EXHIBIT 99.2
RECAPITALIZATION AGREEMENT
dated as of
September 20, 2000
between
SUNBURST HOSPITALITY CORPORATION
and
NOVA FINANCE COMPANY LLC
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions............................................... 2
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger................................................ 5
SECTION 2.02. Effective Time............................................ 6
SECTION 2.03. Effect of the Merger...................................... 6
SECTION 2.04. Effect on Securities, Etc................................. 6
SECTION 2.05. Dissenting Shares......................................... 7
SECTION 2.06. Treatment of Options and Restricted Stock................. 8
SECTION 2.07. Surrender of Shares....................................... 8
SECTION 2.08. Lost, Stolen or Destroyed Certificates.................... 10
SECTION 2.09. Further Action............................................ 10
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation; By-Laws..................... 11
SECTION 3.02. Directors and Officers.................................... 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power............................. 12
SECTION 4.02. Corporate Authorization................................... 12
SECTION 4.03. Governmental Authorization................................ 13
SECTION 4.04. Non-Contravention......................................... 13
SECTION 4.05. Finders' Fees............................................. 13
SECTION 4.06. Antitakeover Statutes and Rights Agreement................ 14
SECTION 4.07. Capitalization............................................ 14
SECTION 4.08. Subsidiaries; Equity Investments.......................... 15
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SECTION 4.09. Disclosure Documents...................................... 16
SECTION 4.10. Absence of Material Adverse Effect........................ 16
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY
SECTION 5.01. Existence and Power....................................... 16
SECTION 5.02. Authorization............................................. 17
SECTION 5.03. Governmental Authorization................................ 17
SECTION 5.04. Non-Contravention......................................... 17
SECTION 5.05. Finders' Fees............................................. 18
SECTION 5.06. Disclosure Documents...................................... 18
SECTION 5.07. Financing................................................. 18
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company.................................... 19
SECTION 6.02. Access to Information..................................... 21
SECTION 6.03. Stockholder Meeting; Proxy Material....................... 21
SECTION 6.04. No Solicitation........................................... 22
SECTION 6.05. State Takeover Laws....................................... 23
SECTION 6.06. Reports................................................... 23
SECTION 6.07. Issuance of Class A Preferred Stock....................... 23
SECTION 6.08. Section 16 Matters........................................ 23
SECTION 6.09. Expenses.................................................. 23
ARTICLE 7
COVENANTS OF MERGER SUBSIDIARY
SECTION 7.01. Director and Officer Liability............................ 25
SECTION 7.02. Financing Arrangements.................................... 26
ARTICLE 8
COVENANTS OF MERGER SUBSIDIARY AND THE COMPANY
SECTION 8.01. Commercially Reasonable Efforts........................... 26
SECTION 8.02. Certain Filings........................................... 27
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SECTION 8.03. Public Announcements...................................... 27
SECTION 8.04. Notices of Certain Events................................. 27
SECTION 8.05. Confidentiality........................................... 28
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party................... 28
SECTION 9.02. Conditions to the Obligations of Merger Subsidiary........ 29
SECTION 9.03. Conditions to the Obligations of the Company.............. 29
ARTICLE 10
TERMINATION
SECTION 10.01. Termination............................................... 30
SECTION 10.02. Effect of Termination..................................... 31
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices................................................... 32
SECTION 11.02. Survival of Representations and Warranties................ 33
SECTION 11.03. Amendments; No Waivers.................................... 33
SECTION 11.04. Successors and Assigns.................................... 34
SECTION 11.05. Governing Law............................................. 34
SECTION 11.06. Jurisdiction.............................................. 34
SECTION 11.07. Waiver of Jury Trial...................................... 34
SECTION 11.08. Counterparts; Effectiveness; Enforcement.................. 34
SECTION 11.09. Entire Agreement.......................................... 35
SECTION 11.10. Captions.................................................. 35
SECTION 11.11. Severability.............................................. 35
SECTION 11.12. Specific Performance...................................... 35
Exhibits
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Exhibit A - Exchange and Voting Agreement
Exhibit B - Form of Certificate of Merger
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Exhibit C - Form of Amended Restated Certificate of Incorporation
of Surviving Corporation
Exhibit D - Form of Amended By-Laws
Exhibit E - Form of Certificate of Designation of Class A Preferred Stock
SCHEDULES
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Schedules A - Continuing Stockholders
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RECAPITALIZATION AGREEMENT
RECAPITALIZATION AGREEMENT dated as of September 20, 2000 between
Sunburst Hospitality Corporation, a Delaware corporation (the "Company"), and
Nova Finance Company LLC, a Delaware limited liability company ("Merger
Subsidiary").
W I T N E S S E T H :
WHEREAS, the members of Merger Subsidiary seek to acquire a
controlling interest in the Company through a merger, to be accounted for as a
recapitalization under generally accepted accounting principles, in which Merger
Subsidiary will merge with and into the Company, with the shares of the Company
being converted into the right to receive the Merger Consideration (as defined
below), subject to certain exceptions described in this Agreement (the
"Merger"); and
WHEREAS, a Special Committee (as defined herein) of the board of
directors of the Company (the "Board of Directors") has (i) approved the Merger
(as defined herein), (ii) has recommended the approval of the Merger by the
Board of Directors, (iii) has determined that the Merger is advisable to and in
the best interests of the holders of the Company's capital stock (the "Company
Stockholders"), other than the Continuing Stockholders (as defined herein), (iv)
has determined that the Merger Consideration (as defined herein) is fair to the
Company Stockholders, other than the Continuing Stockholders, and (v) has
approved and recommended the approval of this Agreement to the Board of
Directors; and
WHEREAS, the Board of Directors, subsequent to the recommendation of
the Special Committee, has approved the Merger and this Agreement and determined
that it is advisable and in the best interests of the Company Stockholders,
other than the Continuing Stockholders, for the Company to consummate the Merger
and the other transactions contemplated by this Agreement (collectively, the
"Transactions"), upon the terms and subject to the conditions set forth herein;
and
WHEREAS, as an inducement to the parties to enter into this Agreement,
the Continuing Stockholders have entered into an Exchange and Voting Agreement
in substantially the form attached hereto as Exhibit A (the "Exchange and Voting
Agreement"), whereby they have agreed to exchange certain Shares (as defined
herein) owned by them immediately prior to the Effective Time (as defined
herein) for newly issued shares of Class A Preferred Stock, par value $0.01 per
share and liquidation preference $1.00 per share, of the Company ("Class A
Preferred Stock"), and they have agreed to vote their Shares in favor of the
Transactions; and
WHEREAS, the members and managers of Merger Subsidiary have approved
this Agreement and the Merger in accordance with the applicable provisions of
the Limited
Liability Company Act of the State of Delaware (the "DLLCA") and upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, (i) any acquisition or purchase of 10% or more of the
consolidated assets of the Company and its Subsidiaries, (ii) any acquisition or
purchase of an equity interest in the Company representing in excess of 10% of
the power to vote for the election of a majority of the directors of the
Company, or any tender offer or exchange offer for equity securities of the
Company as a result of which the offeror would hold such an equity interest in
the Company or (iii) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving (a) the Company or (b) any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than 10% of the
consolidated assets of the Company and its Subsidiaries, in each case other than
the Transactions.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Business Day" means a day other than Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the series of common stock, par value $0.01 per
share, of the Company designated as "Common Stock."
"Continuing Stockholder Exchange Shares" has the meaning specified in
the Exchange and Voting Agreement.
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"Continuing Stockholders" means the shareholders of the Company
identified on Schedule A hereto.
"Exchange Date" has the meaning specified in the Exchange and Voting
Agreement.
"Governmental Authority" means any federal, state or local government
or any court, administrative agency or commission or other governmental or
regulatory agency, authority or official, in each case, whether domestic,
foreign or supranational.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Lien" means, with respect to any property or asset, any mortgage,
deed of trust, deed to secure debt, lien, assignment, pledge, charge, security
interest, claim, levy, purchase option, call, right of first refusal, preemptive
or similar right of any Person or other encumbrance of any kind, whether or not
filed, recorded or otherwise perfected under applicable law (including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a lien or
security interest and any filing of or agreement to file a financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Material Adverse Effect" means either (i) a material adverse effect
on the condition (financial or otherwise), business, assets, properties, results
of operations or prospects of the Company and its Subsidiaries, taken as a
whole, or (ii) an effect which is materially adverse to the ability of the
Company to consummate the Transactions, other than (A) effects or changes
relating to (x) the securities markets in general, (y) conditions in the
Company's industry in general, or (z) general economic conditions, or (B)
effects or changes resulting from the announcement of the Transactions.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Option Plans" means, collectively, the Company's 1996 Long-Term
Incentive Plan, 1997 Non-Employee Director Stock Compensation Plan and Non-
Employee Director Stock Option and Deferred Compensation Plan.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a Governmental Authority.
"Rights" means the rights granted under the Rights Agreement.
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"Rights Agreement" means the Rights Agreement between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent, dated February 23,
1998.
"SEC" means the Securities and Exchange Commission.
"Shares" means shares of Common Stock.
"Special Committee" means the Special Committee of the Board of
Directors formed to, among other things, evaluate the Transactions.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, limited liability company or other organization,
whether incorporated or unincorporated, of which the securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions with respect to
such corporation, partnership, association, limited liability company or other
organization are at any time directly or indirectly owned or controlled by such
Person or by any one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries.
"Surviving Corporation Common Shares" means the common stock, par
value $0.01 per share, of the Surviving Corporation.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Bank............................................... 5.07
Board of Directors................................. Recitals
Certificate of Merger.............................. 2.02
Class A Converted Shares........................... 2.04
Class A Merger Consideration....................... 2.04
Class A Preferred Stock............................ Recitals
Commitment Letter.................................. 5.07
Company............................................ Recitals
Company Expenses................................... 6.09
Company Proxy Statement............................ 4.09
Company Representatives............................ 6.02
Company SEC Documents.............................. 4.07
Company Securities................................. 4.05
Company Stockholder Meeting........................ 6.03
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Term Section
Company Stockholders............................... Recitals
Company Subsidiary Securities...................... 4.06
DGCL............................................... 2.01
DLLCA.............................................. Recitals
Dissenting Shares.................................. 2.05
DOJ................................................ 8.01
Effective Time..................................... 2.02
End Date........................................... 10.01
Exchange Agent..................................... 2.07
Exchange and Voting Agreement...................... Recitals
Converted Share.................................... 2.04
FTC................................................ 8.01
GAAP............................................... 6.01
Indemnified Person................................. 7.01
Merger............................................. Recitals
Merger Consideration............................... 2.04
Merger Subsidiary.................................. Recitals
Merger Subsidiary Common Shares.................... 2.04
Merger Subsidiary Representatives.................. 6.02
Option............................................. 2.06
Preferred Stock.................................... 4.05
Restricted Stock................................... 2.06
Schedule 13E-3..................................... 4.09
Series A Preferred Stock........................... 2.04
Surviving Corporation.............................. 2.01
Title, Survey and Environmental Costs.............. 6.09
Transactions....................................... Recitals
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger. At the Effective Time, and subject to and
upon the terms and conditions of this Agreement, the General Corporation Law of
the State of Delaware (the "DGCL"), and the DLLCA, Merger Subsidiary shall be
merged with and into the Company, the separate existence of Merger Subsidiary
shall cease, and the Company shall continue as the surviving corporation
(hereinafter sometimes referred to as the "Surviving Corporation").
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SECTION 2.02. Effective Time. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 10.01, as promptly as practicable (and in any event within
two Business Days) after the satisfaction or waiver of the conditions set forth
in Article 9 hereof, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger as contemplated by the DGCL and the DLLCA (the
"Certificate of Merger") in the form of Exhibit B attached hereto, together with
any required related certificates, with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL and the DLLCA. The Merger shall become
effective at the time of such filing or at such later time specified in the
Certificate of Merger (the "Effective Time"). Prior to such filing, a closing
shall be held at such time as may be agreed upon by Merger Subsidiary and the
Company, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the parties
hereto, for the purpose of confirming the satisfaction or waiver, as the case
may be, of the conditions set forth in Article 9 hereof.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of the DGCL and the DLLCA.
SECTION 2.04. Effect on Securities, Etc.
(a) Capital Stock of Merger Subsidiary. At the Effective Time, each
membership interest of Merger Subsidiary ("Merger Subsidiary Common Shares")
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and non-assessable Surviving
Corporation Common Share.
(b) Cancellation of Treasury Stock. Each Share that is owned by the
Company shall automatically be canceled and retired and shall cease to exist,
and no cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than (x) Shares constituting
Restricted Stock, which will be treated as provided in Section 2.06(b), (y)
Dissenting Shares and (z) Shares owned by any Subsidiary of the Company) (each
of such Shares, other than Shares referred to in clauses (x), (y) and (z), a
"Converted Share") shall, by virtue of the Merger, be converted into the right
to receive from the Surviving Corporation after the Merger cash in an amount
equal to (i) $7.375 (the "Merger Consideration"). Each such Converted Share
shall no longer be outstanding, shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate formerly representing any
such Converted Shares shall, to the extent such certificate formerly represented
such Converted Shares, cease to have any rights with respect thereto, except the
right to receive the Merger Consideration applicable thereto, upon surrender of
such certificate in accordance with Section 2.07 hereof.
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(d) Conversion of Class A Preferred Stock. Each share of the
Company's Class A Preferred Stock issued and outstanding immediately prior to
the Effective Time (the "Class A Converted Shares") shall, by virtue of the
Merger, be converted into ten Surviving Corporation Common Shares (with
fractional Class A Converted Shares converted into that number of Surviving
Corporation Common Shares equal to the product of (i) such fraction of a Class A
Converted Share and (ii) ten) (the "Class A Merger Consideration"). Each such
Class A Converted Share (or fractional Class A Converted Share) shall no longer
be outstanding, shall automatically be canceled and retired and shall cease to
exist, and each such holder of a certificate formerly representing any such
Class A Converted Shares (or fractional Class A Converted Share) shall, to the
extent such certificate formerly represented such Class A Converted Shares (or
fractional Class A Converted Share), cease to have any rights with respect
thereto, except the right to receive the Class A Merger Consideration applicable
thereto, upon surrender of such certificate in accordance with Section 2.07
hereof.
SECTION 2.05. Dissenting Shares. (a) Notwithstanding any provision
of this Agreement to the contrary, any Shares or Class A Preferred Stock issued
and outstanding immediately prior to the Effective Time, and held by a holder
who has the right to demand payment for and any appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision), who
perfects his demand for the appraisal of the fair value of his Shares or Class A
Preferred Stock in accordance with the DGCL and who, as of the Effective Time,
has neither effectively withdrawn nor lost his right to make such demand (such
Shares or Class A Preferred Stock, the "Dissenting Shares"), shall not be
converted into or represent a right to receive the consideration for his Shares
or Class A Preferred Stock specified in Section 2.04, but the holder thereof
shall be entitled to only such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.05(a), if any holder
of Dissenting Shares effectively withdraws or loses (through failure to perfect
or otherwise) his right to make such demand, then as of the Effective Time or
the occurrence of such event, whichever occurs later, such dissenting holder's
Shares or Class A Preferred Stock shall thereafter represent only the right to
receive the consideration for Shares or Class A Preferred Stock specified in
Section 2.04, without interest thereon, upon surrender of the certificates
representing such Shares or Class A Preferred Stock.
(c) The Company shall give Merger Subsidiary, prior to the Effective
Time, (i) prompt notice of any written demands for appraisal of the fair value
of any Shares or Class A Preferred Stock, withdrawals of such demands and any
other instruments served pursuant to the DGCL received by the Company after the
date hereof and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal or the payment of the fair cash value of
any such Shares or Class A Preferred Stock under the DGCL. The Company shall
not voluntarily make any payment with respect to any demands for appraisal or
the pay-
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ment of the fair cash value of any Shares or Class A Preferred Stock and shall
not, except with the prior written consent of Merger Subsidiary, settle or offer
to settle any such demands.
SECTION 2.06. Treatment of Options and Restricted Stock.
(a) At or immediately prior to the Effective Time, each outstanding
stock option (each, an "Option") to purchase shares granted under any of the
Option Plans held by any person other than a Continuing Stockholder, whether or
not vested, shall be cancelled, and holders of such Options with an exercise
price below the Merger Consideration shall receive from the Surviving
Corporation (subject to any applicable withholding taxes) an amount per Option
equal to the Merger Consideration less the exercise price for such Option.
Options held by Continuing Stockholders shall not be affected or modified
pursuant to this Agreement, but shall be subject to the provisions of the
stockholder agreement contemplated by the Exchange and Voting Agreement.
(b) Each share of restricted stock granted under any of the Option
Plans ("Restricted Stock") held by any person other than a Continuing
Stockholder or an individual who is not offered continuing employment shall be
converted into the right to receive an amount equal to the Merger Consideration
and, notwithstanding the existing restrictions with respect to such Restricted
Stock, such restrictions with respect to 50% of such amounts shall lapse on the
first anniversary of the Effective Time and such restrictions with respect to
the remaining 50% of such amounts shall lapse on the second anniversary of the
Effective Time. Such amounts shall bear interest from the Effective Time to the
date of payment at the simple annual rate equal to the rate for U.S. Treasury
Notes with a one year maturity as of the Effective Time, which rate shall be
reset monthly on the one-month anniversary to the Effective Time. Restricted
Stock held by Continuing Stockholders which shall have been exchanged for Class
A Preferred Stock pursuant to the Exchange and Voting Agreement, shall be
converted into the right to receive the Class A Merger Consideration pursuant to
Section 2.04(d) and shall be subject to the provisions of the stockholders
agreement contemplated by the Exchange and Voting Agreement. Restricted Stock
held by an individual who is not offered continuing employment shall have their
Restricted Stock accelerated and paid out on the Closing Date.
(c) Prior to the Effective Time, the Board of Directors and (i) the
Key Executive Stock Option Plan Committee shall have taken all necessary action
with respect to the Option Plans to give effect to the provisions of this
Section 2.06(a) and (b) and (ii) shall not have taken any action to determine
that the Transactions constitute a "change of control" under any of the Option
Plans.
SECTION 2.07. Surrender of Shares. (a) Prior to the Effective
Time, Merger Subsidiary shall appoint a bank or trust company which is
reasonably satisfactory to the Company to act as the exchange agent (the
"Exchange Agent") for the payment of the Merger Consideration. All of the fees
and expenses of the Exchange Agent shall be borne by
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the Surviving Corporation. The Surviving Corporation will serve in the capacity
of exchange agent with respect to the Class A Merger Consideration and will, at
the Effective Time, upon receipt of the stock certificates for Class A Converted
Shares duly endorsed and in form for transfer with accompanying stock powers
duly executed in blank, exchange such stock certificates for new stock
certificates representing the Class A Merger Consideration in accordance with
Section 2.04(d).
(b) At or prior to the Effective Time, there will be deposited with
the Exchange Agent cash in an amount equal to the aggregate Merger Consideration
(in an amount equal to the number of Converted Shares multiplied by the Merger
Consideration) in immediately available funds. The Exchange Agent shall invest
the funds as directed by the Surviving Corporation on a daily basis. Any
interest and other income resulting from such investments shall be paid to the
Surviving Corporation.
(c) Promptly following the Effective Time, the Surviving Corporation
shall instruct the Exchange Agent to mail to each holder of record as of
immediately prior to the Effective Time of a certificate representing Converted
Shares converted upon the Merger pursuant to this Agreement (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates shall pass, only upon delivery of the
certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the certificates. The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. Each
holder of a certificate or certificates representing Converted Shares converted
upon the Merger pursuant to this Agreement may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder, to
effect the surrender of such certificate or certificates on such holder's behalf
for a period ending three months after the Effective Time. Upon the due
surrender of certificates representing Converted Shares, the Surviving
Corporation shall cause the Exchange Agent to pay the holder of such
certificates in exchange therefor the Merger Consideration multiplied by the
number of Converted Shares formerly represented by such certificate that have
been so converted. Until so surrendered, each such certificate shall represent
solely the right to receive the Merger Consideration.
(d) If any payment or issuance in respect of Shares or Class A
Preferred Stock under this Section 2.07 is to be made to a Person other than the
Person in whose name a surrendered certificate is registered, it shall be a
condition to such payment or issuance that the certificate so surrendered shall
be properly endorsed or shall be otherwise in proper form for transfer and that
the Person requesting such payment or issuance shall have paid any transfer and
other taxes required by reason of such payment or issuance in a name other than
that of the registered holder of the certificate or instrument surrendered or
shall have established to
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the satisfaction of the Surviving Corporation or the Exchange Agent that such
tax either has been paid or is not payable.
(e) At and after the Effective Time, no further transfer of Shares or
Class A Preferred Stock which have been converted pursuant to Section 2.04 of
this Agreement shall be made, other than transfers of such securities that have
occurred prior to the Effective Time. In the event that, after the Effective
Time, certificates representing Shares or Class A Preferred Stock which have
been converted pursuant to Section 2.04 of this Agreement are presented to the
Surviving Corporation, they shall be canceled and exchanged in the manner
contemplated by Section 2.04 and as provided in this Section 2.07.
(f) The Merger Consideration paid in the Merger shall be paid in full
to the holder of Shares without interest thereon, and shall be subject to
reduction only for any applicable United States federal or other withholding or
stock transfer taxes payable by such holder.
(g) Promptly following the date which is three months after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash, certificates and other documents in its possession relating to the
Transactions, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a certificate representing Shares may surrender such certificate to
the Surviving Corporation and (subject to any applicable abandoned property,
escheat or similar law) receive in consideration therefor the consideration due
to such holder pursuant to Section 2.04 of this Agreement, without any interest
thereon.
(h) None of Merger Subsidiary, the Surviving Corporation or the
Exchange Agent shall be liable to any holder of Shares or Class A Preferred
Stock for any cash or securities delivered to a public official pursuant to any
abandoned property, escheat or similar law, rule, regulation, statute, order,
judgment or decree.
SECTION 2.08. Lost, Stolen or Destroyed Certificates. In the event
any certificates representing Shares or Class A Preferred Stock shall have been
lost, stolen or destroyed, the Exchange Agent or the Surviving Corporation, as
applicable, shall deliver the Merger Consideration or Class A Merger
Consideration, as the case may be, pursuant to Section 2.04 hereof in exchange
for such lost, stolen or destroyed certificates upon the making of an affidavit
of that fact by the holder thereof; provided, however, that the Surviving
Corporation may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver an indemnity against any claim that may be made against the Surviving
Corporation or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
SECTION 2.09. Further Action. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement and to put the Surviving Corporation in possession of all assets
and property of every description and
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every interest, wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as of a private nature, of
the Company and Merger Subsidiary, the officers and directors of the Surviving
Corporation are fully authorized in the name of their respective corporations
immediately prior to the Effective Time or otherwise to take, and will take, all
such lawful and necessary action.
ARTICLE 3
The Surviving Corporation
SECTION 3.01. Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. The amended and restated
certificate of incorporation of the Company, as changed and as set forth on
Exhibit C hereto, shall from and after the Effective Time be the amended and
restated certificate of incorporation of the Surviving Corporation until
thereafter amended as provided by the DGCL and such restated certificate of
incorporation.
(b) By-Laws. The by-laws of the Company, as changed and as set forth
on Exhibit D hereto, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided in its amended and restated certificate of
incorporation and by the DGCL.
SECTION 3.02. Directors and Officers. (a) The directors of Merger
Subsidiary immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, and the Board of Directors will approve,
prior to the Merger, the directors of Merger Subsidiary as the directors of the
Surviving Corporation.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed or until their
earlier resignation, removal from office or death.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Merger Subsidiary that, except
as set forth in the section or subsection of the disclosure schedule delivered
by the Company to Merger Subsidiary immediately prior to execution of this
Agreement corresponding to the relevant section or subsection of this Article 4:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to own or
lease and operate its properties and assets and to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which have not had and would not have, individually or
in the aggregate, a Material Adverse Effect. The Company is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified have not had and would not have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.02. Corporate Authorization. (a) The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the Transactions are within the Company's corporate powers and,
except for the required approval of the Company Stockholders in connection with
the consummation of the Merger, have been duly authorized by all necessary
corporate action on the part of the Company. The affirmative vote of the holders
of not less than two-thirds of the total number of votes that may be cast by
holders of capital stock of the Company in the election of directors is the only
vote of the holders of the Company's capital stock required under the DGCL and
the Company's amended and restated certificate of incorporation and by-laws in
connection with the consummation of the Merger. The Company and Merger
Subsidiary, however, have agreed that the vote necessary to approve the Merger
shall be such two-thirds vote including a majority of the total number of votes
that may be cast by holders (other than Continuing Stockholders) of capital
stock of the Company. This Agreement constitutes a valid and binding agreement
of the Company.
(b) The Special Committee has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. to the effect that, as of the date of this Agreement, the Merger
Consideration is fair, from a financial point of view, to the holders of Shares
(other than the Merger Subsidiary, Continuing Stockholders and their respective
affiliates).
(c) At a meeting duly called and held, the Special Committee has
unanimously determined that this Agreement and the Transactions are advisable
and fair to and in the best
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interests of the Company Stockholders (other than the Continuing Stockholders)
and resolved to recommend that the Board of Directors approve and declare
advisable this Agreement and the Transactions.
(d) At a meeting duly called and held, the Board of Directors,
subsequent to the unanimous recommendation of the Special Committee, approved
the Merger and this Agreement, determined that it is advisable and in the best
interests of Company Stockholders (other than Continuing Stockholders) to
consummate the Merger and the other Transactions, and resolved to recommend
approval of the Merger and this Agreement by Company Stockholders.
SECTION 4.03. Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the Transactions require no action by or in respect of, or filing
with, or notification or reporting to, any Governmental Authority, other than
(i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (ii) compliance
with any applicable requirements of the HSR Act and (iii) compliance with any
applicable requirements of the 1934 Act and any other applicable securities
laws, whether state or foreign except for those failures to comply that would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 4.04. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
Transactions do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the amended and restated certificate of
incorporation or by-laws of the Company, (ii) assuming compliance with the
matters referred to in Section 4.02 and 4.03 hereof, contravene, conflict with
or result in a violation or breach of any provision of any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order, or decree,
(iii) require any consent or other action by any Person under, constitute a
default under, or cause or permit the termination, cancellation, acceleration or
other change of any right or obligation or the loss of any benefit to which the
Company or any of its Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets,
properties or business of the Company and its Subsidiaries or (iv) result in the
creation or imposition of any Lien on any asset or property of the Company or
any of its Subsidiaries, except for such failures to obtain any such consent or
other conflicts, violations, breaches, actions, defaults, terminations,
cancellations, accelerations, changes, losses or Liens referred to above that
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
SECTION 4.05. Finders' Fees'. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc., copies of whose engagement agreement have been provided to Merger
Subsidiary, there is no
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investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Company or any of its Subsidiaries
who might be entitled to any fee or commission from the Company or any of its
Affiliates in connection with the Transactions.
SECTION 4.06. Antitakeover Statutes and Rights Agreement. (a) The
Company has validly elected not to be, and is not, governed by the restrictions
on "business combinations" contained in Section 203 of the DGCL, and,
accordingly, neither the restrictions of such Section nor any other antitakeover
or similar statute or regulation applies or purports to apply to any such
Transactions.
(b) The Company has taken all action necessary to render the Rights
issued pursuant to the terms of the Rights Agreement inapplicable to the Merger,
this Agreement, and the Transactions. Prior to the Effective Time, the Rights
Agreement will be amended such that it will expire and all Rights will be
canceled immediately prior to the Effective Time and the Rights Agreement will
have no force or effect on or after the Effective Time.
SECTION 4.07. Capitalization. (a) The authorized capital stock of
the Company consists of 60,000,000 shares of common stock, par value $0.01 per
share, of which 25,000,000 shares have been designated as Common Stock, and
5,000,000 shares, par value $1.00 per share, of preferred stock (the "Preferred
Stock"). As of the close of business on September 19, 2000, (i) 15,834,543
shares of Common Stock (and 15,854,543 related Rights) were issued and
outstanding, (ii) no shares of Preferred Stock were issued or outstanding, and
(iii) 7,437,707 shares of Common Stock were held by the Company in its treasury.
All outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable.
(b) As of the date hereof, 300,000 shares of Preferred Stock have been
designated as Series A Junior Participating Preferred and are reserved for
issuance pursuant to the Rights.
(c) As of the date hereof:
(i) 3,956,666 Shares were reserved for issuance pursuant to options
granted under the Option Plans, of which 1,158,737 were outstanding and
903,984 are vested and exercisable as of the date hereof without regard to
any "change of control" trigger in an Option Plan or option agreement
governing such Options; and
(ii) 1,347,178 Shares of Restricted Stock were the subject of awards
under the Option Plans, of which 295,271 are vested deferred Shares.
(d) Except as set forth in this Section 4.07(d) or as contemplated by
Section 6.07, there are no outstanding (i) shares of capital stock or voting
securities of the Com-
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pany, (ii) securities of the Company convertible into or exchangeable for shares
of capital stock or voting securities of the Company, (iii) options or other
rights to acquire from the Company, or other obligation of the Company to issue,
any capital stock, voting securities or securities convertible into, exercisable
for or exchangeable for capital stock or voting securities of the Company or
(iv) stock appreciation, phantom stock or similar rights with respect to the
Company (the items in clauses (i), (ii), (iii) and (iv) being referred to
collectively as the "Company Securities"). There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the Company Securities. A list of the holders of Options, the
number of Options held by each such holder, the exercise prices, the date of
grant and vesting schedule of each such Option are set forth in Section 4.07(d)
of the Company's disclosure schedule. A list of the holders of Restricted Stock,
the number of Shares of Restricted Stock held by each such holder and the date
of grant and vesting schedule thereof is set forth in Section 4.07(d) of the
Company's disclosure schedule. A list of the persons entitled to deferred
Restricted Stock, the number of Shares of deferred Restricted Stock to which
each such person is entitled and the date or dates on which payment of the
Shares is scheduled to be made is set forth in Section 4.07(d) of the Company's
disclosure schedule.
SECTION 4.08. Subsidiaries; Equity Investments. (a) Each Subsidiary
of the Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to own or lease and operate its properties and
assets and to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which has not had
and would not have, individually or in the aggregate, a Material Adverse Effect.
Each such Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where the failure to be so qualified
has not had and would not have, individually or in the aggregate, a Material
Adverse Effect.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Subsidiary of the Company is owned by
the Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests). All of the outstanding shares of capital stock of each
Subsidiary of the Company have been validly issued and are fully paid and non-
assessable. There are no outstanding (i) securities of the Company or any of its
Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary of the Company,
(ii) options or other rights to acquire from the Company or any of its
Subsidiaries, or other obligation of the Company or any of its Subsidiaries to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership in-
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terests in, any Subsidiary of the Company or (iii) stock appreciation, phantom
stock or similar rights with respect to any Subsidiary of the Company (the items
in clauses (i), (ii) and (iii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Company Subsidiary Securities.
SECTION 4.09. Disclosure Documents. (i) The proxy statement of the
Company to be filed with the SEC in connection with the Merger (the "Company
Proxy Statement") and any amendments or supplements thereto and (ii) the
statement on Schedule 13E-3 to be filed by the Company concurrently with the
filing of the Company Proxy Statement (such statement, as amended or
supplemented, is referred to herein as the "Schedule 13E-3") and any amendments
or supplements thereto will each, when filed, comply as to form in all material
respects with the applicable requirements of the 1934 Act. At the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to Company Stockholders, and at the time such stockholders vote on the adoption
of this Agreement, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The Schedule 13E-3 will not 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. The representations and warranties
contained in this Section 4.09 will not apply to statements or omissions
included in the Company Proxy Statement or the Schedule 13E-3 based upon
information furnished in writing to the Company by or on behalf of Merger
Subsidiary for use therein.
SECTION 4.10. Absence of Material Adverse Effect. As of the date of
this Agreement, since June 30, 2000, there has not been any event, occurrence,
development or state of circumstances or facts that has or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY
Merger Subsidiary represents and warrants to the Company that:
SECTION 5.01. Existence and Power. Merger Subsidiary is a limited
liability company duly formed, validly existing and in good standing under the
laws of Delaware and has all limited liability company powers and all
governmental licenses, authoriza-
-16-
tions, permits, consents and approvals required to carry on its business as now
conducted. Merger Subsidiary was formed solely for the purpose of engaging in
the Transactions. Since the date of its formation, Merger Subsidiary has not
engaged in any activities other than in connection with or as contemplated by
this Agreement. Merger Subsidiary has no Subsidiaries.
SECTION 5.02. Authorization. The execution, delivery and performance
by Merger Subsidiary of this Agreement and the consummation by Merger Subsidiary
of the Transactions are within the limited liability company powers of Merger
Subsidiary and have been duly authorized by all necessary limited liability
company action. This Agreement constitutes a valid and binding agreement of
Merger Subsidiary.
SECTION 5.03. Governmental Authorization. The execution, delivery
and performance by Merger Subsidiary of this Agreement and the consummation by
Merger Subsidiary of the Transactions require no action by or in respect of, or
filing with, or notification or reporting to, any Governmental Authority other
than (i) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, (ii) compliance with any applicable requirements of the
HSR Act, (iii) compliance with any applicable requirements of the 1934 Act and
any other securities laws, whether state or foreign and (iv) any actions or
filings the absence of which could not materially impair the ability of Merger
Subsidiary to consummate the Transactions.
SECTION 5.04. Non-Contravention. The execution, delivery and
performance by Merger Subsidiary of this Agreement and the consummation by
Merger Subsidiary of the Transactions do not and will not (i) contravene,
conflict with, or result in any violation or breach of any provision of any
limited liability company agreement or organizational document of Merger
Subsidiary, (ii) assuming compliance with the matters referred to in Section
5.03 hereof, contravene, conflict with or result in a violation or breach of any
provision of any law, rule, regulation, judgment, injunction, order or decree,
(iii) require any consent or other action by any Person under, constitute a
default under, or cause or permit the termination, cancellation, acceleration or
other change of any right or obligation or the loss of any benefit to which
Merger Subsidiary is entitled under any provision of any agreement or other
instrument binding upon Merger Subsidiary or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of Merger Subsidiary or (iv) result in the
creation or imposition of any Lien on any asset of Merger Subsidiary, except for
such failures to obtain any such consent or other action, defaults,
terminations, cancellations, accelerations, changes, losses or Liens referred to
in clauses (iii) and (iv) that could not materially impair the ability of Merger
Subsidiary to consummate the Transactions.
SECTION 5.05. Membership Interests. The authorized membership
interests of the Merger Subsidiary consists of 100 membership interests.
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SECTION 5.06. Finders' Fees. Except for Chase Securities Inc.,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Merger Subsidiary who
might be entitled to any fee or commission from the Company.
SECTION 5.07. Disclosure Documents. None of the information provided
in writing by Merger Subsidiary for inclusion (i) in the Company Proxy Statement
or any amendment or supplement thereto, at the time the Company Proxy Statement
or any amendment or supplement thereto is first mailed to the Company
Stockholders and at the time the Company Stockholders vote on adoption of this
Agreement or (ii) in the Schedule 13E-3 will contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 5.08. Financing. Merger Subsidiary has received and
furnished copies to the Company of (i) a commitment letter to provide financing
to the Company (including the Summary of Terms and Conditions annexed thereto,
the "Commitment Letter") with The Chase Manhattan Bank (the "Bank") dated as of
September 18, 2000. As of the date hereof (i) the Commitment Letter has not been
withdrawn and is in full force and effect and (ii) Merger Subsidiary has no
reason to believe that any of the conditions set forth in the Commitment Letter
will not be satisfied.
SECTION 5.09. Merger Subsidiary's Representations. Merger Subsidiary
acknowledges that prior to the date hereof, none of the officers or directors of
the Company who are Continuing Stockholders has any knowledge of any
representation or warranty of the Company being untrue or inaccurate in any
material respect. If a manager of Merger Subsidiary or any of the Continuing
Stockholders had knowledge prior to the execution of this Agreement of any
breach by the Company of any representation, warranty, covenant, agreement or
condition of this Agreement, such breach shall not be deemed to be a breach of
this Agreement for any purpose hereunder, and neither Merger Subsidiary nor any
Continuing Stockholder shall have any claim or recourse against the Company, its
Subsidiaries, and each of their respective officers, directors, employees,
counsel advisors and representatives (collectively, the "Company
Representatives") with respect to such breach.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company covenants that, except as set forth in the section or
subsection of the disclosure schedule delivered by the Company to Merger
Subsidiary immediately prior to
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execution of this Agreement corresponding to the relevant section or subsection
of this Article 6:
SECTION 6.01. Conduct of the Company. Except as expressly provided
in this Agreement or as expressly agreed to in writing by Merger Subsidiary,
during the period from the date of this Agreement to the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, conduct its
operations according to its ordinary and usual course of business and consistent
with past practice and use all commercially reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, advertisers, distributors and others
having business dealings with them and to preserve goodwill. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, prior to the Effective Time, the Company shall not, and shall
cause its Subsidiaries not to, without the consent of Merger Subsidiary, which
shall not be unreasonably withheld:
(a) expend funds for capital expenditures that in the aggregate would
cause total capital expenditures for the period from January 1, 2000 to the
Effective Time to exceed the amounts set forth in the most recent version
of the business plan previously provided to Merger Subsidiary;
(b) sell, lease, license or otherwise dispose of any capital stock of
any Subsidiary, any hotels or any material amount of other assets,
securities or property of the Company and its Subsidiaries, taken as a
whole, except pursuant to existing contracts or commitments;
(c) amend or change through merger, recapitalization or otherwise,
its certificate of incorporation, by-laws or equivalent organizational
documents or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership
of any Subsidiary of the Company; combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
(d) except for issuances of Shares upon exercise of presently
outstanding Options, authorize for issuance, issue, deliver, sell or agree
or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), pledge or otherwise encumber any shares of its
capital stock or the capital stock of any of its Subsidiaries, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or any other securities or equity equivalents
(including without limitation stock appreciation rights);
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(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly-owned
Subsidiary of the Company may declare and pay a dividend, or make advances,
to the Company or another wholly-owned Subsidiary of the Company, (ii)
split, combine or reclassify any 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, or (iii) except as
required by the terms of any security as in effect on the date hereof and
as set forth in Section 6.01(e) of the Company's disclosure schedule, amend
the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire any of the Company's securities, including
shares of Company Common Stock, or any option, warrant or right, directly
or indirectly, to acquire any such securities;
(f) make or agree to make any acquisition of any equity interest
(whether through a purchase of stock, establishment of a joint venture or
otherwise), property or asset which is material to the Company and its
Subsidiaries, taken as a whole, except for (i) purchases of inventory and
supplies in the ordinary course of business or (ii) pursuant to purchase
orders entered into in the ordinary course of business;
(g) (i) (A) incur any indebtedness for borrowed money, except for
borrowings and reborrowings not in excess of $20.0 million and borrowings
and reborrowings under the Company's existing credit facilities and
intercompany indebtedness, (B) issue or sell any debt securities (except
intercompany debt securities) or warrants or other rights to acquire any
debt securities of the Company or any of its Subsidiaries, (C) make any
loans, advances (other than to employees of and consultants to the Company
for travel and other reasonable and customary expenses incurred in the
ordinary course of business consistent with past practice) or capital
contributions to, or investments in, any other Person, other than to the
Company or any direct or indirect Subsidiary of the Company or (D) assume,
guarantee (other than guarantees of obligations of the Company's
Subsidiaries entered into in the ordinary course of business consistent
with past practice) or endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person (other than obligations of
Subsidiaries and the endorsements of negotiable instruments for collection
in the ordinary course of business consistent with past practice), or (ii)
enter into or materially amend any contract, agreement, commitment or
arrangement to effect any of the transactions prohibited by this Section
6.01(g);
(h) increase the compensation or severance payable or to become
payable to its directors or officers or enter into any employment or
severance agreement with any new management employee of the Company or any
of its Subsidiaries, except for an agreement entered into in the ordinary
course of business consistent with past practice and providing for annual
base compensation not to exceed $450,000;
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(i) adopt or amend (except as may be required by law) any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund or other arrangement for the benefit or welfare of any employee,
director or former director or employee or, other than increases for
individuals (other than officers and directors) in the ordinary course of
business consistent with past practice, increase the compensation or fringe
benefits of any director, employee or former director or employee or pay
any benefit not required by any existing plan, arrangement or agreement;
(j) take any action to change any method of accounting, method of tax
accounting or accounting principles or practice by the Company or any of
its Subsidiaries, except for any such change required by reason of a
concurrent change in generally accepted accounting principles ("GAAP"),
Regulation S-X under the 1934 Act or other applicable law or regulation;
(k) (i) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect at, or
as of any time prior to, the Effective Time or (ii) omit to take any action
necessary to prevent any such representation or warranty from being
materially inaccurate in any respect at any such time; or
(l) authorize, or commit or agree to take, any of the foregoing
actions. Notwithstanding anything to the contrary in this Section 6.01,
the Company shall not be in breach of its obligations under this Section
6.01 if the action alleged to violate this Section 6.01 was approved in
advance in writing by the Special Committee.
SECTION 6.02. Access to Information. From the date of this Agreement
until the Effective Time, the Company shall, and shall cause its Subsidiaries,
and each of the Company Representatives to, give Merger Subsidiary and its
members, managers, employees, counsel, advisors, representatives (collectively,
the "Merger Subsidiary Representatives") and representatives of financing
sources identified by Merger Subsidiary reasonable access, upon reasonable
notice and during normal business hours, to the offices and other facilities and
to the books and records of the Company and its Subsidiaries and will cause the
Company Representatives and the Company's Subsidiaries to furnish Merger
Subsidiary and the Merger Subsidiary Representatives and representatives of
financing sources identified by Merger Subsidiary with such financial and
operating data and such other information with respect to the properties,
assets, business and operations of the Company and its Subsidiaries as Merger
Subsidiary and representatives of financing sources identified by Merger
Subsidiary may from time to time reasonably request.
SECTION 6.03. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of the Company Stockholders (the "Company Stockholder Meeting")
to be duly called and held as soon as reasonably practicable for the purpose of
voting on the adop-
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tion of this Agreement and the Merger. Subject to Section 6.04 hereof, the Board
of Directors and the Special Committee shall recommend adoption of this
Agreement and the Merger by the Company Stockholders. In connection with such
meeting, the Company will (i) promptly prepare and file with the SEC, use all
commercially reasonable efforts to have cleared by the SEC and thereafter mail
to the Company Stockholders as promptly as practicable the Company Proxy
Statement and all other proxy materials for such meeting, (ii) subject to
Section 6.04, use all commercially reasonable efforts to obtain the necessary
approvals by the Company Stockholders of this Agreement and the Transactions and
(iii) otherwise comply with all legal requirements applicable to such meeting.
SECTION 6.04. No Solicitation. (a) The Company agrees that it will
not, directly or indirectly through any officer, Subsidiary, Affiliate,
director, employee, stockholder, representative, agent or other Person, (i)
seek, initiate, solicit or encourage any Person to make an Acquisition Proposal,
(ii) engage in negotiations or discussions concerning an Acquisition Proposal
with any Person or group, (iii) disclose any non-public information relating to
the Company or give access to the properties, employees, books or records of the
Company or any of its Subsidiaries to any Person or group in connection with any
Acquisition Proposal or (iv) approve or recommend or agree to approve or
recommend any Acquisition Proposal; provided that nothing herein shall prevent
the Special Committee or the Board of Directors (acting through the Special
Committee) (either directly or indirectly through advisors, agents or other
intermediaries) from (a) furnishing information in writing or orally pursuant to
a customary confidentiality agreement concerning the Company and its businesses,
properties or assets to any Person (a "Third Party") in response to any
unsolicited inquiry, proposal or offer, (b) engaging in discussions or
negotiations with such a Third Party that has made such inquiry, proposal or
offer, (c) following receipt of a bona fide Acquisition Proposal, taking and
disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-
2(a) under the 1934 Act or otherwise making disclosure to its stockholders, (d)
following receipt of a bona fide Acquisition Proposal, failing to make or
withdrawing or modifying its recommendation referred to in Section 4.02 hereof,
and/or (e) terminating this Agreement but in each case referred to in clauses
(a) through (e), only to the extent that the Special Committee shall have
concluded in good faith (upon the advice of legal counsel) that such action is
required by the Special Committee's (and the Board of Directors') fiduciary
duties to the stockholders of the Company under applicable law.
(b) The Company shall notify Merger Subsidiary in writing promptly
(but in no event later than the end of the Business Day following receipt
thereof) of the receipt of, or of any change to or modification of, any
Acquisition Proposal (including a copy thereof if in writing), the terms and
conditions of such Acquisition Proposal and the identity of the Person making
it.
(c) The Company shall, and shall cause its Subsidiaries and the
advisors, employees and other agents of the Company and any of its Subsidiaries
to, cease immediately
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and cause to be terminated any and all existing activities, discussions or
negotiations, if any, with any Third Party conducted prior to the date hereof
with respect to any Acquisition Proposal; provided, however, that nothing in
this paragraph 6.04(c) shall prohibit the Company from taking any of the actions
permitted by the proviso in paragraph 6.04(a) hereof with a Third Party with
whom the Company has had discussions prior to the date of this Agreement so long
as the Third Party initiates such actions after termination by the Company of
any existing activities, discussions or negotiations.
SECTION 6.05. State Takeover Laws. The Company shall, upon the
request of Merger Subsidiary, take all reasonable steps to render inapplicable
and to assist in any challenge by Merger Subsidiary to the validity or
applicability to the Transactions, including the Merger, of any state takeover
law.
SECTION 6.06. Reports. From the date of this Agreement, the Company
shall provide Merger Subsidiary with monthly financial statements in the
existing reporting format (balance sheet, cash flow statement, income statement
and, if available, notes thereto), broken out by property, no later than the
tenth Business Day following the end of each calendar month following the date
of this Agreement; provided that for calendar months that are also the end of a
calendar quarter, the Company may provide such financial information to Merger
Subsidiary on the same date such information is publicly released in accordance
with the past practice of the Company.
SECTION 6.07. Issuance of Class A Preferred Stock. Promptly after
the date hereof, the Company shall file with the Secretary of State of the State
of Delaware a certificate of designation having the terms set forth as Exhibit E
attached hereto establishing and designating 797,441 shares of Class A Preferred
Stock. Upon the surrender of each Continuing Stockholder Exchange Share on the
Exchange Date (which will be the same day as the Effective Time occurs) in
accordance with the Exchange and Voting Agreement, the Company shall promptly on
such date issue one-tenth of a share of Class A Preferred Stock, without
additional consideration therefor to the holder thereof, and such shares of
Class A Preferred Stock shall be validly issued, fully paid and nonassessable.
The Shares so exchanged for Class A Preferred Stock shall be treasury shares.
SECTION 6.08. Section 16 Matters. The Company shall take all such
steps as may be required to cause the Transactions and any other dispositions of
equity securities of the Company (including derivative securities) in connection
with this Agreement by each officer and director who is subject to Section 16 of
the 1934 Act to be exempt from Section 16(b) of the 1934 Act, including, without
limitation, such steps to be taken in accordance with the No-Action Letter dated
January 12, 1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
SECTION 6.09. Expenses; Real Property Surveys and Title Insurance.
(a) The Company shall pay all costs and expenses it incurs in connection with
this Agree-
-23-
ment, including, without limitation, Title, Survey and Environmental Costs,
costs incurred in the preparation, printing, mailing and filing of the proxy
statement and filing for all necessary regulatory approvals and the fees and
expenses of Counsel to the Company and the Special Committee ("Company
Expenses"); provided, however, that if this Agreement is terminated pursuant to
Section 10.01(f) hereof, Merger Subsidiary will pay or reimburse the Company, as
the case may be, for all of the Company Expenses; provided, further, however,
that if this Agreement is terminated as a result of the failure of the Bank to
provide the financing under the Commitment Letter, Merger Subsidiary will pay or
reimburse the Company, as the case may be, for fifty percent (50%) of the
Company Expenses, but not to exceed seven hundred thousand dollars ($700,000) in
the aggregate; and provided, further, however, that if this Agreement is
terminated pursuant to Section 10.01(b)(iii) hereof, Merger Subsidiary shall pay
or reimburse the Company, as the case may be, for ten percent (10%) of the
Company Expenses.
(b) At the earlier of the Effective Time or termination of this
Agreement, the Company shall pay or reimburse all fees and expenses of Merger
Subsidiary (including, without limitation, expenses payable to all banks,
investment banking firms and other financial institutions (which shall include,
without limitation, fees and expenses of such banks', firms' and institutions'
legal counsel), and all fees and expenses of counsel, accountants, financial
printers, experts and consultants to Merger Subsidiary and its affiliates),
whether incurred prior to, on or after the date hereof, in connection with the
Transactions and the other matters contemplated by this Agreement and the
financing thereof (such fees and expenses being referred to herein as "Merger
Subsidiary Expenses"); provided, however, that no such expenses shall be payable
or reimbursable by the Company if this Agreement is terminated pursuant to
Section 10.01(f) hereof; provided, further, however, that if this Agreement is
terminated as a result of the failure of the Bank to provide the financing under
the Commitment Letter, Merger Subsidiary will pay or reimburse the Company, as
the case may be, for fifty percent (50%) of the Merger Subsidiary Expenses; and
provided, further, however, that if this Agreement is terminated pursuant to
Section 10.01(b)(iii) hereof, Merger Subsidiary shall pay or reimburse the
Company, as the case may be, for ten percent (10%) of the Merger Subsidiary
Expenses. Merger Subsidiary has provided the Company with copies of all
existing agreements under which Merger Subsidiary Expenses (other than those of
counsel to Merger Subsidiary) may be payable or reimbursable by the Company.
Merger Subsidiary will not enter into any additional agreements under which
Merger Subsidiary Expenses may be payable or reimbursable by the Company without
the approval of the Special Committee, which approval shall not be unreasonably
withheld.
(c) Prior to the Effective Time, the Company shall, at its sole cost
and expense deliver to Merger Subsidiary and the Bank (i) a title insurance
policy or commitment issued by a title insurance company reasonably satisfactory
to Merger Subsidiary with respect to each owned real property and material
leased real property of the Company and its Subsidiaries in form and substance
reasonably satisfactory to Merger Subsidiary, (ii) a current property
-24-
survey with respect to each such owned real property and material leased real
property, in each case, in such form as shall be required by the title insurance
company to omit the so called standard survey exceptions from the title
insurance policies or commitments issued at the Effective Time and (iii) such
environmental and engineering reports as Merger Subsidiary shall reasonably
request. The Company and its Subsidiaries shall, at or prior to the Effective
Time, deliver or cause to be delivered such affidavits, certificates,
instruments and information as shall be reasonably required to induce the title
insurance company to issue the title insurance policies or commitments
contemplated in the immediately preceding sentence (1) free of any exceptions
for (A) rights of parties in possession other than the insured, (B) rights of
first refusal or options to purchase, (C) Liens or rights to Liens for services,
materials or labor and (D) taxes, general and special assessments, supplemental
taxes and assessments other than those that are not yet due and payable and (2)
together with endorsements regarding access, non-imputation, contiguity and so-
called comprehensive and extended coverage. The Company's costs and expenses in
complying with this Section 6.09(c) are referred to herein as "Title, Survey and
Environmental Costs."
ARTICLE 7
COVENANTS OF MERGER SUBSIDIARY
SECTION 7.01. Director and Officer Liability. The Surviving
Corporation hereby agrees to do the following:
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless the present and former officers and
directors of the Company and each of its Subsidiaries (each an "Indemnified
Person") in respect of acts or omissions occurring at or prior to the
Effective Time to the fullest extent permitted by the DGCL or any other
applicable laws or provided under the Company's amended and restated
certificate of incorporation and by-laws in effect on the date hereof;
provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
Indemnified Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof; provided that the Surviving Corporation shall not be obligated to
make annual premium payments for such insurance to the extent such annual
premiums exceed 200% of the annual premiums paid as of the date hereof by
the Com-
-25-
pany for such insurance; and provided, further, that if the premiums with
respect to such insurance exceed 200% of the annual premiums paid as of the
date hereof by the Company for such insurance, the Surviving Corporation
shall be obligated to obtain such insurance with the maximum coverage as
can be obtained at an annual premium equal to 200% of the annual premiums
paid by the Company as of the date hereof.
(c) The rights of each Indemnified Person under this Section 7.01
shall be in addition to any rights such Person may have under the restated
certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, or under the DGCL or any other applicable laws or under any
agreement of any Indemnified Person with the Company or any of its
Subsidiaries. These rights shall survive consummation of the Merger and
are intended to benefit, and shall be enforceable by, each Indemnified
Person.
SECTION 7.02. Financing Arrangements. Merger Subsidiary shall use
its commercially reasonable efforts to obtain the financing contemplated by the
Commitment Letter.
ARTICLE 8
COVENANTS OF MERGER SUBSIDIARY AND THE COMPANY
SECTION 8.01. Commercially Reasonable Efforts. (a) Subject to the
terms and conditions of this Agreement and to the fiduciary duties of the Board
of Directors under applicable law (as determined by such directors in good
faith), the Company and Merger Subsidiary will use commercially reasonable
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 to consummate the Transactions, including, to assist Merger
Subsidiary and will use commercially reasonable efforts to cooperate in all
respects with Merger Subsidiary and the Bank and other lenders in order for
Merger Subsidiary to establish its contemplated debt financing arrangements
under the Commitment Letter or otherwise. The Company shall sign, no later than
the date hereof, the Chase side letter relating to the indemnification of the
Bank and Chase Securities, Inc.. In furtherance and not in limitation of the
foregoing, the Company and Merger Subsidiary agree to make, if required, an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the Transactions as promptly as practicable and in any event
within ten Business Days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable.
-26-
(b) Each of Merger Subsidiary and the Company shall use all
commercially reasonable efforts to (i) cooperate in all respects with each other
in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Authority and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the Transactions and (iii) permit
the other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other Governmental Authority or, in connection with any proceeding
by a private party, with any other Person.
SECTION 8.02. Certain Filings. The Company and Merger Subsidiary
shall cooperate with one another (i) in connection with the preparation of the
Company Proxy Statement and the Schedule 13E-3, (ii) in determining whether any
action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the Transactions, and (iii) in taking such actions or making any
such filings, furnishing information required in connection therewith or with
the Company Proxy Statement and the Schedule 13E-3 and seeking timely to obtain
any such actions, consents, approvals or waivers.
SECTION 8.03. Public Announcements. Merger Subsidiary and the
Company will consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the Transactions and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
SECTION 8.04. Notices of Certain Events. Each of the Company and
Merger Subsidiary shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any Governmental Authority
in connection with the Transactions;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or
involving or otherwise affecting the Company or any of its Subsidiaries or
that relate to the consummation of the Transactions;
-27-
(d) the occurrence or non-occurrence of any fact or event which would
be reasonably likely:
(i) to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any
time from the date hereof to the Effective Time, or
(ii) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied; and
(e) any failure of the Company or Merger Subsidiary, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that no such
notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder.
SECTION 8.05. Confidentiality. Prior to the Effective Time and
after any termination of this Agreement, each of Merger Subsidiary and the
Company will hold, and will use all commercially reasonable efforts to cause its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, all confidential documents and information
concerning the other party furnished to it or its Affiliates in connection with
the Transactions except information that is required to be disclosed in the
Company Proxy Statement and the Schedule 13E-3 or is otherwise required to be
disclosed to any Governmental Authority.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party. The
obligations of the Company and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been approved at the
Company Stockholder Meeting by the holders of not less than two-thirds of
the total number of votes (including a majority of the total number of
votes that may be cast by holders other than the Continuing Stockholders)
that may be cast by holders of capital stock of the Company in the election
of directors;
(b) any applicable waiting period under the HSR Act relating to the
Transactions shall have expired;
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(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
and
(d) all actions by or in respect of, or filings with, any
Governmental Authority required to permit the consummation of the Merger,
shall have been taken, made or obtained.
SECTION 9.02. Conditions to the Obligations of Merger Subsidiary.
The obligations of Merger Subsidiary to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of the Company
contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto (without regard to any
qualification with respect to materiality or to having a Material Adverse
Effect) shall be true in all material respects at and as of the Effective
Time as if made at and as of such time, (iii) since the date of this
Agreement, there has not been any event, occurrence, development or state
of circumstances or facts that has or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and (iv)
Merger Subsidiary shall have received a certificate signed by a duly
authorized officer of the Company to the foregoing effect;
(b) all conditions to closing under the Heads of Agreement dated
September 20, 2000 between the Company and Choice Hotels International,
Inc. shall have been satisfied and the Company shall have entered into
definitive agreements with Choice Hotels International, Inc. with respect
to the matters covered by the Heads of Agreement, the terms of which are
satisfactory to Merger Subsidiary;
(c) the Class A Preferred Stock shall have been issued prior to the
Effective Time to the Continuing Stockholders in accordance with the terms
of this Agreement and the Exchange and Voting Agreement; and
(d) the total number of Dissenting Shares shall not exceed 5% of the
Shares outstanding immediately prior to the exchange contemplated by the
Exchange and Voting Agreement.
SECTION 9.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) Merger Subsidiary shall have performed in all material
respects all of its obligations hereunder and under the Exchange and Voting
Agreement required to be
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performed by it at or prior to the Effective Time, (ii) the representations
and warranties of Merger Subsidiary contained in this Agreement and in any
certificate or other writing delivered by Merger Subsidiary pursuant hereto
(without regard to any qualification with respect to materiality or to
having a Material Adverse Effect) shall be true in all material respects at
and as of the Effective Time as if made at and as of such time, and (iii)
the Company shall have received a certificate signed by a duly authorized
manager of Merger Subsidiary to the foregoing effect.
(b) The Continuing Shareholders shall have performed in all material
respects all of their obligations under the Exchange and Voting Agreement
required to be performed by them at or prior to the Effective Time.
(c) Merger Subsidiary shall have delivered to the Company copies of
such certificates or such other similar materials relating to the solvency
of the Company after giving effect to the Transactions and the financing
contemplated by the Commitment Letter as shall have been delivered to the
lender providing the Commitment Letter and the Stockholders and the Company
may rely on such certificates or other materials with the same effect as if
they had been issued to the Company and the Stockholders. If the lender
does not require such information, Merger Subsidiary shall be required to
deliver to the Company a certificate or such similar materials in form and
substance satisfactory to the Special Committee from the Company's Chief
Financial Officer relating to the solvency after giving effect to the
Transactions and the financing described herein.
ARTICLE 10
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the Company Stockholders):
(a) by mutual written agreement of the Company and Merger Subsidiary;
(b) by either the Company or Merger Subsidiary, if:
(i) the Merger has not been consummated on or before February
28, 2001 (the "End Date"), provided that the right to terminate this
Agreement pursuant to this Section 10.01(b)(i) shall not be available
to any party whose breach of any provision of this Agreement results
in the failure of the Merger to be consummated by such time;
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(ii) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any Governmental Authority
having competent jurisdiction enjoining Company or Merger Subsidiary
from consummating the Merger is entered and such judgment, injunction,
order or decree shall have become final and nonappealable; or
(iii) this Agreement and the Merger shall not have been
adopted in accordance with this Agreement by the Company Stockholders
at the Company Stockholder Meeting (or any adjournment thereof);
(c) by Merger Subsidiary if the Special Committee or Board of
Directors (acting through the Special Committee) (i) shall have failed to
make, or withdrawn, or modified or conditioned in a manner adverse to
Merger Subsidiary, its approval or recommendation of this Agreement or the
Merger or (ii) shall have approved or recommended or agreed to approve or
recommend any Acquisition Proposal;
(d) by the Special Committee or the Board (acting through the Special
Committee) as provided in Section 6.04;
(e) by Merger Subsidiary, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement shall have occurred that would cause the
condition set forth in Section 9.02(a) hereof not to be satisfied, and such
condition is incapable of being satisfied by the End Date; or
(f) by the Company, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Merger
Subsidiary set forth in this Agreement or the Exchange and Voting
Agreement, or if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of the Continuing Shareholders
under the Exchange and Voting Agreement shall have occurred that would
cause the condition set forth in Section 9.03(a) or (b) hereof not to be
satisfied, and such condition is incapable of being satisfied by the End
Date.
The party desiring to terminate this Agreement pursuant to this
Section 10.01 (other than pursuant to Section 10.01(a)) shall give notice of
such termination to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01 hereof, this Agreement shall become void
and of no effect without liability of any party (or any stockholder, member,
manager, director, officer, employee, agent, consultant or representative of
such party) to the other party hereto. The provisions of Sec-
-31-
tions 8.05, 11.04, 11.06, 11.07 and 11.08 shall survive any termination hereof
pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or electronic transmission with confirmed receipt) and shall be given,
if to Merger Subsidiary, to:
Nova Finance Company LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: W. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
if to the Company, to:
Sunburst Hospitality Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
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and to:
The Special Committee of the Company
c/o Allen & Company, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m., and such day is
a Business Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 6.09, 7.01, 8.05, 10.02, 11.04, 11.06, 11.07 and 11.08
which shall survive the Effective Time or the termination of this Agreement
regardless of any investigation made by or on behalf of the Company or Merger
Subsidiary or any of their respective officers or directors.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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SECTION 11.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto.
SECTION 11.05. Governing Law. The validity, construction and effect
of this Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without giving effect to the principles
of conflicts of law of such state.
SECTION 11.06. Jurisdiction. Any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the Transactions shall be brought in any
federal court located in the State of Delaware or any Delaware state court, and
each of the parties hereby consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.01 hereof shall be deemed effective
service of process on such party.
SECTION 11.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS.
SECTION 11.08. Counterparts; Effectiveness; Enforcement. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. Except as provided in Section 7.01, no provision of this
Agreement is intended to confer any rights, benefits, remedies, obligations or
liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns. Notwithstanding any of the terms or
provisions of this Agreement, (a) the Company agrees that neither it nor any
person acting on its behalf may assert any claim or cause of action against any
of the Continuing Stockholders or any of their respective affiliates (other than
Merger Subsidiary), agents, officers or employees in connection with or arising
out of this Agreement or the transactions contemplated hereby and (b) Merger
Subsidiary agrees that its sole remedy for any damages arising out of any breach
of this Agreement by the
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Company shall be limited to the payment or reimbursement of Merger Subsidiary
Expenses as provided in Section 6.09 hereof.
SECTION 11.09. Entire Agreement. This Agreement (including the
exhibits and schedules referred to herein) constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes agreements and understandings, both oral and written, between the
parties with respect to the subject matter of this Agreement. Exhibits referred
to herein are incorporated by reference herein and shall constitute a part of
this Agreement.
SECTION 11.10. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Upon such a determination, the parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the Transactions be consummated as
originally contemplated to the fullest extent possible.
SECTION 11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
SUNBURST HOSPITALITY CORPORATION
By: /s/
_______________________________
Name:
Title:
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NOVA FINANCE COMPANY LLC
/s/
By:_______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Director
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