives or designees serving as officers,
directors (or in similar capacities) of such Persons):
(a) ORGANIZATION DOCUMENTS. Amend any of the Company
Organizational Documents;
(b) DIVIDENDS. Make, declare or pay any dividend or distribution
on any shares of its capital stock, other than (i) until the Merger
Recapitalization Effective
33
Time, other than any dividends on the Preferred Stock in additional shares of
Preferred Stock pursuant to the terms thereof and (ii) dividends paid by
wholly-owned Subsidiaries;
(c) CAPITAL STOCK. (i) Adjust, split, combine or reclassify its
capital stock, (ii) redeem, purchase or otherwise acquire or intentionally and
voluntarily subject to a Lien (other than Liens for Taxes not yet due or payable
or which are being contested in good faith), directly or indirectly, any shares
of its capital stock or of any Subsidiary or any securities convertible or
exchangeable into or exercisable for any shares of such capital stock, (iii)
grant any Person any right or option to acquire any shares of such capital
stock, (iv) issue, deliver or sell any additional shares of such capital stock
or any securities convertible or exchangeable into or exercisable for any shares
of such capital stock or such securities (other than pursuant to (1) the
exercise of the Company Stock Options (2) the vesting of restricted stock, (3)
the conversion of convertible securities, (4) the redemption of OP Units and (5)
the Rights Plan, in each case outstanding as of the date of this Agreement) or
(v) enter into any Contract, understanding or arrangement with respect to the
sale, voting, registration or repurchase of its capital stock; except in each
case as permitted under Section 5.1(d);
(d) COMPENSATION AND BENEFITS. (i) Increase the compensation or
benefits payable or to become payable to any of the Company Employees, (ii)
grant any retention, severance or termination pay to any of the Company
Employees (except pursuant to the terms in effect on the date of this Agreement
of existing agreements, plans or policies identified in Section 3.18(a) of the
Company Disclosure Letter), (iii) enter into any new employment, bonus, change
of control, consulting or severance agreement with any of the Company Employees,
or (iv) establish, adopt, enter into, terminate, amend or take any action to
accelerate rights under any Company Benefit Plans or any plan, agreement,
program, policy, trust, fund or other arrangement that would be a Company
Benefit Plan if it were in existence as of the date of this Agreement, (v) grant
any equity or equity based awards to any Company Employee, except in each case
(A) to the extent required by applicable Laws, (B) for increases in salary,
wages and benefits of officers or employees in the ordinary course of business
consistent with past practice, (C) in conjunction with new hires, promotions or
other changes in job status occurring in the ordinary course of business
consistent with past practice or (D) pursuant to existing collective bargaining
agreements identified in Section 3.20(a) of the Company Disclosure Letter or
(vi) at any time within the 90 day period prior to the Closing Date, effectuate
a "plant closing" "mass layoff" or similar triggering event as those terms are
defined in WARN or any similar state or local Law, without complying with all
provisions of WARN or any similar state or local Law;
(e) ACQUISITIONS. (i) Acquire, by merger, consolidation,
acquisition of equity interests or assets, or otherwise, any business or any
corporation, partnership, limited liability company, joint venture or other
business organization or division thereof or any property or asset, other than
acquisitions (other than of real property) that are not material to the Company
and its Subsidiaries taken as a whole in the ordinary course of business
consistent with past practice, (ii) acquire, enter into or extend any option to
acquire, or exercise an option to acquire, any real property or commence
construction of,
34
or enter into any Contract to develop or construct, any real estate projects or
(iii) enter into any new line of business;
(f) DISPOSITIONS. Sell, lease, license, transfer, pledge,
encumber, grant or dispose of any Company Assets, including the capital stock of
Subsidiaries of the Company, other than (i) the sale of inventory, (ii) the
disposition of used or excess equipment or (iii) other dispositions of Company
Assets (other than real property) that are not material to the Company and its
Subsidiaries taken as a whole in the ordinary course of business consistent with
past practice;
(g) CONTRACTS. (i) Amend or modify in any material respect or
enter into or terminate any Contract that would be a Material Contract or
transaction that would be required to be set forth in Section 3.17(c) of the
Company Disclosure Letter if in effect on the date of this Agreement, (ii) enter
into any Contract that would limit or otherwise restrict the Company or any of
its Subsidiaries or any of their successors, or that would, after the Effective
Time, limit or otherwise restrict Parent or any of its Subsidiaries or any of
their successors, from engaging or competing in any line of business or in any
geographic area in any material respect or (iii) terminate, cancel or amend in
any material respect any Material Contract other than in the ordinary course
consistent with past practice; provided that the exception provided in this
clause (iii) shall not be applicable to any Lease Documents, Settlement
Agreement, Third Party Flag Agreement, Franchise Agreement Documents or
Management Agreement Documents or to the Recapitalization and Merger Agreement;
(h) INDEBTEDNESS; GUARANTEES. Incur, assume, guarantee or prepay
any Indebtedness, other than in the ordinary course of business consistent with
past practice under the First-Lien Credit Agreement by and among the Company,
JPMorgan Chase Bank, N.A. and Bear Xxxxxxx Corporate Lending Inc., dated May 10,
2005, and the Second-Lien Credit Agreement by and among the Company, JPMorgan
Chase Bank, N.A. and Bear Xxxxxxx Corporate Lending Inc., dated May 10, 2005
(the "CREDIT AGREEMENTS"), by the Company and the lenders named therein, or
intentionally and voluntarily assume or otherwise become responsible for the
Liabilities of any Person (other than Liabilities for Taxes incurred in the
ordinary course of business);
(i) LOANS. (i) Make any loans, advances or capital contributions
to, or investments in, any other Person, other than to wholly-owned Subsidiaries
or (ii) make any loans to its directors or officers;
(j) CAPITAL EXPENDITURES. Make any capital expenditure, other than
in respect of those capital expenditure projects that are set forth in Section
5.1(j) of the Company Disclosure Letter;
(k) ACCOUNTING AND TAX. (i) Change its financial accounting
policies or procedures, other than as required by GAAP or (ii) make, change or
rescind any material Tax election or change a method of Tax accounting, in
either case except as required by applicable Law or except for any such actions
taken in the ordinary course of business;
35
(l) LEGAL ACTIONS. Waive, release, assign, settle or compromise
(i) any material Legal Actions or any material claim or material Liability other
than in the ordinary course of business consistent with past practice or (ii)
any Legal Action that is brought by any current, former or purported holder of
any securities of the Company in its capacity as such and that (A) requires any
payment to such security holders by the Company or any Subsidiary or (B)
adversely affects in any material respect the ability of the Company and the
Subsidiaries to conduct their business in a manner consistent with past
practice;
(m) INSURANCE. Fail to use commercially reasonable efforts to
maintain in full force and effect the existing insurance policies covering the
Company and its Subsidiaries and their respective properties, assets and
businesses;
(n) ZONING. Initiate or consent to any material zoning
reclassification of any Owned Real Property or material Leased Property or any
material change to any approved site plan, special use permit, planned unit
development approval or other land use entitlement affecting any Owned Real
Property or material Leased Property; or
(o) RELATED ACTIONS. Agree or commit to do any of the foregoing.
Section 5.2 OTHER ACTIONS. Parent and the Company shall not, and
shall not permit any of their respective Subsidiaries or Affiliates to, take any
action that could reasonably be expected to result in any of the conditions to
the Merger set forth in Article VI of this Agreement not being satisfied or
satisfaction of those conditions being materially delayed, except, in the case
of the Company, to the extent its board of directors withdraws, modifies or
amends the Company Board Recommendation in accordance with Section 5.4(d).
Section 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) The Company shall, and shall cause its Subsidiaries, to: (i)
provide to Parent and its Representatives access at reasonable times upon prior
notice to the officers, employees, agents, properties, books and records of the
Company and its Subsidiaries; and (ii) furnish promptly such information
concerning Company and its Subsidiaries as Parent or its Representatives may
reasonably request. Without limiting the foregoing, Parent and its
Representatives (including its financing sources) shall have the right to
conduct appraisal and environmental and engineering inspections of each of the
Properties; PROVIDED, HOWEVER, that neither Parent nor its Representatives shall
have the right to take and analyze any samples of any environmental media
(including soil, groundwater, surface water, air or sediment) or any building
material or to perform any invasive testing procedure on any building. No
investigation conducted under this Section 5.3(a), however, will affect or be
deemed to modify any representation or warranty made in this Agreement.
(b) Parent and the Company shall comply with, and shall cause
their respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement, dated February 28, 2005 (the
"CONFIDENTIALITY AGREEMENT"),
36
between Blackstone Real Estate Acquisitions IV L.L.C. and the Company with
respect to the information disclosed under this Section 5.3.
(c) Nothing contained in this Agreement shall give Parent,
directly or indirectly, rights to control or direct the Company's or its
Subsidiaries' operations prior to the Effective Time. Prior to the Effective
Time, the Company shall, consistent with the terms and conditions of this
Agreement, exercise complete control and supervision over the operations of the
Company and its Subsidiaries.
Section 5.4 NO SOLICITATION.
(a) From the date of this Agreement until the Effective Time,
except as specifically permitted in Section 5.4(d), the Company shall not, and
shall cause each of its Subsidiaries not to, and shall direct its
Representatives not to, directly or indirectly:
(i) solicit, initiate, facilitate or knowingly encourage
any inquiries, offers or proposals relating to a Takeover Proposal;
(ii) engage in discussions or negotiations with, or
furnish or disclose any non-public information relating to the Company or
any of its Subsidiaries to, any Person regarding a Takeover Proposal;
(iii) withdraw, modify or amend the Company Board
Recommendation in any manner adverse to Parent;
(iv) approve, endorse or recommend any Takeover Proposal;
or
(v) enter into any agreement in principle, arrangement,
understanding or Contract relating to a Takeover Proposal.
(b) The Company shall, and shall cause each of its Subsidiaries
to, and shall direct its Representatives to, immediately cease any existing
solicitations, discussions or negotiations with any Person that has made or
indicated an intention to make a Takeover Proposal. The Company shall promptly
request that each Person who has executed a confidentiality agreement with the
Company in connection with that Person's consideration of a Takeover Proposal
return or destroy all non-public information furnished to that Person by or on
behalf of the Company. The Company shall promptly inform its Representatives of
the Company's obligations under this Section 5.4 and shall instruct its
Representatives to notify the Company as promptly as practicable following
receipt of a Takeover Proposal.
(c) The Company shall notify Parent promptly (and in any event
within 48 hours) upon receipt by the Company or any of its Subsidiaries
(including through a notification by its Representatives) of (i) any Takeover
Proposal or indication by any Person considering making an Takeover Proposal or
(ii) any request for information relating to the Company or any of its
Subsidiaries other than requests for
37
information in the ordinary course of business and unrelated to a Takeover
Proposal or any inquiry or request for discussions or negotiations regarding any
Takeover Proposal. The Company shall provide Parent promptly (and in any event
within 48 hours) with the identity of such Person and a copy of such Takeover
Proposal, indication, inquiry or request, including any modifications thereto
(or, where no such copy is available, a description of such Takeover Proposal,
indication, inquiry or request). The Company shall keep Parent reasonably
informed on a prompt basis (and in any event within 48 hours) of the status of
any such Takeover Proposal, indication, inquiry or request, and any related
communications to or by the Company or its Representatives (the Company agreeing
that it shall not, and shall cause its Subsidiaries not to, enter into any
confidentiality agreement with any Person subsequent to the date of this
Agreement which prohibits the Company from providing such information to
Parent). The Company shall not, and shall cause each of its Subsidiaries not to,
terminate, waive, amend or modify any provision of any existing standstill or
confidentiality agreement to which it or any of its Subsidiaries is a party and
the Company shall, and shall cause its Subsidiaries to, enforce the provisions
of any such agreement.
(d) Subject to the Company's compliance with the provisions of
this Section 5.4, and only until the Requisite Company Vote is obtained, the
Company and its board of directors shall be permitted to:
(i) engage in discussions with a Person who has made a
written Takeover Proposal not solicited in violation of this Section 5.4
to clarify the terms of such Takeover Proposal, or engage in discussions
or negotiations with a Person who has made a written Takeover Proposal not
solicited in violation of this Section 5.4 if prior to taking such action
(1) the board of directors of the Company determines in good faith (after
consultation with its advisors) that such Takeover Proposal is reasonably
likely to result in a Superior Proposal, (2) the board of directors of the
Company determines in good faith (after consultation with its outside
legal counsel) that such action is necessary to comply with its fiduciary
obligations to the stockholders of the Company under applicable Laws and
(3) the Company has complied with clause (3) of (ii) below;
(ii) furnish or disclose any non-public information
relating to the Company or any of its Subsidiaries to a Person who has
made a written Takeover Proposal not solicited in violation of this
Section 5.4 if prior to taking such action (1) the board of directors of
the Company determines in good faith (after consultation with its
advisors) that such Takeover Proposal is reasonably likely to result in a
Superior Proposal, (2) the board of directors of the Company determines in
good faith (after consultation with its outside legal counsel) that such
action is necessary to comply with its fiduciary obligations to the
stockholders of the Company under applicable Laws and (3) with respect to
clause (i) above and this clause (ii), the Company (A) has caused such
Person to enter into a confidentiality agreement with the Company on terms
and conditions substantially the same as those contained in the
Confidentiality
38
Agreement and (B) concurrently discloses the same such non-public
information to Parent if not previously disclosed;
(iii) other than in connection with a Takeover Proposal,
withdraw, modify or amend the Company Board Recommendation in a manner
adverse to Parent, if the board of directors of the Company has determined
in good faith, after consultation with outside legal counsel, that such
action is necessary to comply with its fiduciary obligations to the
stockholders of the Company under applicable Laws;
(iv) in response to the receipt of a Takeover Proposal,
approve, endorse or recommend a written Takeover Proposal not solicited in
violation of this Section 5.4 and, in connection therewith, withdraw,
modify or amend the Company Board Recommendation in a manner adverse to
Parent, if the board of directors of the Company (A) has determined in
good faith, after consultation with a nationally-recognized and
independent financial advisor, that such Takeover Proposal constitutes a
Superior Proposal and (B) has determined in good faith, after consultation
with its outside legal counsel, that such actions are necessary to comply
with its fiduciary obligations to the stockholders of the Company under
applicable Laws; or
(v) subject to the termination of this Agreement in
compliance with Section 7.4(a), enter into an agreement providing for the
implementation of a Superior Proposal.
(e) Notwithstanding the foregoing, the board of directors of the
Company shall be permitted to (i) disclose to the stockholders of the Company a
position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the
Exchange Act and (ii) make such other public disclosure that it determines in
good faith, after consultation with outside legal counsel, is required under
applicable Laws, PROVIDED, HOWEVER, that neither the Company nor its board of
directors shall (x) recommend that the stockholders of the Company tender their
shares of Company Stock in connection with any tender or exchange offer (or
otherwise approve, endorse or recommend any Takeover Proposal) or (y) withdraw,
modify or amend the Company Board Recommendation, unless in the case of each of
clauses (x) and (y), the requirements of Section 5.4(d) have been satisfied.
(f) The Company shall not take any action to exempt any Person
from the restrictions on "business combinations" contained in Section 203 of the
DGCL (or any similar provisions) or otherwise cause such restrictions not to
apply unless such actions are taken simultaneously with a termination of this
Agreement in accordance with Section 7.4(a).
Section 5.5 NOTICES OF CERTAIN EVENTS.
(a) The Company shall notify Parent promptly of (i) any
communication from any Person alleging that the consent of such Person (or
another Person) is or may be required in connection with the transactions
contemplated by this
39
Agreement (and the response thereto from the Company, its Subsidiaries or its
Representatives), (ii) any communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement (and the
response thereto from the Company, its Subsidiaries or its Representatives),
(iii) any material Legal Actions threatened or commenced against or otherwise
affecting the Company or any of its Subsidiaries that are related to the
transactions contemplated by the Agreement or (iv) any event, change,
occurrence, circumstance or development between the date of this Agreement and
the Effective Time which causes or is reasonably likely to cause the conditions
set forth in Section 6.2(a) or 6.2(b) of this Agreement not to be satisfied.
(b) Parent shall notify the Company promptly of (i) any
communication from any Person alleging that the consent of such Person (or other
Person) is or may be required in connection with the transactions contemplated
by this Agreement (and the response thereto from Parent or its Representatives),
(ii) any communication from any Governmental Entity in connection with the
transactions contemplated by this Agreement (and the response thereto from
Parent or its Representatives) or (iii) any event, change, occurrence,
circumstance or development between the date of this Agreement and the Effective
Time which causes or is reasonably likely to cause the conditions set forth in
Section 6.3(a) or 6.3(b) of this Agreement not to be satisfied.
(c) The delivery of any notice pursuant to this Section 5.5 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.6 COMPANY PROXY STATEMENT.
(a) As promptly as practicable following the date of this
Agreement, the Company shall prepare a draft of the Company Proxy Statement. The
Company shall provide Parent with a reasonable opportunity to review and comment
on such draft, and once such draft is in a form reasonably acceptable to each of
Parent and the Company, the Company shall file the Company Proxy Statement with
the SEC. Each of the Company and Parent shall furnish all information concerning
itself and its affiliates that is required to be included in the Company Proxy
Statement or that is customarily included in proxy statements prepared in
connection with transactions of the type contemplated by this Agreement.
(b) The Company shall use its commercially reasonable efforts to
(i) respond to any comments on the Company Proxy Statement or requests for
additional information from the SEC as soon as practicable after receipt of any
such comments or requests, (ii) have the Company Proxy Statement declared
effective under the Securities Act as promptly as practicable following the date
of this Agreement and (iii) cause the Company Proxy Statement to be mailed to
the stockholders of the Company as promptly as practicable following the date of
this Agreement. The Company shall promptly (A) notify Parent upon the receipt of
any such comments or requests and (B) provide Parent with copies of all
correspondence between the Company and its Representatives, on the one hand, and
the SEC and its staff, on the other hand. If at any time prior to the
40
Company Stockholders Meeting, any information relating to the Company, Parent or
any of their respective affiliates, officers or directors, should be discovered
by the Company or Parent which should be set forth in an amendment or supplement
to the Company Proxy Statement, so that the Company Proxy Statement shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, the party which discovers such information shall promptly notify the
other parties, and an appropriate amendment or supplement describing such
information shall be filed with the SEC and, to the extent required by
applicable Law, disseminated to the stockholders of the Company. Notwithstanding
anything to the contrary stated above, prior to responding to any comments or
requests of the SEC or the filing or mailing of the Company Proxy Statement (or
any amendment or supplement thereto), the Company (x) shall provide Parent with
a reasonable opportunity to review and comment on any drafts of the Company
Proxy Statement and related correspondence and filings and (y) shall include in
such drafts, correspondence and filings all comments reasonably proposed by
Parent.
(c) The Company Proxy Statement shall recommend to its
stockholders that they adopt this Agreement and include the Company Board
Recommendation unless the board of directors of the Company has withdrawn,
modified or amended the Company Board Recommendation in accordance with Section
5.4(d).
Section 5.7 COMPANY STOCKHOLDERS MEETING. The Company shall call
and hold the Company Stockholders Meeting as promptly as practicable following
the date of this Agreement for the purpose of obtaining the Requisite Company
Vote and the requisite vote of the Company's stockholders to adopt the
Recapitalization and Merger Agreement and, so long as this Agreement has not
been terminated in accordance with its terms, the Recapitalization Merger shall
not be consummated. Unless this Agreement shall have been terminated in
accordance with Sections 7.1, 7.2, 7.3 or 7.4, the Company shall hold the
Company Stockholders Meeting regardless of whether the Company has withdrawn,
modified or amended the Company Board Recommendation. Subject to Section 5.4(d),
the Company shall (a) use its reasonable best efforts to solicit or cause to be
solicited from its stockholders proxies in favor of adoption of this Agreement
and (b) take all other action necessary or advisable to secure the Requisite
Company Vote.
Section 5.8 EMPLOYEES; BENEFIT PLANS.
(a) For a period of one year following the Closing Date (the
"CONTINUATION PERIOD"), Parent shall cause the Surviving Corporation to provide
Company Employees (other than those employees covered by a collective bargaining
agreement) who are employed by the Company or its Subsidiaries as of the
Effective Time ("ACTIVE EMPLOYEES") with compensation and benefits that are no
less favorable in the aggregate, determined on an individual basis, as those
provided under the Company Benefit Plans in effect at the Effective Time;
PROVIDED, HOWEVER, that nothing herein shall prevent the amendment or
termination of any specific plan, program or arrangement, require that the
Surviving Corporation provide or permit investment in the securities of
41
Parent or the Surviving Corporation or interfere with the Surviving
Corporation's right or obligation to make such changes as are necessary to
comply with applicable law. Notwithstanding anything to the contrary set forth
herein, nothing herein shall preclude the Surviving Corporation from terminating
the employment of any Active Employee for any reason for which the Company could
have terminated such person prior to the Effective Time.
(b) Parent and its Affiliates shall honor all Company Benefit
Plans (including, without limitation, any severance, change of control and
similar plans and agreements) in accordance with their terms as in effect
immediately prior to the Effective Time, subject to any amendment or termination
thereof that may be permitted by such Company Benefit Plans and except as
provided herein. Notwithstanding the foregoing, on and after the Effective Time,
Parent and its Affiliates shall cause the Surviving Corporation to permit those
class B directors who are in the Company's service as such on the date hereof,
to direct, in accordance with Company policy as in effect on the date hereof,
the donation of complimentary hotel room stays to tax-exempt organizations in
the amount of no more than $350,000 in the aggregate. During the Continuation
Period, Parent shall provide all Active Employees who suffer a qualifying
termination of employment with severance benefits no less favorable than those
that would have been provided to such Active Employees under the Company's
severance policy as in effect immediately prior to the Effective Time.
(c) For all purposes under the employee benefit plans of Parent
and its affiliates providing benefits to any Active Employees after the
Effective Time (the "NEW PLANS"), each Active Employee shall be credited with
his or her years of service with the Company and its affiliates before the
Effective Time (including predecessor or acquired entities or any other entities
for which the Company and its affiliates have given credit for prior service),
to the same extent as such Active Employee was entitled, before the Effective
Time, to credit for such service under any similar or comparable Company Benefit
Plans (except to the extent such credit would result in a duplication of
benefits). In addition, and without limiting the generality of the foregoing:
(i) each Active Employee immediately shall be eligible to participate, without
any waiting time, in any and all New Plans to the extent coverage under such New
Plan replaces coverage under a similar or comparable Company Benefit Plan in
which such Active Employee participated immediately before the Effective Time
(such plans, collectively, the "OLD PLANS"); and (ii) for purposes of each New
Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Active Employee, Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such Active
Employee and his or her covered dependents, and Parent shall cause any eligible
expenses incurred by such Active Employee and his or her covered dependents
during the portion of the plan year of the Old Plan ending on the date such
Employee's participation in the corresponding New Plan begins to be taken into
account under such New Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such Active
Employee and his or her covered dependents for the applicable plan year as if
such amounts had been paid in accordance with such New Plan.
42
(d) Parent and the Company acknowledge and agree that all
provisions contained herein with respect to employees are included for the sole
benefit of Parent and the Company and shall not create any right (i) in any
other Person, including any employees, former employees, any participant in any
Company Benefit Plans or any beneficiary thereof or (ii) to continued employment
with the Surviving Corporation.
Section 5.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE.
(a) Parent and the Surviving Corporation shall cause all rights to
indemnification, advancement of expenses and exculpation now existing in favor
of any present or former director or officer of the Company or any of its
Subsidiaries (the "INDEMNIFIED PARTIES") as provided in the Company
Organizational Documents or in agreements between an Indemnified Party and the
Company or one of its Subsidiaries, in each case, in effect on the date of this
Agreement to survive the Merger and to continue in full force and effect for a
period of not less than six years after the Effective Time.
(b) After the Effective Time, Parent and the Surviving Corporation
shall, jointly and severally, indemnify all Indemnified Parties to the fullest
extent permitted by applicable Laws with respect to all acts and omissions
arising out of or relating to their services as directors or officers of the
Company or its Subsidiaries occurring prior to the Effective Time. If any
Indemnified Party is or becomes involved in any Legal Action in connection with
any matter occurring prior to or at the Effective Time, Parent and the Surviving
Corporation shall, jointly and severally, pay promptly after they are incurred
such Indemnified Party's reasonable legal fees, costs and expenses incurred in
connection with such Legal Action, subject to Parent's or the Surviving
Corporation's, as applicable, receipt of an undertaking by or on behalf of such
Indemnified Party, if required by the DGCL, to repay such legal fees, costs and
expenses if it is ultimately determined under applicable Laws that such
Indemnified Party is not entitled to be indemnified; PROVIDED, HOWEVER, that
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without the Surviving Company's written consent (which consent shall
not be unreasonably withheld or delayed) and shall not be obligated to pay the
fees and expenses of more than one counsel (selected by a plurality of the
applicable Indemnified Parties) for all Indemnified Parties in any jurisdiction
with respect to any single Legal Action except to the extent that two or more of
such Indemnified Parties shall have conflicting interests in the outcome of such
action.
(c) Parent and the Surviving Corporation shall, jointly and
severally, (i) maintain in effect for at least six years after the Effective
Time, if available, the current policies of directors' and officers' liability
insurance maintained by the Company (provided that the Surviving Company may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not less advantageous) or (ii) obtain as of the Effective
Time "tail" insurance policies with a claims period of at least six years from
the Effective Time with at least the same coverage and amounts containing terms
and conditions which are no less advantageous, in each case, with respect to
claims arising out of or relating to events which occurred before or at the
Effective Time so long as Parent and the Surviving Corporation are not required
to pay an annual premium in
43
excess of 300% of the last annual premium paid by the Company for such insurance
prior to the date of this Agreement (such 300% amount being the "MAXIMUM
PREMIUM"). The Company represents that such annual premium amount is set forth
in Section 5.9(c) of the Company Disclosure Letter. If the Parent or the
Surviving Corporation are unable to obtain the insurance described in the prior
sentence for an amount less than or equal to the Maximum Premium, Parent and the
Surviving Corporation shall, jointly and severally, instead obtain as much
comparable insurance as possible for an annual premium equal to the Maximum
Premium.
(d) The covenants contained in this Section 5.9 are intended to be
for the benefit of, and shall be enforceable by, each of the Indemnified Parties
and their respective heirs and legal representatives and shall not be deemed
exclusive of any other rights to which an Indemnified Party is entitled, whether
pursuant to law, contract or otherwise.
(e) In the event that Parent or the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors or assigns of Parent or
the Surviving Corporation, as the case may be, shall succeed to the obligations
set forth in this Section 5.9.
Section 5.10 BEST EFFORTS. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with applicable Laws,
each of the parties to this Agreement shall use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to ensure that the conditions set forth in
Article VI are satisfied and to consummate the transactions contemplated by this
Agreement as promptly as practicable.
Section 5.11 CONSENTS; FILINGS; FURTHER ACTION.
(a) Upon the terms and subject to the conditions of this Agreement
and in accordance with applicable Laws, each of Parent and the Company shall (i)
use its best efforts to obtain any consents, approvals or other authorizations,
and make any filings and notifications required in connection with the
transactions contemplated by this Agreement and (ii) thereafter make any other
submissions either required or deemed appropriate by either Parent or the
Company, in connection with the transactions contemplated by this Agreement
under (A) the Securities Act and the Exchange Act, (B) the HSR Act and Foreign
Competition Laws, (C) the DGCL, (D) the AMEX rules and regulations and (E) any
other applicable Laws. Parent and the Company shall cooperate and consult with
each other in connection with the making of all such filings and notifications,
including by providing copies of all relevant documents to the non-filing party
and its advisors prior to filing; and in furtherance thereof, as soon as
practicable after the date of this Agreement, Parent and the Company agree to
make an appropriate filing pursuant to the HSR Act with respect to the
transactions contemplated by this Agreement and to supply as promptly as
practicable to the appropriate
44
Governmental Entity any additional information and documentary material that may
be requested pursuant to the HSR Act. Neither Parent nor the Company shall file
any such document if the other party has reasonably objected to the filing of
such document. Neither Parent nor the Company shall consent to any voluntary
extension of any statutory deadline or waiting period or to any voluntary delay
of the consummation of the transactions contemplated by this Agreement at the
behest of any Governmental Entity without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
(b) Each of Parent and the Company shall promptly inform the other
party upon receipt of any communication from the Federal Trade Commission, the
Department of Justice or any other Governmental Entity regarding any of the
transactions contemplated by this Agreement. If Parent or the Company (or any of
their respective Affiliates) receives a request for additional information from
any such Governmental Entity that is related to the transactions contemplated by
this Agreement, then such party will endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response to such request. Parent shall advise the Company
promptly of any understandings, undertakings or agreements (oral or written)
which Parent proposes to make or enter into with the Federal Trade Commission,
the Department of Justice or any other Governmental Entity in connection with
the transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, Parent shall use its best efforts to resolve any
objections that may be asserted with respect to the transactions contemplated by
this Agreement under any antitrust, competition or trade regulatory Laws.
(c) Each of Parent and the Company shall use their respective
commercially reasonable efforts to obtain any third party consents (i)
necessary, proper or advisable to consummate the Transactions, (ii) disclosed in
the Company Disclosure Letter or (iii) required to prevent a Company Material
Adverse Effect from occurring prior to the Effective Time. In the event that the
Company shall fail to obtain any third party consent described above, the
Company shall use its best efforts, and shall take such actions as are
reasonably requested by Parent, to minimize any adverse effect upon the Company
and Parent and their respective businesses resulting, or which could reasonably
be expected to result, after the Effective Time, from the failure to obtain such
consent. Notwithstanding anything to the contrary in this Agreement, in
connection with obtaining any approval or consent from any Person (other than a
Governmental Entity) with respect to any transaction contemplated by this
Agreement, (i) without the prior written consent of Parent which shall not be
unreasonably withheld, none of the Company or any of its Subsidiaries shall pay
or commit to pay to such Person whose approval or consent is being solicited any
cash or other consideration, make any commitment or incur any Liability or other
obligation due to such Person and (ii) none of Parent, Merger Sub or their
respective affiliates shall be required to pay or commit to pay to such Person
whose approval or consent is being solicited any cash or other consideration,
make any commitment or to incur any Liability or other obligation. The Company
shall comply with the provisions of Section 5.11(c) of the Company Disclosure
Letter.
45
Section 5.12 PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements about this Agreement or any of the transactions contemplated
by this Agreement. Neither Parent nor the Company shall issue any such press
release or make any such public statement prior to such consultation, except to
the extent required by applicable Laws or the AMEX requirements, in which case
that party shall use its reasonable commercial efforts to consult with the other
party before issuing any such release or making any such public statement.
Section 5.13 STOCK EXCHANGE DE-LISTING. Parent and the Company
shall use their reasonable commercial efforts to cause the Company Stock to be
de-listed from the AMEX and de-registered under the Exchange Act promptly
following the Effective Time.
Section 5.14 FEES, EXPENSES AND CONVEYANCE TAXES. Whether or not
the Merger is consummated, all expenses (including fees and expenses payable to
Representatives and hedging counterparties) incurred by any party to this
Agreement or its Affiliates or on its behalf in connection with this Agreement
and the transactions contemplated by this Agreement ("EXPENSES") shall be paid
by the party incurring those Expenses, except (a) that Expenses incurred in
connection with the filing, printing and mailing of the Company Proxy Statement
and the filing fee under the HSR Act shall be shared equally by Parent and the
Company, (b) that all sales, use, value added, transfer, stamp, registration,
documentary, excise, real property transfer or gains, or similar Taxes incurred
as a result of the transactions contemplated in this Agreement shall be borne by
Parent and (c) as otherwise provided in Section 7.6.
Section 5.15 TAKEOVER STATUTES. If any takeover statute is or
becomes applicable to this Agreement, the Voting Agreement, the Merger or the
other transactions contemplated by this Agreement or the Voting Agreement, each
of Parent and the Company and their respective boards of directors shall (a)
take all necessary action to ensure that such transactions may be consummated as
promptly as practicable upon the terms and subject to the conditions set forth
in this Agreement and (b) otherwise act to eliminate or minimize the effects of
such takeover statute.
Section 5.16 TAX MATTERS. During the period from the date of this
Agreement to the Effective Time, the Company and its Subsidiaries shall:
(a) prepare and timely file all Tax Returns required to be filed
by them on or before the Closing Date ("POST-SIGNING RETURNS") in a manner
consistent with past practice, except as otherwise required by applicable Laws;
(b) fully and timely pay all Taxes due and payable in respect of
such Post-Signing Returns that are so filed;
(c) properly reserve (and reflect such reserve in their books and
records and financial statements), for all Taxes payable by them for which no
Post-
46
Signing Return is due prior to the Effective Time in a manner consistent with
past practice; and
(d) terminate all Tax sharing agreements to which the Company or
any of its Subsidiaries is a party such that there are no further Liabilities
thereunder.
Section 5.17 RIGHTS PLAN. The Rights Plan shall terminate upon the
earlier of (i) the Recapitalization Merger Effective Time, or, (ii) in the event
the Recapitalization Merger Effective Time does not occur prior to the Effective
Time, the Effective Time, without payment of any amounts to any holders
thereunder. Prior to the earlier of the Recapitalization Merger Effective Time
or the Effective Time, the Company shall not terminate, waive any provision of,
exempt any Person from or amend the terms of the Rights Agreement (or redeem the
Rights).
Section 5.18 FINANCING.
(a) Parent shall use its reasonable best efforts to arrange the
Debt Financing on the terms and conditions described in the Commitment Letter,
including using reasonable best efforts to (i) negotiate definitive agreements
with respect thereto on terms and conditions contained therein and (ii) to
satisfy all conditions applicable to Parent and Merger Sub in such definitive
agreements that are within its control. In the event any portion of the Debt
Financing becomes unavailable on the terms and conditions contemplated in the
Commitment Letter, Parent shall use its reasonable best efforts to arrange to
obtain any such portion from alternative sources on comparable or more favorable
terms to Parent (as determined in the reasonable judgment of Parent) as promptly
as practicable following the occurrence of such event. Parent shall give the
Company prompt notice of any material breach by any party of the Commitment
Letter or any termination of the Commitment Letter. Parent shall keep the
Company informed on a reasonably current basis in reasonable detail of the
status of its efforts to arrange the Financing and shall not permit any material
amendment or modification to be made to, or any waiver of any material provision
or remedy under, the Commitment Letter without first consulting with the Company
or, if such amendment would or would be reasonably expected to materially and
adversely affect or delay in any material respect Parent's ability to consummate
the transactions contemplated by this Agreement, without first obtaining the
Company's prior written consent (not to be unreasonably withheld or delayed).
For the avoidance of doubt, if the Debt Financing (or any alternative financing)
has not been obtained, Parent and Merger Sub shall continue to be obligated to
consummate the Merger on the terms contemplated by this Agreement and subject
only to the satisfaction or waiver of the conditions set forth in Sections 6.1
and 6.2 of this Agreement and to Parent's rights under Sections 7.2 and 7.3,
regardless of whether Parent and Merger Sub have complied with all of their
other obligations under this Agreement (including their obligations under this
Section 5.18).
(b) The Company agrees to provide, and shall cause the
Subsidiaries and its and their Representatives to provide, all reasonable
cooperation in connection with the arrangement of the Debt Financing as may be
reasonably requested by Parent (provided that such requested cooperation does
not unreasonably interfere with the
47
ongoing operations of the Company and the Subsidiaries), including (i)
participation in meetings, drafting sessions and due diligence sessions, (ii)
furnishing Parent and its financing sources with financial and other pertinent
information regarding the Company as may be reasonably requested by Parent,
(iii) assisting Parent and its financing sources in the preparation of (A) an
offering document for any debt raised to complete the Merger and (B) materials
for rating agency presentations, (iv) reasonably cooperating with the marketing
efforts of Parent and its financing sources for any debt raised by Parent to
complete the Merger, (v) forming new direct or indirect Subsidiaries, and (vi)
providing and executing documents as may be reasonably requested by Parent;
provided that none of the Company or any Subsidiary shall be required to pay any
commitment or other similar fee or incur any other liability in connection with
the Debt Financing prior to the Effective Time. Parent shall, promptly upon
request by the Company, reimburse the Company for all reasonable out-of-pocket
costs incurred by the Company or the Subsidiaries in connection with such
cooperation. Parent and Merger Sub shall, on a joint and several basis,
indemnify and hold harmless the Company, the Subsidiaries and their respective
Representatives for and against any and all liabilities, losses, damages,
claims, costs, expenses, interest, awards, judgments and penalties suffered or
incurred by them in connection with the arrangement of the Debt Financing and
any information utilized in connection therewith (other than historical
information relating to the Company or the Subsidiaries). Notwithstanding
anything to the contrary, the condition set forth in Section 6.2(b) of this
Agreement, as it applies to the Company's obligations under this Section
5.18(b), shall be deemed satisfied unless the Debt Financing (or any alternative
financing) has not been obtained primarily as a result of the Company's willful
and material breach of its obligations under this Section 5.18(b).
(c) All non-public or otherwise confidential information regarding
the Company obtained by Parent or its Representatives pursuant to paragraph (b)
above shall be kept confidential in accordance with the Confidentiality
Agreement.
Section 5.19 RESIGNATIONS. The Company shall use its reasonable
best efforts to obtain and deliver to Parent at the Closing evidence reasonably
satisfactory to Parent of the resignation effective as of the Effective Time, of
those directors of the Company or any Subsidiary designated by Parent to the
Company in writing at least five calendar days prior to the Closing.
Section 5.20 SUMMERFIELD. Promptly upon execution of this
Agreement, the Company shall or shall cause Patriot American Hospitality
Partnership, L.P. ("PAHLP") to deliver an executed copy of this Agreement to Sum
Business Holdings, LLC ("LBREP") in accordance with Section 9.8 of the
Summerfield Venture Operating Agreement. In the event that LBREP elects to
invoke the Buy-Sell Procedures, Parent shall have the sole and absolute right to
cause PAHLP and the Company to take any and all actions contemplated by the
Buy-Sell Procedures (including, the funding of the Deposit). In furtherance of
the foregoing, the Company shall promptly provide Parent with any and all
information with respect to the Summerfield Venture that Parent may reasonably
request in order for Parent to determine the Offer Price (if PAHLP is required
to provide) or to evaluate an Offer Price submitted by LBREP. For purposes of
this
48
Section 5.20, "Summerfield Venture" means Summerfield Hotel Holding Company,
L.L.C., a Delaware limited liability company and "Summerfield Venture Operating
Agreement" means that certain Amended and Restated Limited Liability Company
Agreement of Summerfield Hotel Holding Company, L.L.C., dated as of December 22,
2004. The capitalized terms "Buy-Sell Procedures", "Deposit", "Offer Price" and
"Response Notice" used in this Section 5.20 shall each have the respective
meaning assigned thereto in the Summerfield Venture Operating Agreement.
ARTICLE VI
CONDITIONS
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to this Agreement to effect the
Merger is subject to the satisfaction or waiver on or prior to the Closing Date
of each of the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. This Agreement shall have been
duly adopted by the Requisite Company Vote.
(b) ANTITRUST. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
(c) NO INJUNCTIONS OR RESTRAINTS. No Governmental Entity shall
have enacted, issued, promulgated, enforced or entered any Laws or Orders
(whether temporary, preliminary or permanent) that (i) restrain, enjoin or
otherwise prohibit consummation of the Merger or the other transactions
contemplated by this Agreement or (ii) would have a Company Material Adverse
Effect after giving effect to the Merger. No Governmental Entity shall have
instituted any proceeding seeking any such Laws or Orders.
Section 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of each of Parent and Merger Sub to effect the Merger are also
subject to the satisfaction or waiver by Parent on or prior to the Closing Date
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all respects, without regard to any materiality or Company Material Adverse
Effect qualifications contained in them as of the Closing Date, as though made
on and as of the Closing Date (except for representations and warranties made as
of a specified date, the accuracy of which shall be determined as of that
specified date), unless the failure or failures of all such representations and
warranties to be so true and correct in all respects would not, in the
aggregate, have a Company Material Adverse Effect. In addition, the
representations and warranties set forth in Section 3.10(a), Section 3.10(b) and
Section 3.10(f) shall be true and correct in all material respects and the
representation and warranty set forth in Section 3.15(a) shall be true and
correct in all respects as of the
49
Closing Date, as though made on and as of the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such earlier date).
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date.
(c) COMPANY MATERIAL ADVERSE EFFECT. Since the date of this
Agreement, there shall have been no Company Material Adverse Effect.
(d) OFFICER'S CERTIFICATE. Parent shall have received a
certificate, signed by the chief executive officer or chief financial officer of
the Company, certifying as to the matters set forth in Section 6.2(a), Section
6.2(b) and Section 6.2(c).
(e) RECAPITALIZATION AND MERGER AGREEMENT. The Company shall have
terminated the Recapitalization and Merger Agreement, without cost or liability
to the Company.
(f) CREDIT AGREEMENTS. At or prior to the Effective Time, XX
Xxxxxx Xxxxx Bank, as the Administrative Agent under the Credit Agreements ("XX
XXXXXX"), shall have provided the Company with a "payoff" letter acknowledging
that (i) the Credit Agreements shall be terminated, (ii) any and all Liens held
by XX Xxxxxx related thereto shall be released and (iii) the Company and the
Subsidiaries shall be released from any and all Liabilities under the Credit
Agreements and any related guaranties (other than any obligations under any
indemnification or similar provision that survive such termination), in each
case subject to repayment of the aggregate principal amount outstanding under
the Credit Agreements, together with all interest accrued thereon and any other
fees or expenses payable thereunder.
Section 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of Parent and Merger Sub set forth in this Agreement shall be
true and correct in all respects, without regard to any materiality or Parent
Material Adverse Effect qualifications contained in them, as of the Closing
Date, as though made on and as of the Closing Date (except for representations
and warranties made as of a specified date, the accuracy of which shall be
determined as of that specified date), unless the failure or failures of all
such representations and warranties to be so true and correct in all respects
would not, in the aggregate, have a Parent Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS. Each of Parent and Merger Sub
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
50
(c) OFFICER'S CERTIFICATE. The Company shall have received a
certificate, signed by a senior executive officer of Parent, certifying as to
the matters set forth in Section 6.3(a) and Section 6.3(b).
Section 6.4 FRUSTRATION OF CLOSING CONDITIONS. None of the
parties to this Agreement may rely on the failure of any condition set forth in
this Article VI to be satisfied if such failure was caused by such party,
including such party's failure to use best efforts to consummate the Merger and
the other transactions contemplated by this Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Effective Time by mutual written consent of
Parent and the Company.
Section 7.2 TERMINATION BY EITHER PARENT OR THE COMPANY. This
Agreement may be terminated by either Parent or the Company at any time prior to
the Effective Time:
(a) if the Merger has not been consummated on or before December
15, 2005 (the "END DATE") except that the right to terminate this Agreement
under this clause (a) shall not be available to any party to this Agreement
whose failure to fulfill any of its obligations has been a principal cause of,
or resulted in, the failure to consummate the Merger by such date;
(b) if this Agreement has been submitted to the stockholders of
the Company for adoption at a duly convened Company Stockholders Meeting (or
adjournment or postponement thereof) and the Requisite Company Vote is not
obtained upon a vote taken thereon;
(c) if any Law prohibits consummation of the Merger; or
(d) if any Order restrains, enjoins or otherwise prohibits
consummation of the Merger, and such Order has become final and nonappealable.
Section 7.3 TERMINATION BY PARENT. This Agreement may be
terminated by Parent at any time prior to the Effective Time:
(a) if the board of directors of the Company withdraws, modifies
or amends the Company Board Recommendation in any manner adverse to Parent;
(b) if (i) the board of directors of the Company approves,
endorses or recommends a Takeover Proposal, (ii) the Company enters into a
Contract relating to a Takeover Proposal, (iii) a tender offer or exchange offer
for any outstanding shares of
51
capital stock of the Company is commenced prior to obtaining the Requisite
Company Vote and the board of directors of the Company fails to recommend
against acceptance of such tender offer or exchange offer by its stockholders
(including, for these purposes, by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders, which
shall constitute a failure to recommend against acceptance of such tender offer
or exchange offer) within ten Business Days after commencement, or (iv) the
Company or its board of directors publicly announces its intention to do any of
the foregoing;
(c) except as provided for under the Recapitalization and Merger
Agreement, if the board of directors of the Company exempts any Person other
than the Parent or any of its Affiliates from the provisions of Section 203 of
the DGCL; or
(d) if neither Parent nor Merger Sub is in material breach of its
obligations under this Agreement and the Company breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 6.2(a), Section 6.2(b) or Section 6.2(c) and (ii) has not been
cured by the Company within 20 Business Days after the Company's receipt of
written notice of such breach from Parent.
Section 7.4 TERMINATION BY THE COMPANY. This Agreement may be
terminated by the Company at any time prior to the Effective Time:
(a) if the board of directors of the Company approves, and
authorizes the Company to enter into, an agreement providing for the
implementation of a Superior Proposal, but only so long as:
(i) the Requisite Company Vote has not yet been obtained;
(ii) the Company is not then and has not been in breach of
any of its obligations under Section 5.4 in any material respect;
(iii) the board of directors of the Company has determined
in good faith, after consulting with a nationally-recognized and
independent financial advisor, that such definitive agreement constitutes
a Superior Proposal and has determined in good faith, after consultation
with its outside legal counsel, that such actions are necessary to comply
with its fiduciary obligations to the stockholders of the Company under
applicable Laws;
(iv) the Company has notified Parent in writing that it
intends to enter into such definitive agreement, attaching the most
current version of such definitive agreement (including any amendments,
supplements or modifications) to such notice;
(v) during the three Business Day period following
Parent's receipt of such notice, (A) the Company shall have offered to
52
negotiate with (and, if accepted, negotiated in good faith with), and
shall have caused its respective financial and legal advisors to offer to
negotiate with (and, if accepted, negotiate in good faith with), Parent in
making adjustments to the terms and conditions of this Agreement as would
enable the Company to proceed with the Merger and the other transactions
contemplated by this Agreement, and (B) the board of directors of the
Company shall have determined in good faith, after the end of such three
Business Day period, after considering the results of such negotiations
and the revised proposals made by Parent, if any, that the Superior
Proposal giving rise to such notice continues to be a Superior Proposal;
and
(vi) the Company pays to Parent the Termination Fee and
Termination Expenses in accordance with Section 7.6(b)(i) simultaneously
with such termination (any purported termination pursuant to this Section
7.4(b) shall be void and of no force or effect unless the Company shall
have made such payment); or
(b) if the Company is not in material breach of its obligations
under this Agreement and Parent breaches any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach (i) would give
rise to the failure of a condition set forth in Section 6.3(a) or Section 6.3(b)
and (ii) has not been cured by Parent within 20 Business Days after Parent's
receipt of written notice of such breach from the Company.
Section 7.5 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to this Article VII, it shall become void and of no further
force and effect, with no liability on the part of any party to this Agreement
(or any stockholder, director, officer, employee, agent or representative of
such party), except that if such termination results from the willful (a)
failure of any party to perform its obligations or (b) breach by any party of
its representations or warranties contained in this Agreement, then such party
shall be fully liable for any Liabilities incurred or suffered by the other
parties as a result of such failure or breach. Notwithstanding the foregoing,
the indemnification and reimbursement obligations of Parent and Merger Sub
contained in Sections 1.9 and 5.18(b), the Guarantee referred to in Section 4.10
and the provisions of Section 5.3(b), Section 5.14, Section 5.18(c), Section 7.5
and Section 7.6 and Article VIII shall survive any termination of this
Agreement.
Section 7.6 EXPENSES FOLLOWING TERMINATION.
(a) Except as set forth in this Section 7.6, all Expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid in accordance with the provisions of Section 5.14.
(b) The Company shall pay, or cause to be paid, to Parent by wire
transfer of immediately available funds an amount equal to $44,500,000 (the
"COMPANY TERMINATION FEE") and reasonable documented Expenses of Parent and
Merger Sub not to exceed $5,000,000 (the "TERMINATION EXPENSES"):
53
(i) if this Agreement is terminated by the Company
pursuant to Section 7.4(a), in which case payment shall be made before or
concurrently with such termination and shall be a condition to the
effectiveness of such termination;
(ii) if this Agreement is terminated by Parent pursuant to
Section 7.3(a), Section 7.3(b), or Section 7.3(c), in which case payment
shall be made within two Business Days of such termination; or
(iii) if (A) a Takeover Proposal shall have been made or
proposed to the Company or otherwise publicly announced (which has not
been withdrawn), (B) this Agreement is terminated by either Parent or the
Company pursuant to Section 7.2(a) or Section 7.2(b) or by Parent pursuant
to Section 7.3(d) and (C) within 12 months following the date of such
termination, the Company enters into a Contract providing for the
implementation of a Takeover Proposal or shall consummate any Takeover
Proposal (whether or not such Takeover Proposal was the same Takeover
Proposal referred to in the foregoing clause (A)), in which case payment
shall be made within two Business Days of the date on which the Company
enters into such Contract or consummates such Takeover Proposal, as
applicable. For purposes of the foregoing clause (C) only, references in
the definition of the term "Takeover Proposal" to the figure "20%" shall
be deemed to be replaced by the figure "50%";
(c) In no event shall the Company be required to pay under Section
7.6 an amount in excess of the sum of the Company Termination Fee plus the
maximum amount of Termination Expenses.
(d) Each of the Company and Parent acknowledges that the
agreements contained in this Section 7.6 are an integral part of the
transactions contemplated by this Agreement. In the event that the Company shall
fail to pay the Company Termination Fee or any Termination Expenses when due,
the Company shall reimburse the other party for all reasonable costs and
expenses actually incurred or accrued by such other party (including reasonable
fees and expenses of counsel) in connection with the collection under and
enforcement of this Section 7.6.
Section 7.7 AMENDMENT. This Agreement may be amended by the
parties to this Agreement at any time prior to the Effective Time, whether
before or after stockholder approval hereof, so long as (a) no amendment that
requires further stockholder approval under applicable Laws after stockholder
approval hereof shall be made without such required further approval and (b)
such amendment has been duly approved by the board of directors of each of
Merger Sub and the Company. This Agreement may not be amended except by an
instrument in writing signed by each of the parties to this Agreement.
Section 7.8 EXTENSION; WAIVER. At any time prior to the Effective
Time, Parent and Merger Sub, on the one hand, and the Company, on the other
hand, may
54
(a) extend the time for the performance of any of the obligations of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained in this Agreement or in any document delivered under this
Agreement or, (c) subject to applicable Laws, waive compliance with any of the
covenants or conditions contained in this Agreement. Any agreement on the part
of a party to any extension or waiver shall be valid only if set forth in an
instrument in writing signed by such party. The failure of any part to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
Section 7.9 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. In order to be effective, (a) any termination or amendment of this
Agreement shall require the prior approval of that action by the board of
directors of each party seeking to terminate or amend this Agreement and (b) any
extension or waiver of any obligation under this Agreement or condition to the
consummation of this Agreement shall require the prior approval of a duly
authorized officer or the board of directors of the party or parties entitled to
extend or waive that obligation or condition.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) "AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by or is under common
control with, such first Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
(b) "AMEX" means the American Stock Exchange.
(c) "BUSINESS DAY" means any day, other than Saturday, Sunday or a
U.S. federal holiday, and shall consist of the time period from 12:01 a.m.
through 12:00 midnight Eastern time.
(d) "COMPANY MARKS" has the meaning set forth on Section 8.1(d) of
the Company Disclosure Letter.
(e) "COMPANY MATERIAL ADVERSE EFFECT" means any event,
circumstance, development, change or effect that, individually or in the
aggregate with all other events, circumstances, developments, changes and
effects, is or is likely to become materially adverse to the business,
operations, assets, or financial condition of the Company and its Subsidiaries
taken as a whole or would reasonably be expected to prevent or materially delay
(to a date beyond the End Date) the consummation of the Merger and the other
transactions contemplated hereby or prevent or materially impair or
55
delay the ability of the Company to perform its obligations hereunder; PROVIDED,
HOWEVER, that in no event shall any of the following, alone or in combination,
be deemed to constitute, nor shall any of the following be taken into account in
determining whether there has been, or will be, a Company Material Adverse
Effect: any event, circumstance, change or effect resulting from or relating to
(i) a change in general political, economic or financial market conditions, (ii)
changes affecting the industries generally in which the Company or its
Subsidiaries conduct business, (iii) seasonal fluctuations in the business of
the Company and its Subsidiaries, (iv) any acts of terrorism or war (except to
the extent such event, circumstance, change or effect has had a disproportionate
effect on the Company and its Subsidiaries as compared to other persons in the
industry in which the Company and its Subsidiaries conduct their business), (v)
the announcement of the execution of this Agreement or the pendency or
consummation of the transactions contemplated hereby, or (vi) compliance with
the terms of, or the taking of any action required by, this Agreement; and
PROVIDED, FURTHER, that with respect to references to Company Material Adverse
Effect in the representations and warranties set forth in Sections 3.8 and 3.9,
the exceptions set forth in clauses (v) and (vi) will not apply.
(f) "CONTRACTS" means any contracts, agreements, licenses, notes,
bonds, mortgages, indentures, commitments, leases or other instruments or
obligations.
(g) "HAZARDOUS SUBSTANCES" means: (i) any substance that is
listed, classified or regulated under any Environmental Laws; (ii) any
petroleum, petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, urea formaldehyde
insulation, toxic mold, radioactive material or radon; or (iii) any other
substance that is or may become the subject of regulatory action under any
Environmental Laws.
(h) "KNOWLEDGE" means, when used with respect to Parent or the
Company, the actual Knowledge (after reasonable inquiry) of the Persons set
forth in Section 8.1(h) of the Company or Parent Disclosure Letter, as
applicable.
(i) "LAWS" means any binding domestic or foreign laws, statutes,
ordinances, rules, regulations, codes or executive orders enacted, issued,
adopted, promulgated or applied by any Governmental Entity.
(j) "LIENS" means any liens, mortgages, pledges, security
interests, claims, options, rights of first offer or refusal, charges,
conditional or installment sale contracts, claims of third parties of any kind
or other encumbrances.
(k) "ORDERS" means any orders, judgments, injunctions, awards,
decrees or writs handed down, adopted or imposed by any Governmental Entity.
(l) "PARENT MATERIAL ADVERSE EFFECT" means any event,
circumstance, development, change or effect that, individually or in the
aggregate with all other events, circumstances, developments, changes and
effects, is or is likely to become materially adverse to the business,
operations, assets, or financial condition of the Parent and its Subsidiaries
taken as a whole or would reasonably be expected to prevent or materially
56
delay (to a date beyond the End Date) the consummation of the Merger and the
other transactions contemplated hereby or prevent or materially impair or delay
the ability of the Parent or Merger Sub to perform its obligations hereunder;
PROVIDED, HOWEVER, that in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been, or will be, a Parent
Material Adverse Effect: any event, circumstance, change or effect resulting
from or relating to (i) a change in general political economic or financial
market conditions, (ii) changes affecting the industries generally in which the
Company or its Subsidiaries conduct business, (iii) seasonal fluctuations in the
business of the Parent and its Subsidiaries, (iv) any acts of terrorism or war
(except to the extent such event, circumstance, change or effect has had a
disproportionate effect on the Parent and its Subsidiaries as compared to other
persons in the industry in which the Parent and its Subsidiaries conduct their
business), (v) the announcement of the execution of this Agreement or the
pendency or consummation of the transactions contemplated hereby, or (vi)
compliance with the terms of, or the taking of any action required by, this
Agreement.
(m) "PERSON" means any individual, corporation, limited or general
partnership, limited liability company, limited liability partnership, trust,
association, joint venture, Governmental Entity and other entity and group
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act).
(n) "REPRESENTATIVES" means, when used with respect to Parent or
the Company, the directors, officers, employees, consultants, accountants, legal
counsel, investment bankers, financing sources, agents and other representatives
of Parent or the Company, as applicable, and its Subsidiaries.
(o) "REQUISITE COMPANY VOTE" means (i) the adoption of this
Agreement by the holders of a majority in voting power of the issued and
outstanding shares of Class A Common Stock, Class B Common Stock and Series B
Preferred Stock (voting on an as-converted basis) entitled to vote thereon,
voting together as a single class and (ii) the adoption of this Agreement by the
holders of at least two thirds of the issued and outstanding shares of Series B
Preferred Stock entitled to vote thereon.
(p) "SUBSIDIARY" means, when used with respect to Parent or the
Company, any other Person that Parent or the Company, as applicable, directly or
indirectly owns or has the power to vote or control 50% or more of any class or
series of capital stock or equity interests of such Person.
(q) "SUPERIOR PROPOSAL" means a written Takeover Proposal (i) that
relates to more than 50% of the voting power of the capital stock of the Company
or all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole, (ii) which the board of directors of the Company determines,
in its good faith judgment, after receiving the advice of its financial advisor
and after taking into account all the terms and conditions of the Takeover
Proposal, is on terms and conditions more favorable from a financial point of
view to the stockholders of the Company (in their capacities as stockholders)
than those contemplated by this Agreement (including any alterations to
57
this Agreement agreed to in writing by Parent in response thereto), (iii) the
conditions to the consummation of which are all reasonably capable of being
satisfied without undue delay, and (iv) for which financing, to the extent
required, is then committed or, in the judgment of the board of directors of the
Company, is reasonably likely to be available.
(r) "TAKEOVER PROPOSAL" means, any proposal or offer relating to
(i) a merger, consolidation, share exchange or business combination involving
the Company or any of its Subsidiaries representing 20% or more of the assets of
the Company and its Subsidiaries, taken as a whole (other than a merger
involving only the Company and one or more of its wholly-owned Subsidiaries),
(ii) a sale, lease, exchange, mortgage, transfer or other disposition, in a
single transaction or series of related transactions, of 20% or more of the
assets of the Company and its Subsidiaries, taken as a whole, (iii) a purchase
or sale of shares of capital stock or other securities, in a single transaction
or series of related transactions, representing 20% or more of the voting power
of the capital stock of Company or any of its Subsidiaries, including by way of
a tender offer or exchange offer, (iv) a liquidation or dissolution of the
Company, (v) a reorganization or recapitalization of the Company, other than any
such transaction that does not involve a transfer of 20% or more of the assets
of the Company and its Subsidiaries, taken as a whole, or 20% or more of the
voting power of the capital stock of the Company, or (vi) any other transaction
having a similar effect to those described in clauses (i) - (v), in each case
other than the transactions contemplated by this Agreement or the
Recapitalization and Merger Agreement.
(s) "TAXES" means (i) any and all federal, state, provincial,
local, foreign and other taxes, levies, fees, imposts, duties, and similar
governmental charges (including any interest, fines, assessments, penalties or
additions to tax imposed in connection therewith or with respect thereto),
whether computed on a separate or consolidated, unitary or combined basis or in
any other manner, including (x) taxes imposed on, or measured by, income,
franchise, profits or gross receipts, and (y) ad valorem, value added, capital
gains, sales, goods and services, use, real or personal property, capital stock,
license, branch, payroll, estimated, withholding, employment, social security
(or similar), disability, registration, unemployment, compensation, utility,
severance, production, excise, stamp, occupation, premium, windfall profits,
transfer and gains taxes, and customs duties and (ii) any transferee liability
in respect of any items described in the foregoing clause (i).
(t) "TAX RETURNS" means any and all reports, returns,
declarations, claims for refund, elections, disclosures, estimates, information
reports or returns or statements required to be supplied to a taxing authority
in connection with Taxes, including any schedule or attachment thereto or
amendment thereof.
(u) "TREASURY REGULATIONS" means the Treasury regulations
promulgated under the Code.
Section 8.2 INTERPRETATION. The table of contents and headings in
this Agreement are for reference only and shall not affect the meaning or
interpretation of this Agreement. Definitions shall apply equally to both the
singular and plural forms of the
58
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references in this
Agreement to Articles, Sections and Exhibits shall refer to Articles and
Sections of, and Exhibits to, this Agreement unless the context shall require
otherwise. The words "include," "includes" and "including" shall not be limiting
and shall be deemed to be followed by the phrase "without limitation." Unless
the context shall require otherwise, any agreements, documents, instruments or
Laws defined or referred to in this Agreement shall be deemed to mean or refer
to such agreements, documents, instruments or Laws as from time to time amended,
modified or supplemented, including (a) in the case of agreements, documents or
instruments, by waiver or consent and (b) in the case of Laws, by succession of
comparable successor statutes. All references in this Agreement to any
particular Law shall be deemed to refer also to any rules and regulations
promulgated under that Law. References to a person also refer to its
predecessors and permitted successors and assigns.
Section 8.3 SURVIVAL. None of the representations and warranties
contained in this Agreement or in any instrument delivered under this Agreement
shall survive the Effective Time. This Section 8.3 shall not limit any covenant
or agreement of the parties to this Agreement which, by its terms, contemplates
performance after the Effective Time.
Section 8.4 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
regard to the laws that might otherwise govern under applicable principles of
conflicts of law.
Section 8.5 SUBMISSION TO JURISDICTION. The parties to this
Agreement (a) irrevocably submit to the personal jurisdiction of the federal
courts of the United States of America located in the State of Delaware and the
Court of Chancery of the State of Delaware and (b) waive any claim of improper
venue or any claim that those courts are an inconvenient forum. The parties to
this Agreement agree that mailing of process or other papers in connection with
any such action or proceeding in the manner provided in Section 8.7 or in such
other manner as may be permitted by applicable Laws, shall be valid and
sufficient service thereof.
Section 8.6 WAIVER OF JURY TRIAL. Each party acknowledges and
agrees that any controversy which may arise under this Agreement is likely to
involve complicated and difficult issues and, therefore, each such party
irrevocably and unconditionally waives any right it may have to a trial by jury
in respect of any Legal Action arising out of or relating to this Agreement or
the transactions contemplated by this Agreement. Each party to this Agreement
certifies and acknowledges that (a) no Representative of any other party has
represented, expressly or otherwise, that such other party would not seek to
enforce the foregoing waiver in the event of a Legal Action, (b) such party has
considered the implications of this waiver, (c) such party makes this waiver
voluntarily, and (d) such party has been induced to enter into this Agreement
by, among other things, the mutual waivers and certifications in this Section
8.6.
59
Section 8.7 NOTICES. Any notice, request, instruction or other
communication under this Agreement shall be in writing and delivered by hand or
overnight courier service or by facsimile:
If to Parent or Merger Sub, to:
c/o Blackstone Real Estate Partners IV L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Company, to:
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
Chairman, President and CEO
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxx X. Xxxxxxxxx, Esq.
or to such other Persons, addresses or facsimile numbers as may be designated in
writing by the Person entitled to receive such communication as provided above.
Each such communication shall be effective (a) if delivered by hand, when such
delivery is made at the address specified in this Section 8.7, (b) if delivered
by overnight courier service, the next Business Day after such communication is
sent to the address specified in this Section 8.7, or (c) if delivered by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section 8.7 and appropriate confirmation is received.
60
Section 8.8 ENTIRE AGREEMENT. This Agreement (including the
Exhibits to this Agreement), the Guarantee, the Company Disclosure Letter, the
Parent Disclosure Letter and the Confidentiality Agreement constitute the entire
agreement and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties to this
Agreement with respect to the subject matter of this Agreement. No
representation, warranty, inducement, promise, understanding or condition not
set forth in this Agreement has been made or relied upon by any of the parties
to this Agreement.
Section 8.9 NO THIRD-PARTY BENEFICIARIES. Except as provided in
Section 5.9, this Agreement is not intended to confer any rights or remedies
upon any Person other than the parties to this Agreement.
Section 8.10 SEVERABILITY. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any Person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of that provision to other Persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of that provision, or the application of that provision, in any other
jurisdiction.
Section 8.11 RULES OF CONSTRUCTION. The parties to this Agreement
have been represented by counsel during the negotiation and execution of this
Agreement and waive the application of any Laws or rule of construction
providing that ambiguities in any agreement or other document shall be construed
against the party drafting such agreement or other document.
Section 8.12 ASSIGNMENT. This Agreement shall not be assignable by
operation of law or otherwise, except that Parent may designate, by written
notice to the Company, a Subsidiary that is wholly-owned by Parent to be merged
with and into the Company in lieu of Merger Sub, in which event all references
in this Agreement to Merger Sub shall be deemed references to such Subsidiary,
and in that case, all representations and warranties made in this Agreement with
respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such Subsidiary as of the
date of such designation.
Section 8.13 REMEDIES. Except as otherwise provided in Section
8.14 or elsewhere in this Agreement, any and all remedies expressly conferred
upon a party to this Agreement shall be cumulative with, and not exclusive of,
any other remedy contained in this Agreement, at law or in equity and the
exercise by a party to this Agreement of any one remedy shall not preclude the
exercise by it of any other remedy. Without limiting the right to receive any
payment it may be entitled to receive under Sections 1.9 and 5.18(b), the
Company agrees that to the extent it has incurred losses or
61
damages in connection with this Agreement the maximum aggregate liability of
Parent, Merger Sub and Guarantor for such losses or damages shall be limited to
an amount equal to the amount of the Guarantee, and in no event shall the
Company seek to recover any money damages in excess of such amount from Parent,
Merger Sub or Guarantor or their respective Representatives and affiliates in
connection therewith.
Section 8.14 SPECIFIC PERFORMANCE. The parties to this Agreement
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed by the Company in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that prior to the termination of this Agreement pursuant to Sections 7.1, 7.2,
7.3 or 7.4, Parent and Merger Sub shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement by the Company and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. The parties
acknowledge that the Company shall not be entitled to an injunction or
injunctions to prevent breaches of this Agreement or to enforce specifically the
terms and provisions of this Agreement and that the Company's sole and exclusive
remedy with respect to any such breach shall be the remedy set forth in Section
8.13 and the Guarantee PROVIDED, HOWEVER, the Company shall be entitled to seek
specific performance to prevent any breach by Parent or Merger Sub of Sections
5.3(b) and 5.18(c).
Section 8.15 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts, all of which shall be one and the same
agreement. This Agreement shall become effective when each party to this
Agreement shall have received counterparts signed by all of the other parties.
[Signature page follows]
62
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties to this Agreement as of
the date first written above.
WYNDHAM INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
WIND HOTELS ACQUISITION INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director and Vice President
WIND HOTELS HOLDINGS INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director and Vice President
EXHIBIT A
---------
AMENDED CERTIFICATE OF INCORPORATION
OF
WYNDHAM INTERNATIONAL, INC.
FIRST. The name of the corporation is Wyndham International, Inc. (the
"Corporation").
SECOND. The address of the Corporation's registered office in the State
of Delaware is 0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law ("DGCL) or any successor statute.
FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is 1,000 shares of common stock, par value $0.01 per
share.
FIFTH. The board of directors of the Corporation, acting by majority
vote, is expressly authorized to adopt, alter, amend or repeal the bylaws of the
Corporation.
SIXTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and all rights conferred upon
stockholders herein are granted subject to this reservation.
SEVENTH. No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director or as such a member, except for liability (a) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (b)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the director derived an improper personal benefit. If the
DGCL is amended after the effective date of this Certificate to authorize
corporate action further eliminating or limiting the personal liability of
directors or the person or persons exercising or performing any of the powers or
duties otherwise conferred or imposed upon directors of the Corporation, then
the liability of the director of the Corporation or the person or persons
exercising or performing any of the powers or duties otherwise conferred or
imposed upon directors of the Corporation shall be eliminated or limited to the
fullest extent permitted by the DGCL, as so amended. Any amendment or repeal of
this Article VII by either (i) the stockholders of the Corporation or (ii) an
amendment to the DGCL shall not adversely affect any right or protection
existing at the time of such amendment or repeal with respect to any acts or
omissions occurring before such amendment or repeal of a person serving as a
director at the time of such amendment or repeal.
EIGHTH. The Corporation shall indemnify its directors and officers to
the fullest extent authorized or permitted by law, as now or hereafter in
effect, and such right to indemnification shall continue as to a person who has
ceased to be a director or officer of the Corporation and
shall inure to the benefit of his or her heirs, executors and personal and legal
representatives; provided, however, that, except for proceedings to enforce
rights to indemnification, the Corporation shall not be obligated to indemnify
any director or officer (or his or her heirs, executors or personal or legal
representatives) in connection with a proceeding (or part thereof) initiated by
such person unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors. The right to indemnification conferred by this
Article VIII shall include the right to be paid by the Corporation the expenses
incurred in defending or otherwise participating in any proceeding in advance of
its final disposition. The Corporation may, to the extent authorized from time
to time by the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation similar to
those conferred in this Article VIII to directors and officers of the
Corporation. The rights to indemnification and to the advance of expenses
conferred in this Article VIII shall not be exclusive of any other right which
any person may have or hereafter acquire under this Certificate of
Incorporation, the Bylaws of the Corporation, any statute, agreement, vote of
stockholders or disinterested directors or otherwise. Any amendment or repeal of
this Article VIII by the stockholders of the Corporation shall not adversely
affect any rights to indemnification and to the advancement of expenses of a
director or officer of the Corporation existing at the time of such amendment or
repeal with respect to any acts or omissions occurring prior to such amendment
or repeal.
