Exhibit 10(1)
ACQUISITION AGREEMENT
by and between
MARRIOTT INTERNATIONAL, INC.
and
RENAISSANCE HOTEL GROUP N.V.
Dated as of February 17, 1997
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT dated as of February 17, 1997 (this
"Agreement"), by and between Marriott International, Inc., a Delaware
corporation (the "Purchaser") and Renaissance Hotel Group N.V., a company
organized under the laws of The Netherlands with its statutory seat in Amsterdam
(the "Company").
RECITALS
WHEREAS, the Board of Managing Directors of the Company has determined
that the acquisition of the Company by the Purchaser, upon the terms and subject
to the conditions set forth in this Agreement (the "Acquisition"), is fair to,
and in the best interests of, the Company and its stockholders; and
WHEREAS, the Board of Directors of the Purchaser has determined that
the Acquisition is in the best interests of the Purchaser and its stockholders;
and
WHEREAS, the Boards of Directors of the Company and the Purchaser have
each approved and adopted this Agreement and approved the Acquisition and the
other transactions contemplated hereby and recommended, in the case of the
Company, acceptance of the Offer by its stockholders; and
WHEREAS, concurrently with the execution of this Agreement, New World
Hotel Holdings Ltd. ("New World") and Diamant Hotel Investments N.V.
("Diamant"), which are the majority stockholders of the Company, have entered
into a Shareholder Agreement (the "Shareholder Agreement") pursuant to which
such entities have agreed, among other things, to tender all Shares (as defined
below) held by them into the Offer (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I.
THE OFFER
Section 1.1. The Offer. (a) As promptly as practicable following the
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execution hereof, the Purchaser shall make a public announcement pursuant to
Rule 14d-2(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, promptly thereafter, the Purchaser shall commence or shall
cause a wholly-owned subsidiary to commence (within the meaning of Rule 14d-2
under the Exchange Act) an offer (the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value 0.01 Netherlands Guilders per
share, of the Company (referred to herein as either the "Shares" or "Company
Common
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Stock") for (i) $30.00 per Share, net of fees and commissions, to the seller in
cash (the "Offer Price"), subject to there being, at the expiration of the
Offer, validly tendered and not withdrawn that number of Shares which represent
at least ninety percent (90%) of the capital stock entitled to vote and then
outstanding (the "Minimum Condition") and to the other conditions set forth in
Section 6.1 hereof. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as practicable after it is permitted to do so
under the Exchange Act (the "Closing Date"). The obligations of the Purchaser to
commence the Offer and to accept for payment and to pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn shall be
subject only to the Minimum Condition and the other conditions set forth in
Section 6.1 hereof. The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") containing the Minimum Condition and the other
conditions set forth in Section 6.1 hereof. Without the written consent of the
Company (such consent to be authorized by the Board of Directors of the Company
or a duly authorized committee thereof), the Purchaser shall not (i) decrease
the Offer Price or change the form of consideration payable pursuant to the
Offer (other than as set forth below), (ii) decrease the number of Shares sought
or extend the Offer (other than as set forth below), or (iii) impose any
additional conditions or amend any condition of the Offer in any manner adverse
to the holders of the Shares; provided, however, that if on the scheduled
expiration date of the Offer (as it may be extended), all conditions to the
Offer shall not have been satisfied or waived, the Offer may be extended by the
Purchaser from time to time to permit the satisfaction of such conditions until
termination of this Agreement, without the consent of the Company, to permit
satisfaction of such conditions. In addition, the Purchaser may, without the
consent of the Company, increase the Offer Price and extend the Offer to the
extent required by law.
(b) As soon as practicable on the date the Offer is commenced, the
Purchaser shall file with the United States Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1") which will include, as exhibits, the
Offer to Purchase and a form of letter of transmittal and summary advertisement
with respect to the Offer (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Purchaser represents that the
Offer Documents will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder, and all other applicable
federal securities laws and, on the date filed with the Commission and on the
date first published, sent or given to the Company's stockholders, 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 were made, not
misleading, except that no representation is made by the Purchaser with respect
to information supplied by the Company for inclusion in the Schedule 14D-1. The
Purchaser further agrees to take all steps necessary to cause the Offer
Documents to be filed with the Commission and to be disseminated to holders of
Shares, in each case as and to the extent required by the Exchange Act and other
applicable federal securities laws. The Purchaser, on the one hand, and the
Company, on the other hand, agrees promptly to correct any information provided
by it for
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use in the Offer Documents if and to the extent that it shall have become false
and misleading in any material respect, and the Purchaser further agrees to take
all steps necessary to cause the Offer Documents, as so corrected, to be filed
with the Commission and to be disseminated to holders of Shares, in each case as
and to the extent required by the Exchange Act or other applicable federal
securities laws. The Company and its counsel shall be given the opportunity to
review and comment on the Offer Documents before they are filed with the
Commission. In addition, the Purchaser agrees to provide the Company and its
counsel in writing any comments the Purchaser or its counsel may receive from
time to time from the Commission or its staff with respect to the Schedule 14D-l
promptly after receipt of such comments.
Section 1.2. Company Stock Options. (a) At the Closing Date, all
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outstanding options and other rights to acquire shares under any stock option or
purchase plan, program or similar arrangement (each, as amended, an "Option
Plan" and such options and other rights, "Stock Options") of the Company, shall
vest in full and the Purchaser shall pay to the holder of each outstanding Stock
Option an amount equal to the difference between the Offer Price and the
exercise price of each such Stock Option, unless the Purchaser and the pertinent
holder agree otherwise in writing. Such amount shall be paid by the Purchaser in
cash. If and to the extent required by the terms of the Option Plans or the
terms of any Stock Option granted thereunder, the Company shall use its best
efforts to obtain the consent of each holder of outstanding Stock Options to the
foregoing treatment of such Stock Options and to take any other action necessary
to effectuate the foregoing provisions.
(b) Except as provided herein or as otherwise agreed to by the parties
and to the extent permitted by the Option Plans, the Option Plans of the Company
shall terminate as of the Closing Date and any rights under any provisions in
any other plan, program or arrangement providing for the issuance or grant by
the Company of any interest in respect of the capital stock of the Company shall
be canceled as of the Closing Date.
Section 1.3. Company Actions. (a) The Company hereby consents to the
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Offer and represents that its Board of Managing Directors, at a meeting duly
called and held, has unanimously (i) determined that the Offer is fair to and in
the best interests of the Company's stockholders, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer, and (iii)
resolved to recommend that the stockholders of the Company accept the Offer and
tender their Shares thereunder to the Purchaser. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated has delivered to the Board of Managing Directors of the Company its
opinion that the Offer Price to be received by the holders of Shares pursuant to
the Offer is fair to such holders from a financial point of view.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the Commission a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall contain the recommendation
referred to in clause (iii) of Section 1.3(a) hereof. The Company represents
that the Schedule 14D-9 will comply in all material respects with the provisions
of the Exchange Act and any other applicable federal securities laws. No
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representation is made by the Company with respect to information supplied by
the Purchaser for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the
Commission and to be disseminated to holders of Shares, in each case as and to
the extent required by the Exchange Act and any other applicable federal
securities laws. Each of the Company, on the one hand, and the Purchaser, on the
other hand, agrees promptly to correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and to be disseminated to holders of the Shares to the extent
required by applicable federal securities laws. The Purchaser and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the Commission. In addition, the Company agrees to provide the Purchaser,
and its counsel in writing with any comments the Company or its counsel may
receive from time to time from the Commission or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the stockholders
of the Company. Subject to the requirements of law, and except for such steps as
are necessary to disseminate the Offer Documents, the Purchaser, and each of its
affiliates and associates shall hold in confidence the information contained in
any such labels, lists and files, shall use the information contained in any
such labels, lists and files only in connection with the Offer and, if this
Agreement shall be terminated pursuant to Article VII hereof, shall deliver to
the Company all copies and extracts of such information then in their possession
or under their control.
Section 1.4. Directors. (a) The Company shall, promptly upon the
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purchase of and payment for any Shares by the Purchaser or any other subsidiary
of the Purchaser pursuant to the Offer which represent at least a majority of
the outstanding Shares take all actions necessary and available (including, if
requested by Purchaser, calling a General Meeting of holders of Shares) to cause
the Company's Board of Managing Directors to consist solely of persons
designated by Purchaser.
(b) The Company's obligations under Section 1.4(a) shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder. The
Company shall promptly take all actions required pursuant to such Section 14(f)
and Rule 14f-1 in order to effectuate the changes contemplated by Section
1.4(a), including mailing to stockholders as part of the Schedule 14D-9 the
information required by such Section 14(f) and Rule 14f-1, as is necessary to
enable the Purchaser's designees to be elected to the Company's Board of
Directors. The Purchaser will supply the Company and be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and affiliates
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required by such Section 14(f) and Rule 14f-1. The provisions of Section 1.4(a)
are in addition to and shall not limit any rights which the Purchaser or any of
its affiliates may have as a holder or beneficial owner of Shares as a matter of
law with respect to the election of directors or otherwise.
ARTICLE II.
THE COMPULSORY BUY-OUT
Section 2.1. The Compulsory Buy-Out. Subject to the terms and conditions
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of this Agreement, and in accordance with the provisions of the Dutch Civil Code
(the "DCC"), as soon as practicable after the Closing Date, Purchaser may, at
its sole discretion, take all actions necessary and proper under the DCC to
commence the process leading to a Compulsory Buy-Out (the "Buy-Out") in
accordance with Section 2:92a of the DCC to acquire all the issued and
outstanding Company Common Stock not acquired by Purchaser pursuant to the
Offer. In order to bring Purchaser and/or any of its affiliates in a position
to exercise their rights under Section 2:92a of the DCC, the Company shall
provide Purchaser with such information regarding the Company and take such
actions as are reasonably necessary in order for Purchaser and/or an affiliate
of Purchaser to be in a position to establish the value or price of a share in
the issued capital of the Company for the purposes of the Buy-Out. The Buy-Out
shall become effective in accordance with the applicable provisions of the DCC.
Section 2.2. Statutory Merger. If the Purchaser shall acquire less than
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95% of the outstanding Shares pursuant to the Offer then Purchaser may elect, to
the extent permitted by the DCC, to effectuate a statutory merger (a "Statutory
Merger") involving the Company as a disappearing entity pursuant to Section
2.308 et seq. of the DCC, in which case, to the extent permitted by the DCC, the
merger consideration shall be the same as (or shall provide equivalent value as)
the Offer Price. The Company shall use its best efforts to facilitate such a
Statutory Merger.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
Section 3.1. Organization and Qualification. The Company is a limited
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liability company in the form of a "naamloze vennootschap" duly organized and
validly existing under the laws of The Netherlands and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. The Company is duly
qualified or licensed to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified, licensed or in good standing would not have a material adverse
effect on the business, operations, prospects,
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properties, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole ("Company Material Adverse Effect"). The Company
has heretofore delivered to the Purchaser true and complete copies of the
articles of incorporation and other charter or organization documents, each as
amended to date, of the Company.
Section 3.2. Capitalization. (a) The authorized capital stock of the
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Company consists of 100,000,000 shares of Company Common Stock. As of September
30, 1996, (i) 30,100,000 shares of Company Common Stock were issued and
outstanding, (ii) the number of shares of Company Common Stock set forth on
Section 3.2 of the Disclosure Schedule delivered by the Company to the Purchaser
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule"), and identified thereon as "Company Option Shares", were reserved for
future issuance upon exercise of outstanding options to purchase Company Common
Stock ("Company Options"), granted to directors, officers, employees and
consultants of the Company pursuant to the Company's Stock Option Plan (the
"Company Stock Plan"), and (iii) no shares of Company Common Stock were held in
the treasury of the Company. Since such date, no additional shares of capital
stock of the Company have been issued or reserved for issuance (except for
shares of Company Common Stock issued upon exercise of Company Options granted
as aforesaid), and no options or other rights to purchase or otherwise acquire
shares of capital stock of the Company have been issued or granted (other than
the Company Options identified on Section 3.2 of the Company Disclosure Schedule
as having been granted as aforesaid). Except as set forth above in this
paragraph, no shares of capital stock or other equity or voting securities or
equivalents of the Company are issued, reserved for issuance, or outstanding.
All of the outstanding shares of capital stock of the Company are, and all
shares thereof which may be issued upon exercise of Company Options will upon
issuance be, duly authorized, validly issued, fully paid and nonassessable, and
free of any preemptive rights except as provided in the Company's articles of
incorporation.
(b) Except as set forth in Section 3.2 of the Company Disclosure
Schedule, (i) no bonds, debentures, notes or other indebtedness or obligations
of the Company or any of its subsidiaries entitling the holders thereof to have
the right to vote (or which are convertible into, or exercisable or exchangeable
for, securities entitling the holders thereof to have the right to vote) with
the stockholders of the Company or any of its subsidiaries on any matter are
issued, reserved for issuance, or outstanding, (ii) there are no options,
warrants, calls, subscriptions, convertible or exchangeable securities, or other
rights, agreements or commitments of any character obligating the Company or any
of its subsidiaries to grant, issue, transfer or sell, or cause to be granted,
issued, transferred or sold, any shares of capital stock, or any other equity or
voting security or equity or voting interest, of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to grant,
issue, extend or enter into any right, agreement or commitment with respect to
the foregoing, (iii) there are no obligations (absolute, contingent or
otherwise) of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock, or other equity or voting
security or equity or voting interest, of the Company or any of its
subsidiaries, and (iv) other than this Agreement, there are no voting trusts,
proxies or other agreements or understandings to which the Company or any of its
subsidiaries is a party or by
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which the Company or any of its subsidiaries is bound with respect to the voting
of any shares of capital stock, or any other equity or voting security or
interest, of the Company or any of its subsidiaries.
Section 3.3. Subsidiaries. (a) Each of the subsidiaries of the Company
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whose operations are material to the Company and its subsidiaries taken as a
whole (a "Material Subsidiary") is duly formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each subsidiary of the
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing would not have a Company Material Adverse Effect.
(b) All of the outstanding shares of capital stock of, or other equity
interests in, each of the Material Subsidiaries are duly authorized and validly
issued and (in the case of shares of capital stock) are fully paid and
nonassessable, and (except as set forth in Section 3.3 of the Company Disclosure
Schedule) all such shares or other equity interests owned directly or indirectly
by the Company are owned free and clear of all liens, security interests,
claims, pledges, rights of first refusal, limitations on voting rights, charges
or other encumbrances of any nature whatsoever.
Section 3.4. Authorization, Validity and Enforceability. The Company has
------------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Acquisition and the other transactions contemplated hereby to be consummated by
the Company. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the Acquisition and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement or the consummation of the
Acquisition or the other transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and except as the
availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
Section 3.5. No Conflict or Violation. Subject to (i) making the filings
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and obtaining the approvals identified in Section 3.6 and (ii) obtaining the
material non-governmental consents identified in Section 3.5 of the Company
Disclosure Schedule, the execution and
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delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations hereunder and the consummation by the Company of the
Acquisition and the other transactions pursuant hereto will not, (a) conflict
with or violate the articles or certificate of incorporation, bylaws,
partnership agreement or other charter or organization document of the Company
or any of its Material Subsidiaries, (b) conflict with or violate any material
law, statute, rule, regulation, order, judgment, writ, injunction or decree
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (c) result in a violation or breach of or constitute a
default under (or an event which with the giving of notice or the lapse of time
or both would constitute a default under), require any consent, approval or
authorization under, result in the loss of a benefit or result in any provision
becoming applicable or effective under, or give rise to any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any property or
asset of the Company or any of its subsidiaries may be bound or affected, except
in the case of each of clauses (b) and (c) for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, be reasonably likely to result in a Company Material Adverse Effect
or prevent the Company from performing its obligations under this Agreement in
any material respect.
Section 3.6. Consents and Approvals. The execution and delivery of this
----------------------
Agreement by the Company do not, and the performance by the Company of its
obligations hereunder and the consummation by the Company of the Acquisition and
the other transactions contemplated hereby will not, require the Company to
obtain any consent, approval, authorization or permit of, or to make any filing
with or notification to, any United States, Dutch or foreign national, federal,
state, local or other governmental, judicial or regulatory authority (each, a
"Governmental Entity"), except (a) for (i) applicable requirements, if any, of
the Securities Act, the Exchange Act and state securities or "blue sky" laws
("Blue Sky Laws"), (ii) the pre-merger notification and report requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), (iii) consents, approvals,
authorizations, orders, permits, filings or registrations related to, or arising
out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages and (iv) as set forth in
Section 3.6 of the Company Disclosure Schedule and (b) where the failure to
obtain such consents, approvals, authorizations and permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
the Company from performing its obligations under this Agreement in any material
respect or from consummating the Acquisition or any other transaction pursuant
hereto, or following the Acquisition constitute a Company Material Adverse
Effect.
Section 3.7. SEC Documents and Financial Statements. (a) The Company has
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filed all forms, reports, statements and other documents required to be filed by
it with the Commission since September 26, 1995 (such forms, reports, statements
and other documents
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are hereinafter referred to as the "Company SEC Documents"). The Company SEC
Documents filed by the Company with the Commission prior to and after the date
of this Agreement (i) complied, or will comply, when filed, in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder, and (ii) did not, or will not,
when filed, 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 they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes or schedules thereto) contained in or incorporated by
reference in the Company SEC Documents filed prior to and after the date of this
Agreement (i) have been or will be prepared in accordance with the published
rules and regulations of the Commission and United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited consolidated quarterly statements, as permitted by Form 10-Q
of the Commission) and (ii) fairly present or will fairly present in all
material respects the consolidated financial position of the Company and its
subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its subsidiaries for the periods
indicated therein (subject, in the case of unaudited interim financial
statements, to normal recurring year-end audit adjustments).
Section 3.8. No Material Undisclosed Liabilities. Neither the Company nor
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any of its subsidiaries has any debts, liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or disclosed or reserved against in, a consolidated balance
sheet of the Company and its subsidiaries or in the notes thereto, prepared in
accordance with GAAP consistently applied, except for (a) debts, liabilities and
obligations that were so reserved on, or disclosed or reflected in, the
consolidated balance sheet of the Company and its subsidiaries as of December
31, 1996 and the notes thereto, included in the Report on Form 6-K of the
Company for the quarter then ended, or the consolidated balance sheet of the
Company and its subsidiaries as of June 30, 1996 and the notes thereto, included
in the Annual Report on Form 20-F of the Company for the year then ended and (b)
debts, liabilities or obligations arising in the ordinary course of business
since September 30, 1996.
Section 3.9. Absence of Certain Changes. Since December 31, 1996, except
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as disclosed in the Company SEC Documents filed with the Commission prior to the
date of this Agreement or as specifically contemplated by this Agreement or as
set forth in Section 3.9 of the Company Disclosure Schedule, (a) the Company and
its Material Subsidiaries have conducted their respective businesses only in the
ordinary course and in a manner consistent with past practice and (b) there has
not been (i) any change, event, occurrence or circumstance in the business,
operations, properties, financial condition or results of operations of the
Company or any of its subsidiaries which, individually or in the aggregate, has
had or is reasonably likely to have a Company Material Adverse Effect (except
for changes, events,
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occurrences or circumstances (A) with respect to general economic or industry
conditions or (B) arising as a result of the transactions contemplated hereby),
(ii) any material change by the Company in its accounting methods, principles or
practices, (iii) any declaration, setting aside or payment of any dividend or
distribution or capital return in respect of any capital stock of, or other
equity interest in, the Company or any of its subsidiaries, (iv) any material
revaluation for financial statement purposes by the Company or any of its
subsidiaries of any asset (including, without limitation, any writing down of
the value of any property, investment or asset or writing off of notes or
accounts receivable), (v) other than payment of compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course of
business consistent with past practice or the grant of Company Options as
described in (and in amounts consistent with) Section 3.2 or any transactions
described in Section 3.12 of the Company Disclosure Schedule, any material
transactions between the Company or any of its subsidiaries, on the one hand,
and any (A) officer or director of the Company or any of its subsidiaries, (B)
record or beneficial owner of five percent (5%) or more of the voting securities
of the Company, or (C) affiliate of any such officer, director or beneficial
owner, on the other hand, or (vi) other than pursuant to the terms of the plans,
programs or arrangements specifically referred to in Section 3.12 or in the
ordinary course of business consistent with past practice, any increase in or
establishment of any bonus, insurance, welfare, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any employees, officers, directors or consultants of the Company or
any of its subsidiaries, which increase or establishment, individually or in the
aggregate, will result in a material liability.
Section 3.10. Litigation. Except as disclosed in Section 3.10 of the
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Company Disclosure Schedule, there is no action, suit, claim, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any properties or assets of the
Company or any of its subsidiaries by or before any court, other Governmental
Entity or arbitrator which (i) could reasonably be expected to have a Company
Material Adverse Effect or (ii) could reasonably be expected to prevent or
substantially delay consummation of the Acquisition or any of the other
transactions contemplated hereby, or otherwise prevent the Company from
performing its obligations under this Agreement in any material respect. Except
as disclosed in the Company SEC Documents filed with the Commission prior to the
date of this Agreement, neither the Company nor any of its subsidiaries nor any
property or asset of the Company or any of its subsidiaries is subject to any
order, writ, injunction, judgment, decree or award which is material or which
could reasonably be expected to prevent or substantially delay consummation of
the Acquisition or any of the other transactions pursuant hereto in any material
respect, or otherwise prevent the Company from performing its obligations under
this Agreement in any material respect.
Section 3.11. Compliance. Except as set forth in Section 3.11 of the
----------
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
in conflict with, or in default or violation of, (a) its respective articles or
certificate of incorporation, bylaws, or
11
other charter or organization documents, (b) any law, statute, rule, regulation,
order, judgment, writ, injunction or decree applicable to the Company or any of
its subsidiaries or any of their respective properties or assets, the effect of
which conflict, default or violation, either individually or in the aggregate,
would be reasonably likely to have a Company Material Adverse Effect, or (c) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any property or asset of the Company or any of its subsidiaries may be bound or
affected, the effect of which conflict, default or violation, either
individually or in the aggregate, would be reasonably likely to have a Company
Material Adverse Effect. The Company and its subsidiaries hold all material
licenses, permits, approvals and other authorizations of Governmental Entities,
and are in substantial compliance with all applicable laws and governmental
regulations in connection with their businesses as now being conducted.
Section 3.12. Employee Benefit Plans. (a) Section 3.12(a) of the Company
----------------------
Disclosure Schedule sets forth each plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each other
material agreement, arrangement or commitment which is an employment or
consulting agreement, executive or incentive compensation plan, bonus plan,
deferred compensation agreement, employee pension, profit sharing, savings or
retirement plan, employee stock option or stock purchase plan, group life,
health, or accident insurance or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, any commitment arising
under the laws of any jurisdiction, severance, holiday, vacation, Christmas or
other bonus plans, currently maintained by the Company or any of its
subsidiaries for the benefit of any present or former employees, officers or
directors of the Company or any of its subsidiaries ("Company Personnel") or
with respect to which the Company or any of its subsidiaries has liability or
makes or has an obligation to make contributions, other than any Foreign Plan
(as defined in Section 3.12(l) (each such plan, agreement, arrangement or
commitment set forth on Section 3.12(a) being hereinafter referred to as a
"Company Employee Plan").
(b) The Company has made available to the Purchaser (i) copies of all
Company Employee Plans or in the case of an unwritten plan, a written
description thereof, (ii) copies of the most recent annual, financial and, if
applicable, actuarial reports and Internal Revenue Service determination letters
relating to such Company Employee Plans and (iii) copies of all summary plan
descriptions relating to such Company Employee Plans and distributed to Company
Personnel.
(c) Except as disclosed in Section 3.12(c) of the Company Disclosure
Schedule, there are no Company Personnel who are entitled to any medical, dental
or life benefits to be paid under any Company Employee Plans after termination
of employment other than as required by Section 601 of ERISA, Section 4980B of
the Code or applicable state law.
(d) Each Company Employee Plan that is an employee welfare benefit plan
under Section 3(1) of ERISA is either (i) funded through an insurance company
contract and is
12
not a "welfare benefit fund" within the meaning of Section 419 of the Code or
(ii) is unfunded. There is no liability in the nature of a retroactive rate
adjustment or loss-sharing or similar arrangement, with respect to any Company
Employee Plan which is an employee welfare benefit plan, which is reasonably
likely to result in a Company Material Adverse Effect.
(e) All contributions or payments due with respect to any periods prior to
the Closing Date under any Company Employee Plan have been made or appropriate
charges have been made on the financial statements. Except as disclosed in
Section 3.12(e) of the Company Disclosure Schedule, each Company Employee Plan
by its terms and operation is in compliance in all material respects with all
applicable laws (including, but not limited to, ERISA, the Code and the Age
Discrimination in Employment Act of 1967, as amended).
(f) There are no actions, suits or claims pending or, to the knowledge of
the Company, threatened (other than routine noncontested claims for benefits),
against any Company Employee Plan or, to the knowledge of the Company, any
administrator or fiduciary of any such Company Employee Plan, which is
reasonably likely to result in a Company Material Adverse Effect. As to each
Company Employee Plan for which an annual report is required to be filed under
ERISA or the Code, all such filings, including schedules, have been made on a
timely basis and, with respect to the most recent report regarding each such
Company Employee Plan, which is a funded pension benefit plan, liabilities do
not exceed assets, and no material adverse change has occurred with respect to
the financial materials covered thereby.
(g) Except as disclosed in Section 3.12(g) of the Company Disclosure
Schedule:
(x) neither the Company nor any of its subsidiaries (nor any entity that
is treated as a single employer with the Company or any of its subsidiaries
under Section 414(b), (c), (m) or (o) of the Code) maintains, contributes to or
is required to contribute to any plan under which more than one employer makes
contributions (within the meaning of Section 4064(a) of ERISA) or any plan that
is a multiemployer plan within the meaning of Section 3(37) of ERISA;
(y) neither the Company nor any of its subsidiaries (nor any entity that
is or was at the relevant time treated as a single employer with the Company or
any of its subsidiaries under Section 414(b), (c), (m) or (o) of the Code) has
at any time incurred any liability to the Pension Benefit Guaranty Corporation
or otherwise under Title IV of ERISA (other than the payment of premiums none of
which are overdue) which liability has not been satisfied and which can result
in a Company Material Adverse Effect; and
(z) neither the Company nor any of its subsidiaries (nor any entity that
is or was at the relevant time treated as a single employer with the Company or
any of its subsidiaries under Section 414(b), (c), (m) or (o) of the Code) has
at any time incurred liability in connection with an "accumulated funding
deficiency" within the meaning of Section 412 of
13
the Code, whether or not waived which liability has not been satisfied and which
can result in a Company Material Adverse Effect. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Company Employee Plan.
(h) The Renaissance Hotels and Resorts 401(k) Plan maintained by the
Company (the "401(k) Plan") has received a favorable determination letter from
the Internal Revenue Service which provides that the 401(k) Plan is qualified
under Sections 401(a) and 401(k) of the Code (the "Company IRS Letter"). To the
knowledge of the Company, nothing has occurred since the date of the most recent
Company IRS Letter to cause such letter to be no longer valid or effective,
except for changes in the law which may be in effect but with respect to which
amendments to such Plan do not have to be adopted on or before the date hereof.
(i) Neither the Company nor any of its subsidiaries (or, to the knowledge
of the Company, any other person, including any fiduciary) has engaged in any
"prohibited transaction" (as defined in Section 4975 of the Code or Section 406
of ERISA), which could subject any of the Company Employee Plans (or their
trusts), the Company, any of its subsidiaries or any person whom the Company or
any of its subsidiaries has an obligation to indemnify, to any material tax or
penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(j) None of the assets of the Company Employee Plans is invested in any
property constituting employer real property or an employer security within the
meaning of Section 407(d) of ERISA.
(k) Except as disclosed in Section 3.12(k) of the Company Disclosure
Schedule, the events contemplated by this Agreement (either alone or together
with any other event) will not (i) entitle any Company Personnel to severance
pay or other similar payments under any Company Employee Plan, (ii) accelerate
the time of payment or vesting or increase the amount of benefits due under any
Company Employee Plan or compensation to any Company Personnel residing in the
U.S., (iii) result in any payments (including parachute payments) under any
Company Employee Plan becoming due to any Company Personnel, or (iv) terminate
or modify or give a third party a right to terminate or modify the provisions or
terms of any Company Employee Plan. Section 3.12(k) of the Company Disclosure
Schedule sets forth, for each employee of the Company or any of its subsidiaries
that will receive any parachute payment within the meaning of Section 280G of
the Code, a preliminary calculation of the base amount for such employee and of
the amount of each such parachute payment, based upon information currently
known by the Company and assuming all circumstances that could give rise to such
payment occur.
(l) Except as disclosed in Section 3.12(l) of the Company Disclosure
Schedule, each Foreign Plan has been maintained in substantial compliance with
its terms and with the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has
14
been maintained, where required, in good standing with applicable regulatory
authorities. Except as disclosed in Section 3.12(l) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has incurred any
material obligation in connection with the termination or withdrawal from any
Foreign Pension Plan. Except as disclosed in Section 3.12(l) of the Company
Disclosure Schedule, the present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan which is funded,
determined as of the end of the most recently ended fiscal year of the Company
on the basis of actuarial assumptions, each of which is reasonable, did not
exceed the current value of the assets of such Foreign Pension Plan, and for
each Foreign Pension Plan which is not funded, the obligations of such Foreign
Pension Plan are properly accrued. For purposes of this Section 3.12, (i)
"Foreign Plan" shall mean any plan, fund or other similar program established or
maintained outside the United States of America by the Company or any of its
subsidiaries primarily for the benefit of employees of the Company or such
subsidiaries residing outside the United States of America and which plan is not
subject to ERISA, or any such plan as to which the Company or any of its
subsidiaries may have any liability, and (ii) "Foreign Pension Plan" shall mean
any Foreign Plan which plan, fund (including, without limitation, any
superannuation fund) or other similar program provides or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, except for any severance payments mandated
by applicable laws, statutes, rules, regulations or orders. Section 3.12(l) of
the Company Disclosure Schedule lists each non-statutory Foreign Plan.
Section 3.13. Labor Matters. Except as set forth in Section 3.13 of the
-------------
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
a party to any collective bargaining or other labor union contracts applicable
to any person employed by the Company or any of its subsidiaries. There is no
pending or, to the knowledge of the Company, threatened material labor dispute,
strike or work stoppage against the Company or any of its subsidiaries. Neither
the Company nor its subsidiaries, nor their respective representatives or
employees, has committed any material unfair labor practices in connection with
the operation of the respective businesses of the Company or its subsidiaries,
and there is no pending or, to the knowledge of the Company, threatened charge
or complaint against the Company or its subsidiaries by the National Labor
Relations Board or any comparable state or foreign governmental agency which, if
adversely determined, would have a Company Material Adverse Effect. The Company
and its subsidiaries are in compliance in all material respects with all
applicable laws and regulations respecting employment, employment practices,
labor relations, employment discrimination, safety and health, wages, hours and
terms and conditions of employment. There is no pending or, to the knowledge of
the Company, threatened grievance alleging a violation of any collective
bargaining agreement or other labor union contract which, if adversely
determined, would have a Company Material Adverse Effect. To the knowledge of
the Company, the Company and its subsidiaries have complied and are complying in
all material respects with the terms and conditions of any collective bargaining
or other labor union contracts applicable to it or them.
15
Section 3.14. Tax Matters. (a) For purposes of this Agreement: (i)
-----------
"Taxes" means any taxes, charges, fees, levies, or other assessments imposed by
any U.S. or foreign governmental entity, whether national, state, county, local
or other political subdivision, including, without limitation, all net income,
gross income, sales and use, value added, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross receipt, capital stock,
business and occupation, disability, employment, payroll, license, estimated, or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties on or additions to any such taxes (and includes Taxes
for which the Company and/or any of its subsidiaries, as the case may be, may be
liable in its own right, or as the transferee of the assets of, or as successor
to, any other corporation, association, partnership, joint venture, or other
entity, or under Treasury Regulation Section 1.1502-6 or any similar provision
of foreign, state or local law); and (ii) "Tax Return" means a report, return or
other information required to be supplied to a governmental entity with respect
to Taxes including, where permitted or required, group, combined or consolidated
returns for any group of entities that includes the Company or any of its
subsidiaries.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries, and any affiliated or
combined group of which the Company or any of its subsidiaries is or was a
member for applicable Tax purposes, have (i) filed all federal income and all
other material Tax Returns required to be filed by applicable law and all such
federal income and other material Tax Returns (A) reflect the liability for
Taxes of the Company and each of its subsidiaries, and (B) were filed on a
timely basis and (ii) within the time and in the manner prescribed by law, paid
(and until the Closing Date will pay within the time and in the manner
prescribed by law) all Taxes that were or are due and payable as set forth in
such Tax Returns.
(c) Each of the Company and, where applicable, the Company's subsidiaries
has established (and until the Closing Date will maintain) on its books and
records reserves adequate to pay all Taxes of the Company or such respective
subsidiary, as the case may be, in accordance with GAAP, which are reflected in
the most recent consolidated financial statements of the Company and its
subsidiaries contained in the Company SEC Documents, as applicable, to the
extent required by GAAP.
(d) Except as disclosed in Section 3.14(d) of the Company Disclosure
Schedule, neither the Company nor any Material Subsidiary thereof has requested
any extension of time within which to file any income, franchise or other
material Tax Return, which Tax Return has not been filed as of the date hereof.
(e) Except as disclosed in Section 3.14(d) of the Company Disclosure
Schedule, neither the Company nor any subsidiary thereof has executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any income, franchise or other material
Taxes or Tax Returns.
16
(f) Except as disclosed in Section 3.14(f) of the Company Disclosure
Schedule, no deficiency for any Tax which, alone or in the aggregate with any
other deficiency or deficiencies, would exceed $1,000,000, has been proposed,
asserted, or assessed against the Company and/or any subsidiary thereof that has
not been resolved and paid in full or otherwise settled, no audits or other
administrative proceedings are presently in progress or pending or threatened in
writing with regard to any Taxes or Tax Returns of the Company and/or any
subsidiary thereof, and no written claim is currently being made by any
authority in a jurisdiction where any of the Company or any subsidiary thereof,
as the case may be, does not file Tax Returns that it is or may be subject to
Tax in that jurisdiction.
(g) Except as disclosed on Section 3.14(g) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement relating to allocating or sharing of the payment of, or liability for,
Taxes.
(h) The Company does not constitute and for the past five years has not
constituted a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
Section 3.15. Properties. Section 3.15 of the Company Disclosure Schedule
----------
contains a true and complete list (identifying the relevant owners, lessors and
lessees) of all real properties owned or leased by the Company or any of its
subsidiaries. Each of the Company and its subsidiaries has good and marketable
title to all properties, assets and rights of any kind whatsoever (whether real,
personal or mixed, and whether tangible or intangible) owned by it
(collectively, the "Company Assets"), in each case free and clear of any
mortgage, security interest, deed of trust, claim, charge, title defect or other
lien or encumbrance, except (a) as shown on the consolidated balance sheet of
the Company and its subsidiaries dated September 30, 1996 and the notes thereto,
and the consolidated balance sheet of the Company and its subsidiaries dated as
of June 30, 1996 and the notes thereto, each as contained in the Company SEC
Documents, (b) for any mortgage, security interest, deed of trust, claim,
charge, title defect or other lien or encumbrance arising by reason of (i)
taxes, assessments or governmental charges not yet delinquent or which are being
contested in good faith, (ii) deposits to secure public or statutory obligations
in lieu of surety or appeal bonds entered into in the ordinary course of
business, and (iii) operation of law in favor of carriers, warehousemen,
landlords, mechanics, materialmen, laborers, employees or suppliers, incurred in
the ordinary course of business for sums which are not yet delinquent or are
being contested in good faith by negotiations or by appropriate proceedings
which suspend the collection thereof ("Permitted Liens"), or (c) as set forth on
Section 3.15 of the Company Disclosure Schedule. Except as set forth in Section
3.15 of the Company Disclosure Schedule, there are no pending or, to the
knowledge of the Company, threatened condemnation proceedings against or
affecting any material Company Assets, and none of the material Company Assets
is subject to any commitment or other arrangement for its sale to a third party
outside the ordinary course of business.
17
Section 3.16. Environmental Matters. Neither the Company nor any of its
---------------------
subsidiaries is the subject of any governmental investigation, and neither the
Company nor any of its subsidiaries has received any notice or claim, nor
entered into any negotiations or agreements with any third party, relating to
any material liability or remedial action or potential material liability or
remedial action under any Environmental Laws (as defined below). There are no
pending or, to the knowledge of the Company, threatened actions, suits, claims
or proceedings against or affecting the Company or any of its subsidiaries or
any of their properties, assets or operations in connection with any such
Environmental Laws. The properties, assets and operations of the Company and its
subsidiaries are in compliance in all material respects with all applicable
United States, Dutch or foreign national, federal, state and local laws, rules
and regulations, orders, decrees, judgments, permits and licenses relating to
public and worker health and safety and to the protection and clean-up of
natural environment and activities or conditions relating thereto, including,
without limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous materials (collectively, "Environmental
Laws"), except as disclosed in the "Phase I" and other reports if any,
identified in Section 3.16 of the Company Disclosure Schedule.
Section 3.17. Material Contracts and Commitments. (a) Section 3.17 of
----------------------------------
the Company Disclosure Schedule contains a true and complete list of all of the
following contracts, agreements and commitments, whether oral or written
("Contracts"), to which the Company or any of its subsidiaries is a party or by
which any of them or any of their material Company Assets are bound, as each
such contract or commitment may have been amended, modified or supplemented:
(i) all Contracts pursuant to which the Company or its
subsidiaries holds a leasehold interest in or otherwise has an
economic interest in one or more hotel facilities;
(ii) all Contracts providing for management of any hotel or hotel
business by the Company or any of its subsidiaries;
(iii) all Contracts granting a franchise or license to utilize a
brand name or other rights of a hotel chain or system, or granting a
license or sublicense of any material trademark, trade name,
copyright, patent, service ▇▇▇▇ or trade secret, or any rights therein
or application therefor;
(iv) all partnership or joint venture Contracts;
(v) all loan agreements, notes, bonds, debentures, debt
instruments, evidences of indebtedness, debt securities, or other
Contracts relating to any indebtedness of the Company or any of its
subsidiaries in an amount in excess of $1,000,000, or involving the
direct or indirect guaranty or suretyship by the Company or any of its
subsidiaries of any indebtedness in an amount in excess of $1,000,000;
18
(vi) all Contracts that, after the date hereof, obligate the
Company or any of its subsidiaries to pay, pledge, or encumber or
restrict assets in an amount in excess of $500,000;
(vii) all Contracts by which the Company has committed to extend
credit in a material amount to third parties; and
(viii) all Contracts that limit or restrict the ability of the
Company or any of its affiliates to compete or otherwise to conduct
business in any material manner or place.
(b) The Company has heretofore made available to the Purchaser true
and complete copies of all of the Contracts required to be set forth in Section
3.17 of the Company Disclosure Schedule. Each such Contract is valid and binding
in accordance with its terms, and is in full force and effect (except as set
forth in Section 3.17 of the Company Disclosure Schedule). Neither the Company
nor any of its subsidiaries is in default in any material respect with respect
to any such Contract, nor (to the knowledge of the Company) does any condition
exist that with notice or lapse of time or both would constitute such a material
default thereunder or permit any other party thereto on terminate such Contract.
To the knowledge of the Company, no other party to any such Contract is in
default in any material respect with respect to any such Contract. Except as set
forth in Section 3.17 of the Company Disclosure Schedule, no party has given any
written or (to the knowledge of the Company) oral notice of termination or
cancellation of any such Contract or that it intends to assert a breach of, or
seek to terminate or cancel, any such Contract, whether as a result of the
transactions contemplated hereby or otherwise. Each Contract identified in
Section 3.17 of the Company Disclosure Schedule in response to any item under
this Section 3.17 shall be deemed incorporated by reference to all other items
in this Section 3.17.
Section 3.18. Intangible Property.
-------------------
(a) The Company has made available to Purchaser a list of the
Intangible Property (as defined below) which is material to the Company and its
subsidiaries in which the Company or any of its subsidiaries has an interest.
Except as set forth on Section 3.18 of the Company Disclosure Schedule, (i) the
Company and its subsidiaries do not use any material Intangible Property by
consent of any other person and do not make any payments to others with respect
thereto; (ii) the Company and its subsidiaries have performed all material
obligations required to be performed by them, and are not in default under any
material contract or arrangement relating to any of the foregoing; and (iii)
neither the Company nor any of its subsidiaries has received any notice to the
effect (or is otherwise aware) that any material Intangible Property or the use
thereof by the Company or any of its subsidiaries conflicts with any rights of
any Person.
(b) Except as set forth on Section 3.18 of the Company Disclosure
Schedule:
19
(i) to the best of the Company's knowledge, the Company and its
subsidiaries own and have the right to use, sell, license or dispose of all
Intangible Property primarily used for the conduct of its business as
presently conducted;
(ii) to the best of the Company's knowledge, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not breach, violate or conflict with
any material Intangible Property, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of, or in
any material way impair the right of the Company or any of its subsidiaries
to use, sell, license or dispose of or to bring any action for the
infringement of, any material Intangible Property or material portion
thereof;
(iii) to the best of the Company's knowledge, there are no
royalties, honoraria, fees or other payments payable by the Company or any
of its subsidiaries to any person by reason of the ownership, use, license,
sale or disposition of any material Intangible Property; and
(iv) to the best of the Company's knowledge, the conduct of the
business by the Company and its subsidiaries does not violate any license
or agreement with any third party or infringe any Intangible Property of
any other person.
(c) As used herein "Intangible Property" means all intellectual
property rights, including patents, patent applications (pending or otherwise),
computer software, research findings, market and competitive analyses, brand
names, copyrights, service marks, trademarks, tradenames, and all registrations
or applications for registration of any of the foregoing.
Section 3.19. Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated to the effect that the
consideration to be received by the stockholders of the Company pursuant to the
Acquisition is fair to such stockholders from a financial point of view.
Section 3.20. Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its affiliates, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated (the fees and expenses of which shall be paid in full by the
Company). The Company has heretofore furnished to the Purchaser a true and
complete copy of all agreements between the Company and such firm pursuant to
which such firm would be entitled to any payment relating to the Acquisition or
the transactions contemplated hereby.
Section 3.21. Aggregation. The representations and warranties set forth
-----------
in this Article III would in the aggregate be true and correct without regard to
the materiality exceptions or qualifications contained therein except for such
exceptions and qualifications which, in the
20
aggregate for all such representations and warranties, would not constitute and
would not be reasonably expected to constitute a Company Material Adverse
Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
Section 4.1. Organization and Qualification. The Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. The Purchaser is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not have a material adverse effect
on the business, operations, properties, financial condition or results of
operations of the Purchaser and its subsidiaries, taken as a whole (a "Purchaser
Material Adverse Effect").
Section 4.2. Authorization, Validity and Enforceability. The Purchaser
------------------------------------------
has all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Acquisition and the other transactions contemplated hereby to be consummated by
the Purchaser. The execution, delivery and performance of this Agreement by the
Purchaser and the consummation by the Purchaser of the Acquisition and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Purchaser and no other corporate
proceedings on the part or the Purchaser are necessary to authorize the
execution, delivery and performance of this Agreement or the consummation of the
Acquisition or the other transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Purchaser and constitutes the legal,
valid and binding obligation of each of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity).
Section 4.3. No Conflict or Violation. Subject to making the filings and
------------------------
obtaining the approvals identified in Section 4.4, the execution and delivery of
this Agreement by the Purchaser do not, and the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
Acquisition and the other transactions pursuant hereto will not, (a) conflict
with or violate the certificate of incorporation, by-laws or other charter or
organization document of the Purchaser or any material subsidiary of the
Purchaser, (b)
21
conflict with or violate any material law, statute, rule, regulation, order,
judgment, writ, injunction or decree applicable to the Purchaser or any of its
subsidiaries or any of their respective properties or assets, or (c) result in a
violation or breach of or constitute a default under (or an event which with the
giving of notice or the lapse of time or both would constitute a default under),
require any consent, approval or authorization under, result in the loss of a
material benefit or result in any provision becoming applicable or effective
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Purchaser or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Purchaser or
any of its subsidiaries is a party or by which the Purchaser or any of its
subsidiaries or any material property or asset of the Purchaser or any of its
subsidiaries may be bound or affected, except in the case of each of clauses (b)
and (c) for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, be reasonably
likely to result in a Purchaser Material Adverse Effect or prevent the Purchaser
from performing its obligations under this Agreement in any material respect.
Section 4.4. Consents and Approvals. The execution and delivery of this
----------------------
Agreement by the Purchaser do not, and the performance by the Purchaser of its
obligations hereunder and the consummation by the Purchaser of the transactions
contemplated hereby will not, require the Purchaser to obtain any consent,
approval, authorization or permit of, or to make any filing with or notification
to, any Governmental Entity, except (a) for (i) applicable requirements, if any,
of the Securities Act, the Exchange Act, Blue Sky Laws, and (ii) the pre-merger
notification and report requirements of the HSR Act, (iii) consents, approvals,
authorizations, orders, permits, filings or registrations related to, or arising
out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages and (iv) as set forth in
Section 4.4 of the Purchaser Disclosure Schedule, and (b) where the failure to
obtain such consents, approvals, authorizations and permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
the Purchaser from performing its obligations under this Agreement in any
material respect or from consummating the Acquisition or any other transaction
pursuant hereto.
Section 4.5. Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its affiliates, other than Salomon Brothers
Inc (the fees and expenses of which shall be paid in full by the Purchaser).
Section 4.6. Financing. The Purchaser has adequate cash resources
---------
available to consummate the Offer.
ARTICLE V.
22
COVENANTS
Section 5.1. Interim Operations. From the date of this Agreement until
------------------
the Closing Date, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement,
unless the Purchaser has consented in writing thereto, the Company shall, and
shall cause each of its subsidiaries to:
(a) conduct its business and operations only in the ordinary
course of business consistent with past practice;
(b) use all reasonable efforts to preserve intact the business
organizations, goodwill, rights, licenses, permits and franchises of
the Company and its subsidiaries and maintain their existing
relationships with customers, suppliers and other persons having
business dealings with them;
(c) use its commercially reasonable efforts to keep in full
force and effect adequate insurance overages and maintain and keep its
properties and assets in good repair, working order and condition,
normal wear and tear excepted;
(d) not amend or modify its respective articles or certificate
of incorporation, by-laws, partnership agreement or other charter or
organization documents;
(e) not authorize for issuance, issue, sell, grant, deliver,
pledge or encumber or agree or commit to issue, sell, grant, deliver,
pledge or encumber any shares of any class or series of capital stock
of the Company or any of its subsidiaries or any other equity or
voting security or equity or voting interest in the Company or any of
its subsidiaries, any securities convertible into or exercisable or
exchangeable for any such shares, securities or interests, or any
options, warrants, calls, commitments, subscriptions or rights to
purchase or acquire any such shares, securities or interests (other
than issuances of Company Common Stock upon exercise of Company
Options granted prior to the date of this Agreement to directors,
officers, employees and consultants of the Company in accordance with
the Company Stock Plan as currently in effect);
(f) not (A) split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for,
shares of its capital stock, (B) in solely the case of the Company,
declare, set aside or pay any dividends on, or make other
distributions in respect of, any of the Company's capital stock, or
(C) repurchase, redeem or otherwise acquire, or agree or commit to
repurchase,
23
redeem or otherwise acquire, any shares of capital stock or other
equity or debt securities or equity interests of the Company or any of
its subsidiaries;
(g) not amend or otherwise modify the terms of any Company
Options or the Company Stock Plan the effect of which shall be to make
such terms more favorable to the holders thereof or persons eligible
for participation therein;
(h) other than regularly scheduled seniority increases in the
ordinary course of business consistent with past practice, not
increase the compensation payable or to become payable to any
directors, officers or employees of the Company or any of its
subsidiaries, or grant any severance or termination pay to, or enter
into any employment or severance agreement with any director or
officer of the Company or any of its subsidiaries, or establish,
adopt, enter into or amend in any material respect or take action to
accelerate any material rights or benefits under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer
or employee of the Company of any of its subsidiaries;
(i) not acquire or agree to acquire (including, without
limitation, by merger, consolidation, or acquisition of stock, equity
securities or interests, or assets) any corporation, partnership,
joint venture, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets of any
other person outside the ordinary course of business consistent with
past practice or any interest in any real properties (whether or not
in the ordinary course of business);
(j) not incur, assume or guarantee any indebtedness for borrowed
money (including draw-downs on letters or lines of credit) or issue or
sell any notes, bonds, debentures, debt instruments, evidences of
indebtedness or other debt securities of the Company or any of its
subsidiaries or any options, warrants or rights to purchase or acquire
any of the same, except for (A) renewals of existing bonds and letters
of credit in the ordinary course of business not to exceed $10,000,000
and (B) advances, loans or other indebtedness in the ordinary course
of business consistent with past practice in an aggregate amount not
to exceed $5,000,000;
(k) not sell, lease, license, encumber or otherwise dispose of,
or agree to sell, lease, license, encumber or otherwise dispose of,
any material properties or assets of the Company or any of its
subsidiaries;
24
(l) not authorize or make any capital expenditures (including by
lease) in excess of $5,000,000 in the aggregate for the Company and
all of its subsidiaries;
(m) not make any material change in any of its accounting or
financial reporting (including Tax accounting and reporting) methods,
principles or practices, except as may be required by GAAP;
(n) not make any material tax election or settle or compromise
any material United States, Dutch or foreign tax liability;
(o) except in the ordinary course of business consistent with
past practice, not amend, modify or terminate any Contract required to
be listed in Section 3.17 of the Company Disclosure Schedule or waive,
release or assign any material rights or claims thereunder;
(p) not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries;
(q) not take any action that would, or would be reasonably
likely to, result in any of the representations and warranties set
forth in this Agreement not being true and correct in any material
respect or any of the conditions set forth in Article VI not being
satisfied; and
(r) not agree or commit in writing or otherwise to do (or, in
the case of clauses (i) through (iii), to do anything inconsistent
with) any of the foregoing.
Section 5.2. No Solicitation. Prior to the Closing Date, the Company
---------------
agrees (a) that neither it nor any of its subsidiaries shall, nor shall it or
any of its subsidiaries authorize or permit their respective officers,
directors, employees, agents and representatives (including, without limitation,
any investment banker, financial advisor, attorney, accountant, consultant or
other advisor, agent, representative or expert retained by or acting on behalf
of it or any of its subsidiaries) (collectively, "Representatives") to, directly
or indirectly, initiate, solicit, negotiate, encourage, or provide confidential
information to facilitate any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to any of its
stockholders) concerning, or that may reasonably be expected to lead to, an
Alternative Transaction (any such proposal or offer being hereinafter referred
to as an "Alternative Transaction Proposal"), and (b) that it will notify the
Purchaser promptly 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, the Company or any of its
subsidiaries; provided, however, that (i) nothing contained in this Section 5.2
------------------
shall prohibit the Board of Directors of the Company from, to the extent
applicable, complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Transaction Proposal
25
and (ii) the Company and its subsidiaries and Representatives may furnish
confidential information to and participate in negotiations with a person making
or proposing to make an Alternative Transaction Proposal if (x) the Company's
Board of Directors is advised by one or more of its financial advisors that such
person has the financial wherewithal to consummate an Alternative Transaction,
(ii) the Board of Directors reasonably determines, after receiving advice from
the Company's financial advisor, that such person has proposed an Alternative
Transaction that involves consideration to the Company's stockholders that is
superior to the consideration provided for under this Agreement and (iii) based
upon the advice of counsel to such effect, the Company's Board of Directors
determines in good faith that it is necessary so to furnish information and/or
negotiate in order to comply with its fiduciary duty to stockholders of the
Company. The Company agrees that prior to furnishing any such information to, or
entering into any discussions or negotiations with, any person or entity
concerning an Alternative Transaction Proposal, the Company shall (i) receive
from such person or entity an executed confidentiality agreement in customary
form on terms not less favorable to the Company than the confidentiality
provisions contained in the Confidentiality Agreement dated January, 1997
between the Purchaser and the Company (the "Confidentiality Agreement"),
providing for confidentiality of information furnished by the Company to the
Purchaser and its Representatives in connection with the transactions
contemplated hereby, and (ii) provide written notice to the Purchaser to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity. The Company shall provide the
Purchaser with a summary of the terms of any Alternative Transaction Proposal
received by the Company, or its subsidiaries or Representatives. For purposes of
this Agreement, "Alternative Transaction" shall mean any of the following
involving the Company or any of its subsidiaries: (i) any merger, consolidation,
Buy-Out, business combination or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 20% or more
of the assets of the Company and its subsidiaries, determined on a consolidated
basis in accordance with GAAP; (iii) any tender offer, exchange offer or other
offer for 20% or more of the outstanding shares of capital stock of the Company
or the filing of a registration statement under the Securities Act in connection
therewith; (iv) the acquisition by any person or entity of beneficial ownership
or the right to acquire beneficial ownership of, or the formation or existence
of any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) which beneficially owns,
or has the right to acquire beneficial ownership of, 20% or more of the then
outstanding shares of capital stock of the Company; or (v) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement or commitment to engage in any of the foregoing.
Section 5.3. Access to Information. From the date of this Agreement until
---------------------
the Closing Date, upon reasonable prior notice, the Company shall (and shall
cause each of its subsidiaries to) give the Purchaser and its Representatives
(including lenders to and financing sources for such party) full access, during
normal business hours and at other reasonable times without disruption to the
Company's normal business affairs, to the officers, employees, agents, books,
records, contracts, commitments, properties, offices, hotels and other
facilities of it and its subsidiaries, and shall furnish promptly to the
Purchaser and its Representatives such
26
financial and operating data and other information concerning the business,
operations, properties, contracts, records and personnel of the Company and its
subsidiaries as the Purchaser may from time to time reasonably request. All
information obtained by the Purchaser pursuant to this Section 5.3 shall be kept
confidential in accordance with the confidentiality provisions of the
Confidentiality Agreement. No representations and warranties or conditions to
the consummation of the Acquisition contained herein or in any certificate or
instrument delivered in connection herewith shall be deemed waived or otherwise
affected by any investigation made by the parties or their respective
Representatives.
Section 5.4. Notice of Certain Matters. The Company shall give prompt
-------------------------
notice to the Purchaser, and the Purchaser shall give prompt notice to the
Company, of (a) the occurrence or non-occurrence of any event which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect or (ii) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied in all material respects and (b) any failure of the Company or of the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder in any material
respect; provided that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.5. Further Actions. (a) Each of the parties hereto shall use
---------------
all commercially reasonable good faith efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, and consult and fully cooperate
with and provide reasonable assistance to each other party hereto and their
respective Representatives in order, to consummate and make effective the
Acquisition and the other transactions contemplated by this Agreement as
promptly as practicable hereafter, including, without limitation, (i) using all
commercially reasonable good faith efforts to make all filings, applications,
notifications, reports, submissions and registrations with, and to obtain all
consents, approvals, authorizations or permits of, Governmental Entities or
other persons or entities as are necessary for the consummation of the
Acquisition and the other transactions contemplated hereby (including, without
limitation, pursuant to the HSR Act, the Securities Act, the Exchange Act, Blue
Sky Laws and other applicable laws and regulations in effect in the United
States, The Netherlands or any other jurisdiction), and (ii) taking such actions
and doing such things as any other party hereto may reasonably request in order
to cause any of the conditions to such other party's obligation to consummate
the Acquisition as specified in Article VI of this Agreement to be fully
satisfied. Prior to making any application to or filing with any Governmental
Entity or other person or entity in connection with this Agreement, the Company,
on the one hand, and the Purchaser, on the other hand, shall provide the other
with drafts thereof and afford the other a reasonable opportunity to comment on
such drafts.
(b) Without limiting the generality of the foregoing, each of the
Purchaser and the Company agree to cooperate and use all commercially reasonable
efforts to vigorously contest and resist any action, suit, proceeding or claim,
and to have vacated, lifted, reversed
27
or overturned any injunction, order, judgment or decree (whether temporary,
preliminary or permanent), that delays, prevents or otherwise restricts the
consummation of the Acquisition or any other transaction contemplated by this
Agreement, and to take any and all actions (including, without limitation, the
disposition of assets, divestiture of businesses, or the withdrawal from doing
business in particular jurisdictions) as may be required by Governmental
Entities as a condition to the granting of any such necessary approvals or as
may be required to avoid, vacate, lift, reverse or overturn any injunction,
order, judgment, decree or regulatory action (provided, however, that in no
event shall any party hereto take, or be required to take, any action that could
reasonably be expected to have a Company Material Adverse Effect or that,
individually or in the aggregate, could reasonably be expected to have a
Purchaser Material Adverse Effect).
(c) The Company shall, and shall cause its respective representatives
to, fully cooperate with the Purchaser and its respective representatives in the
preparation of the Registration Statement, and shall, upon request, furnish the
Purchaser with all information concerning it and its affiliates, directors,
officers and stockholders as the Purchaser may reasonably request in connection
with the preparation of the Registration Statement. Without limiting the
generality of the foregoing, the Company shall notify the Purchaser as promptly
as practicable upon becoming aware of any event or circumstance which should be
described in an amendment of, or a supplement to, the Registration Statement.
Section 5.6. Compulsory Buy-Out. (a) The Company acknowledges that the
------------------
Purchaser may desire to obtain all of the outstanding shares of Company Common
Stock and Company Options pursuant to the consummation of the Offer and the
Acquisition. In order to bring the Purchaser and/or any of its affiliates in a
position to exercise their rights under Section 2:92a of the DCC, the Company
shall at the request of the Purchaser: (i) inform the Purchaser of the fact that
the Purchaser and/or one or more of its affiliates jointly holds 95% or more of
the issued share capital in the Company, as soon as the Company has become aware
of that fact; (ii) provide the Purchaser with extracts from and/or copies of the
shareholders' register of the Company if so required by the Purchaser; and (iii)
provide the Purchaser and/or any auditor instructed by the Purchaser with such
information regarding the Company in order for the Purchaser and/or such auditor
to be in a position to establish the value or price of a share in the issued
capital of the Company for the purposes of proceedings pursuant to Section 2:92a
of the DCC.
(b) The Company further acknowledges that upon expiration of the Offer
and acceptance of the shares of Company Common Stock thereunder, the Purchaser
may from time to time purchase or acquire beneficial ownership of shares of
Company Common Stock in the open market at market prices then prevailing and
such prices may be greater or lower than the consideration offered pursuant to
the Offer.
Section 5.7. Public Announcements. Unless otherwise required by
--------------------
applicable law or stock exchange requirements, at all times prior to the earlier
of the Closing Date or the termination of this Agreement, no party hereto shall
or shall permit any of its subsidiaries to
28
(and each party shall use its reasonable best efforts to cause its affiliates
and Representatives not to) issue any press release concerning this Agreement,
the Acquisition or any other transaction contemplated hereby, without prior
consultation with the other parties hereto.
Section 5.8. Expenses. Whether or not the Acquisition is consummated,
--------
subject to Section 7.2 hereof, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, fees and disbursements of Representatives) shall be borne by the
party which incurs such cost or expense; provided, however, that (a) the filing
fee in connection with the filings under the HSR Act required in connection
herewith, and (b) all out-of-pocket costs and expenses related to the printing,
filing and mailing (as applicable) of the Offer Documents, and all Commission
and other regulatory filing fees incurred in connection with the Offer, shall be
borne by the Purchaser.
Section 5.9. Indemnification. (a) From and after the Closing Date, the
---------------
Purchaser shall, and shall cause the Company to, indemnify and hold harmless
each person who is now, or has been at any time prior to the date hereof, an
officer or director of the Company or any of its subsidiaries (the "Indemnified
Parties") against any losses, claims, damages, judgments, settlements,
liabilities, costs or expenses (including without limitation reasonable
attorneys' fees and out-of-pocket expenses) incurred in connection with any
claim, action, suit, proceeding or investigation arising out of or pertaining to
acts or omissions, or alleged acts or omissions, by them in their capacities as
such occurring at or prior to the Closing Date (including, without limitation,
in connection with the Acquisition and the other transactions contemplated by
this Agreement), to the fullest extent that the Company or such subsidiaries
would have been permitted, under applicable law and the articles of
incorporation or by-laws of the Company or the organizational documents of such
subsidiaries each as in effect on the date of this Agreement, to indemnify such
person (and the Purchaser or the Company shall also advance expenses as incurred
to the fullest extent permitted under applicable law upon receipt from the
Indemnified Party to whom expenses are advanced of a written undertaking to
repay such advances). The Purchaser and the Company shall pay all expenses,
including attorneys' fees, that may be incurred by any Indemnified Party in
enforcing this Section 5.9. If the indemnity provided by this Section 5.9(a) is
not available with respect to any Indemnified Party, then the Purchaser and the
Company, on the one hand, and the Indemnified Party, on the other hand, shall
contribute to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits.
(b) In the event of any such claim, action, suit, proceeding or
investigation, (i) any Indemnified Party wishing to claim indemnification under
this Section 5.9 shall, upon becoming aware of any such claim, action, suit,
proceeding or investigation, promptly notify the Company thereof (provided that
the failure to provide such notice shall not relieve the Purchaser or the
Company of any liability or obligation it may have to such Indemnified Party
under this Section unless such failure materially prejudices the Purchaser or
the Company, (ii) the Purchaser or the Company shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably acceptable to the Purchaser and the Company, (iii) the Purchaser and
the Company shall cooperate in the defense of any such
29
matter; provided, however, that neither the Purchaser nor the Company shall be
liable for any settlement effected without its prior written consent (not to be
unreasonably withheld); and provided, further, that neither the Purchaser nor
the Company shall be liable under this Section 5.9 for the fees and expenses of
more than one counsel for all Indemnified Parties in any single claim, action,
suit, proceeding or investigation, except to the extent that, in the opinion of
counsel for the Indemnified Parties, two or more of such Indemnified Parties
have conflicting interests in the outcome of such claim, action, suit,
proceeding or investigation such that additional counsel is required to be
retained by such Indemnified Parties under applicable standards of professional
conduct.
(c) From and after the Closing Date until the sixth anniversary
thereof, the Purchaser shall cause the Company to maintain, without any gaps or
lapses in coverage, directors' and officers' liability insurance covering the
Indemnified Parties who are covered, in their capacities as directors and
officers of the Company, by the existing directors' and officers' liability
insurance of the Company in force on the date of this Agreement, with respect to
losses or claims arising out of acts or omissions, or alleged acts or omissions,
by them in their capacities as such occurring at or prior to the Closing Date,
and upon terms no less favorable to the Indemnified Parties than such existing
directors' and officers' liability insurance; provided, however, that the
Company shall not be required in order to maintain or procure such coverage to
pay an annual premium in excess of 150% of the current annual premium paid by
the Company for its existing coverage, and that if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of such
limit, the Company shall only be required to obtain as much coverage as can be
obtained by paying an annual premium equal to such limit.
(d) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives.
Section 5.10. Employee Benefit Matters. (a) The Purchaser acknowledges
------------------------
that the Company is bound by the Employee Severance Plans applicable to
employees of the Company, and Purchaser agrees to cause the Company to perform
the terms thereof.
(b) Before the Closing Date, the Company shall, or shall cause one of
its Subsidiaries to take such action as is necessary to avoid the requirement
under the Renaissance Hotels Executive Supplemental 401(k) Plan and Renaissance
Hotels Deferred Incentive Plan (together, the "Plans") that, upon a change in
control of the Company or one of its Subsidiaries, the liabilities under the
Plans be funded through an irrevocable trust. Effective as of the Closing Date,
the Purchaser shall assume the Company's and any of the Company's Subsidiaries
liabilities and obligations under the Plans, except for the obligation to
establish an irrevocable trust to fund the liabilities. The Company and the
Purchaser agree that employees of the Company or any of its Subsidiaries who
participate in the Plans shall be fully vested in their accrued benefits under
the Plans as of the Closing Date. The Purchaser shall use its best efforts to
ensure that the intended timing of distributions under the Plans and the
intended tax consequences to participants in the Plans shall be maintained on
and after the Closing Date,
30
except to the extent modified by written agreement between the Purchaser and
such participants.
ARTICLE VI.
CONDITIONS TO THE OFFER
Section 6.1. Conditions to the Offer. (a) Notwithstanding any other
-----------------------
provisions of the Offer, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission including
Rule 14e-l(c) under the Exchange Act (relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restrictions referred to above, the payment for, any tendered Shares, and may
amend the Offer consistent with the terms of this Agreement or terminate the
Offer if (i) any applicable waiting period under the HSR Act has not expired or
terminated prior to the expiration of the Offer, (ii) the Minimum Condition has
not been satisfied, or (iii) at any time on or after February 17, 1997 and at or
before the time of acceptance of Shares for payment pursuant to the Offer, any
of the following events shall occur:
(A) from the date of this Agreement until the Closing Date,
there shall have occurred any change, event, occurrence or
circumstance in the business, operations, properties, financial
condition or results of operations of the Company or any of its
subsidiaries which, individually or in the aggregate, has had or
is reasonably likely to have a Company Material Adverse Effect
(except for changes, events, occurrences or circumstances with
respect to general economic or industry conditions);
(B) any Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which (1) makes the acceptance
for payment of, or the payment for, some or all of the Shares
illegal or otherwise prohibits or restricts consummation of the
Offer, (2) imposes material limitations on the ability of the
Purchaser to acquire or hold or to exercise any rights of
ownership of the Shares, or effectively to manage or control the
Company and its business, assets and properties or (3) has had or
is reasonably likely to have a Company Material Adverse Effect;
provided, however, that the parties shall use all commercially
-----------------
reasonable efforts (subject to the proviso in Section 5.5(b)) to
cause any such decree, judgment or other order to be vacated or
lifted;
(C) the representations and warranties of the Company set
forth in this Agreement shall not (i) have been true and correct
in any material respect on the date hereof or (ii) be true and
correct in any respect as of the scheduled
31
expiration date (as such date may be extended) of the Offer as
though made on or as of such date or the Company shall have
breached or failed in any respect to perform or comply with any
material obligation, agreement or covenant required by this
Agreement to be performed or complied with by it except, in each
case with respect to clause (ii), (x) for changes specifically
permitted by this Agreement and (y) (A) for those representations
and warranties that address matters only as of a particular date
which are true and correct as of such date or (B) where the
failure of representations and warranties (without regard to
materiality qualifications therein contained) to be true and
correct, or the performance or compliance with such obligations,
agreements or covenants, would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect;
(D) this Agreement shall have been terminated in accordance
with its terms;
(E) it shall have been publicly disclosed or Purchaser shall
have learned that any person, entity or "group" (as that term is
defined in Section 13(d)(3) of the Exchange Act), other than
Purchaser or its affiliates, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 of the Exchange
Act) of 20% or more of the Shares, or shall have entered into a
definitive agreement with the Company with respect to a tender
offer or exchange offer for any Shares or merger, consolidation or
other business combination with or involving the Company or any of
its subsidiaries;
(F) the Board of Managing Directors of the Company shall have
withdrawn or modified in a manner adverse to Purchaser its
approval or recommendation of the Offer, shall have recommended to
the Company's shareholders another offer or shall have adopted any
resolution to effect any of the foregoing;
(G) any of the consents, approvals, authorizations, orders or
permits required to be obtained by the Company, the Purchaser, or
their respective subsidiaries in connection with the Acquisition
from, or filings or registrations required to be made by any of
the same prior to the Closing Date with, any Governmental Entity
in connection with the execution, delivery and performance of this
Agreement shall not have been obtained or made or shall have been
obtained or made subject to conditions or requirements, except (i)
where the failure to have obtained or made any such consent,
approval, authorization, order, permit, filing or registration or
such conditions or requirements could not reasonably be expected
to (1) have a Company Material Adverse Effect or a Purchaser
Material Adverse Effect or (2) impose material limitations on the
ability of the Purchaser to acquire or hold or to exercise any
rights of ownership of the Shares, or effectively to manage or
control the
32
Company and its business, assets and properties and (ii) for any
such consent, approval, authorization, order, permit, filing or
registration related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or
serving of alcoholic beverages; or
(H) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the
New York Stock Exchange, Inc., (2) the declaration of a banking
moratorium or any suspension of payments in respect of banks in
the United States (whether or not mandatory), (3) the commencement
of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States and
having had or being reasonably likely to have a Company Material
Adverse Effect or materially adversely affecting (or materially
delaying) the consummation of the Offer, (4) any limitation or
proposed limitation (whether or not mandatory) by any United
States or Dutch governmental authority or agency, or any other
event, that materially adversely affects generally the extension
of credit by banks or other financial institutions, (5) from the
date of this Agreement through the date of termination or
expiration of the Offer, a decline of at least 25% in the Standard
& Poor's 500 Index or (6) in the case of any of the situations
described in clauses (1) through (5) inclusive, existing at the
date of the commencement of the Offer, a material acceleration,
escalation or worsening thereof;
which, in the reasonable judgment of Purchaser, in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
(b) The conditions set forth in Section 6.1(a) are for the sole
benefit of Purchaser and may be asserted by Purchaser regardless of any
circumstances giving rise to any condition and may be waived by Purchaser, in
whole or in part at any time and from time to time in the sole discretion of
Purchaser. The failure by Purchaser (or any affiliate of Purchaser) at any time
to exercise any of the foregoing rights will not be deemed a waiver of any right
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
ARTICLE VII.
TERMINATION
Section 7.1. Termination. This Agreement may be terminated and the Offer
-----------
and the Acquisition may be abandoned at any time prior to the Closing Date:
(a) by mutual consent of the Purchaser and the Company; or
33
(b) by action of the Board of Directors of either the Purchaser or
the Company if:
(i) (x) the Closing Date shall not have occurred on or
before June 30, 1997 (provided that the right to terminate this
Agreement under this clause (i) shall not be available to any
party whose breach of any representation or warranty or failure to
fulfill any covenant or agreement under this Agreement has been
the cause of or resulted in the failure of the Acquisition to
occur on or before such date); or (y) the Offer shall have expired
or been terminated and the Purchaser shall not have purchased any
shares of Company Common Stock pursuant to the Offer unless, in
the case of termination by the Purchaser, the Purchaser's
obligation to purchase shares of Company Common Stock pursuant to
the Offer shall not have been satisfied by reason of any failure
of the Purchaser to fulfill its obligations hereunder; or
(ii) a United States federal or state or Dutch court of
competent jurisdiction or United States federal or state or Dutch
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-
appealable (provided, that the party seeking to terminate this
Agreement pursuant to this clause (ii) shall have used all
commercially reasonable efforts (subject to the provisions of
Section 5.5.(b)) to remove such injunction, order or decree); or
(c) by action of the Board of Managing Directors of the Company on
five days' prior written notice to Purchaser if the Board of Managing
Directors of the Company withdraws its approval or recommendation of the
Offer, the Acquisition or this Agreement, by reason of an Alternative
Transaction Proposal, and the Company pays to the Purchaser the fee
provided in Section 7.2; or
(d) by action of the Board of Directors of the Purchaser, if the
Board of Managing Directors of the Company shall not have issued, or shall
have withdrawn or modified (including by amendment of the Schedule 14D-9)
in a manner materially adverse to the Purchaser, its approval or
recommendation of the Offer, the Acquisition or this Agreement or shall
have recommended an Alternative Transaction Proposal to the stockholders
of the Company, or shall have adopted any resolution to effect any of the
foregoing.
Section 7.2. Effect of Termination. (a) In the event that any person
---------------------
shall have made an Alternative Transaction Proposal for the Company and this
Agreement is terminated by either party, or in the event that this Agreement is
otherwise terminated under Section 7.1(d) pay the Purchaser a fee of $27,500,000
and, notwithstanding Section 5.8, reimburse the Purchaser for its documented
out-of-pocket expenses in connection with the transactions
34
contemplated hereby not exceeding $1,000,000, which amount shall be payable by
wire transfer of same day funds prior to or upon termination of this Agreement.
The Company acknowledges that the agreements contained in this Section 7.2(a)
are an integral part of the transactions contemplated in this Agreement, and
that, without these agreements, the Purchaser would not enter into this
Agreement.
(b) In the event of the termination of this Agreement and the
abandonment of the Acquisition pursuant to this Article VII, all future
obligations and liabilities of the parties hereto shall terminate, except the
obligations of the parties pursuant to this Section 7.2.
Section 7.3. Extension; Waiver. At any time prior to the Closing Date, any
-----------------
party hereto, by action taken by its Board of Directors, may, to the extent
locally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by or on behalf of the party or parties to be bound
thereby.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.
---------------------------------------------------------
All representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Acquisition and shall not
survive the Acquisition and thereafter neither the Purchaser, the Company, nor
any affiliate, officer, director, employee or shareholder shall have any
liability with respect thereto; provided, however, that the agreements contained
in Articles I and II and Section 5.9, this Article VIII, the Shareholder
Agreement, and any other covenant or agreement which contemplates performance
after the Closing Date shall survive the Acquisition.
Section 8.2. Notices. Any notice required to be given hereunder shall be
-------
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
35
(a) if to the Purchaser, to
Marriott International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel, Dept. 52/923
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
Renaissance Hotel Group N.V.
c/o Renaissance Hotels International
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated or personally delivered or on the fifth business day after
being deposited in the United States mail, if mailed.
Section 8.3. Certain Definitions. The following terms shall, when used in
-------------------
this Agreement, have the following respective meanings:
(a) "affiliate" shall have the meaning assigned to such term in
Section 12(b)-2 of the Exchange Act.
36
(b) "business day" shall have the meaning set forth in Rule 14d-
l(c)(6) under the Exchange Act.
(c) "person" means any natural person, corporation, limited
liability company, partnership, unincorporated organization, government or
department or agency thereof, or other legal entity.
(d) "subsidiary" of any person means any corporation, partnership,
joint venture or other organization, whether incorporated or unincorporated, of
which such person directly or indirectly owns or controls at least 50% of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
partnership or other organization of which such person directly or indirectly
owns a 50% or greater equity interest.
Section 8.4. Assignment; Binding Effect. Neither this Agreement nor any
--------------------------
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, provided, however, that Purchaser may
-----------------
assign its rights and delegate its obligations hereunder to a wholly-owned
subsidiary of the Purchaser and further provided that such assignment and
delegation shall not relieve Purchaser of its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Section 8.6 nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 8.5. Entire Agreement. This Agreement (including the Company
----------------
Disclosure Schedule), and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
Section 8.6. Amendment. This Agreement may be amended by the parties
---------
hereto, by action taken by their respective Boards of Directors, at any time by
an instrument in writing signed on behalf of each of the parties hereto. After
the Closing Date, none of the Sections or Articles specified in Section 8.1 may
be amended.
Section 8.7. Waivers. Except as provided in this Agreement, no action
-------
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement.
37
The waiver by any party hereto of a breach of any provision hereunder shall not
operate or be construed as a waiver of any prior or subsequent breach of the
same or any other provision hereunder.
Section 8.8. Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 8.9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without regard to
its rules of conflict of laws. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America located in the
State of New York (the "New York Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in the New York Courts),
waives any objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum.
Section 8.10. Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any New York Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 8.11. Incorporation of Exhibits. The Company Disclosure Schedule
-------------------------
is hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein. Inclusion of information in the Company Disclosure
Schedule does not constitute an admission or acknowledgment of the materiality
of such information.
Section 8.12. Interpretation. In this Agreement, unless the context
--------------
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders.
Section 8.13. Headings. The headings of the Articles and Sections of this
--------
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
38
Section 8.14. Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all which counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
MARRIOTT INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
RENAISSANCE HOTEL GROUP N.V.
By: /s/ Cheng Kar-Shun
-----------------------------------
Name: Cheng Kar-Shun, ▇▇▇▇▇
Title: Managing Director
39