1
EXHIBIT 3
SHAREHOLDER SUPPORT AGREEMENT
SHAREHOLDER SUPPORT AGREEMENT dated as of September 12, 1996
(this "Agreement"), by and between RED LION, A CALIFORNIA LIMITED PARTNERSHIP
(the "Stockholder"), and DOUBLETREE CORPORATION, a Delaware corporation (the
"Parent"). Capitalized terms used and not otherwise defined herein shall have
the respective meanings assigned to them in the Merger Agreement referred to
below.
WHEREAS, as of the date hereof, the Stockholder owns of record
and beneficially 20,900,000 shares (such shares, together with any other voting
or equity securities of the Company hereafter acquired by the Stockholder prior
to the termination of this Agreement, being referred to herein collectively as
the "Shares") of Common Stock, par value $.01 per share ("Company Common
Stock"), of Red Lion Hotels, Inc., a Delaware corporation (the "Company"); and
WHEREAS, concurrently with the execution of this Agreement,
the Company, the Parent and RLH Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Parent ("Merger Sub"), are entering into an
Agreement and Plan of Merger (as the same may be amended or modified from time
to time, with the written consent of the Stockholder, in accordance with the
terms thereof, the "Merger Agreement"), pursuant to which, upon the terms and
subject to the conditions thereof, Merger Sub will be merged with and into the
Company (the "Merger") and each share of Company Common Stock outstanding
immediately prior to the Effective Time of the Merger will be converted into and
represent the right to receive, among other things, a number of shares of Common
Stock, par value $.01 per share, of the Parent ("Parent Common Stock") equal to
the Exchange Ratio; and
WHEREAS, as a condition to the willingness of the Parent to
enter into the Merger Agreement, the Parent has requested the Stockholder agree,
and in order to induce the Parent to enter into the Merger Agreement, the
Stockholder is willing to agree, to vote for the Merger, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereby agree as follows:
2
Section 1. Voting of Shares. The Stockholder hereby agrees
that, at the Company Stockholders' Meeting or any other meeting of the
stockholders of the Company, however called, and in any action by consent of the
stockholders of the Company, the Stockholder will vote all of the Shares (a) in
favor of adoption of the Merger Agreement and approval of the Merger and the
other transactions contemplated by the Merger Agreement, (b) against any
Alternative Transaction or Alternative Transaction Proposal or any other action
or agreement that would result in a breach of any representation, warranty,
covenant, agreement or other obligation of the Company under the Merger
Agreement or which could result in any of the conditions to the Company's
obligations under the Merger Agreement not being fulfilled and (c) in favor of
any other matter necessary to consummation of the transactions contemplated by
the Merger Agreement and considered and voted upon by the stockholders of the
Company (or any class thereof). The Stockholder acknowledges receipt and review
of a copy of the Merger Agreement.
Section 2. Transfer of Shares. Until the earlier of any
termination of this Agreement in accordance with the terms hereof or the close
of business on the date which is 180 days following the date on which the
Effective Time occurs, the Stockholder will not, directly or indirectly, (a)
sell, assign, transfer, pledge, encumber or otherwise dispose of any of the
Shares or any shares of Parent Common Stock into which the Shares are converted
or exchanged pursuant to the Merger (the "Merger Shares"), (b) deposit any of
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to any of the Shares or grant any proxy or power of attorney with
respect thereto which is inconsistent with this Agreement or (c) enter into any
contract, option or other arrangement or undertaking with respect to the direct
or indirect sale, assignment, transfer or other disposition of any Company
Common Stock or Merger Shares; provided, however, that the Stockholder will be
permitted to distribute up to 17% of the aggregate number of Shares to Xxx X.
XxXxxxxxx, a limited partner of the Stockholder or his, successors, assigns,
heirs or legal representatives ("XxXxxxxxx"), if required by the terms of the
Agreement of Limited Partnership of the Stockholder as in effect on the date
hereof, or up to 17% of the aggregate number of Merger Shares to XxXxxxxxx, who
in turn will be permitted to sell, assign, transfer, pledge, encumber or
otherwise dispose of any or all of such Shares or Merger Shares, as the case may
be, in his sole discretion.
Section 3. No Solicitation. Prior to the Effective Time, the
Stockholder agrees (a) that it will not, nor will it authorize or permit any of
its Representatives (including, for purposes hereof, Kohlberg Kravis Xxxxxxx &
Co., L.P. and KKR Associates) to, directly or indirectly,
2
3
initiate or solicit any inquiries or the making of any Alternative Transaction
Proposal and (b) that it will notify the Parent as soon as possible (and in any
event within 48 hours) if any such inquiries or proposals are received by, any
information or documents is requested from, or any negotiations or discussions
are sought to be initiated or continued with, it or any of its affiliates.
Section 4. Board Representation. The Parent shall use
reasonable efforts to cause two designees of the Stockholder to be nominated for
election, and elected, to the Board of Directors of the Parent, (a) effective
and contingent upon the Effective Time and (b) for only so long as the
Stockholder beneficially owns shares of Parent Common Stock representing 5% or
more of the aggregate voting power of all securityholders of the Parent, at each
annual meeting of stockholders of the Parent held thereafter. From the date of
the Merger Agreement until the earlier of (i) the Effective Time or (ii) any
termination of this Agreement or the Merger Agreement, the Parent shall consult
with the two initial designees of the Stockholder therefor (as previously
identified to the Parent) with respect to any material acquisitions or sales of
businesses or assets by the Parent or its subsidiaries; it being understood that
the Parent shall have sole discretion with respect to such matters, and that no
consent of the Stockholder shall be required for the Parent or its Board of
Directors to take any action or omit to take any action with respect thereto.
Section 5. Termination. This Agreement shall terminate upon
(i) any termination of the Merger Agreement in accordance with the terms thereof
or (ii) the Board of Directors of the Company shall have withdrawn or modified
in any manner materially adverse to the Parent its approval or recommendation of
the Merger Agreement or the Merger or shall have recommended an Alternative
Transaction Proposal to the stockholders of the Company.
Section 6. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 7. Miscellaneous. (a) This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between the parties with respect thereto. This Agreement may not be
amended, modified or rescinded except by an instrument in writing signed by each
of the parties hereto.
3
4
(b) If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of law thereof.
(d) Notwithstanding anything herein to the contrary, the
covenants and agreements set forth herein shall not prevent any of the
Stockholder's designees, partners or affiliates serving on the Board of
Directors of the Company from taking any action, subject to the applicable
provisions of the Merger Agreement, while acting in such capacity as a director
of the Company.
(e) Notwithstanding any provisions hereof, none of the
obligations of the Stockholder under or contemplated by this Agreement shall be
an obligation of any officer, director, stockholder, limited partner, general
partner or owner of the Stockholder, or any of their respective officers,
directors, stockholders, limited partners, general partners or owners, or
successors or assigns. The Stockholder shall be the only person or entity liable
with respect to such obligations. Any monetary liability of the Stockholder
under this Agreement shall be satisfied solely out of the assets of the
Stockholder. The Stockholder hereby irrevocably waives any right it may have
against any such officer, director, stockholder, limited partner, general
partner, owner, successor or assign identified above as a result of the
performance of the provisions under or contemplated by this Agreement. Nothing
in this Section 7(e) shall prevent the Parent from obtaining specific
enforcement of the obligations of the Stockholder under this Agreement. This
provision shall survive any termination of this Agreement.
(f) This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
4
5
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first written above.
RED LION, A CALIFORNIA LIMITED
PARTNERSHIP
By: RLA-GP, INC., its general
partner
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
DOUBLETREE CORPORATION
By: /s/ Xxxxxxx Xxxxxx
--------------------------
Name: Xxxxxxx Xxxxxx
Title: Co-Chairman
5
