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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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RENAISSANCE HOTEL GROUP N.V.
(NAME OF SUBJECT COMPANY)
RENAISSANCE HOTEL GROUP N.V.
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, PAR VALUE 0.01 NETHERLANDS GUILDERS PER SHARE
(TITLE OF CLASS OF SECURITIES)
N73689 10 6
(CUSIP NUMBER OF CLASS OF SECURITIES)
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ROBERT W. OLESEN
EXECUTIVE MANAGING DIRECTOR, EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
C/O RENAISSANCE HOTELS INTERNATIONAL
29800 BAINBRIDGE ROAD
SOLON, OHIO 44139
(216) 498-9090
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
STEPHAN H. HAIMO, ESQ.
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NEW YORK 10038-4982
(212) 806-5400
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SCHEDULE 14D-9
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Renaissance Hotel Group N.V., a
Netherlands limited liability company ("Renaissance" or the "Company"), and
the address of the principal executive offices of the Company is 17th Floor,
New World Tower II, 18 Queen's Road, Central, Hong Kong. The Company's United
States headquarters and primary shareholder relations office is located at c/o
Renaissance Hotels International, 29800 Bainbridge Road, Solon, Ohio 44139.
The title of the class of equity securities to which this statement relates is
the Common Stock, par value 0.01 Netherlands Guilders per share (the
"Shares"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer disclosed in a Schedule 14D-1
dated February 24, 1997 by Marriott International, Inc., a Delaware
corporation ("Marriott"), to purchase all outstanding Shares, at a price per
Share of $30.00, net to the seller in cash (the "Offer Price"), upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
February 24, 1997 and in the related Letter of Transmittal (which together
constitute the "Offer"). The Offer states that the address of the principal
executive offices of Marriott are located at 10400 Fernwood Road, Bethesda,
Maryland 20817.
The Offer is being made pursuant to an Acquisition Agreement dated as of
February 17, 1997 (the "Acquisition Agreement") by and between Marriott and
the Company. The Acquisition Agreement is filed as Exhibit 1 to this Schedule
14D-9 and is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described below in this Item 3(b) or incorporated herein by
reference, to the knowledge of the Company, as of the date hereof, there are
no material contracts, agreements, arrangements or understandings and actual
or potential conflicts of interest, between the Company or its affiliates and
(i) the Company, its executive officers, directors or affiliates or (ii)
Marriott, its executive officers, directors or affiliates.
Certain contracts, agreements, arrangements and understandings between the
Company and its executive officers, directors and affiliates are described on
pages 11-13 and 27-29 of the Company's Annual Report on Form 20-F for the
fiscal year ended June 30, 1996 (the "Form 20-F") in the sections entitled
"Item 1. DESCRIPTION OF BUSINESS--Management Agreements--Affiliated-Party
Management Agreements," "Item 4. CONTROL OF REGISTRANT," "Item 11.
COMPENSATION OF DIRECTORS AND OFFICERS," "Item 12. OPTIONS TO PURCHASE
SECURITIES FROM REGISTRANT OR SUBSIDIARIES" and "Item 13. INTEREST OF
MANAGEMENT IN CERTAIN TRANSACTIONS." Pages 11-13 and 27-29 of the Form 20-F
are filed as Exhibit 2 hereto and are incorporated herein by reference.
1. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Following is a description of certain termination of employment and change
of control arrangements which were established by the Company and its
subsidiaries in January 1997 in light of the proposed sale of the Company as
then contemplated by the Letter of Intent with Doubletree Corporation
("Doubletree") described herein under Item 4(b):
Change of Control Agreements. On January 10, 1997, the Company and certain
of its subsidiaries entered into change of control agreements (the "Change of
Control Agreements") with three senior executive officers of the Company
(collectively, the "Senior Executives"). A copy of the form of the Change of
Control Agreements is filed as Exhibit 5 hereto and is incorporated herein by
reference.
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The Change of Control Agreements generally provide that if any of the Senior
Executives' employment with the Company or its subsidiaries is terminated for
any reason other than Cause (as defined below) within two years after a Change
of Control (as defined below), such Senior Executive will be entitled to a
lump sum payment upon such termination of employment. A "Change of Control" is
defined in the Change of Control Agreements as the first to occur of the
following events: (a) the sale or other divestiture of all or substantially
all of the assets of the Company or its subsidiaries; (b) the acquisition by
any person or affiliated group of persons of more than 50% of the outstanding
common stock of the Company or of its subsidiaries; or (c) a change in the
composition of the Company's Board of Managing Directors such that a majority
of the Company's Board of Managing Directors is not comprised of persons
affiliated with or employed by New World Group Members (as such term is
defined in the Company's prospectus with respect to its September 1995 initial
public offering). The consummation of the Offer will constitute a Change of
Control under the Change of Control Agreements. "Cause" is defined in the
Change of Control Agreements as any act or any failure to act on the part of
the Senior Executive which constitutes a felony for which such Senior
Executive is convicted or pleads nolo contendere.
The Senior Executives are entitled to receive the same benefits if, within
two years following a Change of Control, the Senior Executives terminate their
employment for "Good Reason" as defined in the Change of Control Agreements,
which includes the following: (a) any limitation of the Senior Executives'
responsibilities or duties, or any demotion in the Senior Executives'
positions; (b) any removal of the Senior Executives from, or failure to re-
elect the Senior Executives to, any of the positions with the Company or its
subsidiaries held by the Senior Executives; (c) any reduction in the Senior
Executives' annual base salary or fringe benefit coverages; (d) any
detrimental change in the Senior Executives' bonus entitlement or in the
formula or method of calculation of such bonus; (e) any change in the Senior
Executives' travel obligations; or (f) any change in the Senior Executives'
principal work location or the location of the Senior Executives' primary work
group by more than 35 miles from such Senior Executives' or work groups'
current location.
The Change of Control Agreements also contain a provision which provides
that, to the extent that any payment to a Senior Executive (under the Change
of Control Agreement or otherwise) constitutes an excess parachute payment
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company or its subsidiaries will make a gross-up payment to such
individual in an amount necessary to enable such individual to pay the excise
tax (and any interest and penalties thereon and any income and excise taxes
thereon) with respect to such excess parachute payment and such gross-up
payment.
In addition, the Company has an employment agreement with another senior
executive officer of the Company which was entered into in May 1996 and
provides that if such executive officer terminates his employment with the
Company at any time during the one year period after a Change of Control, he
will be entitled to receive a lump sum payment upon such termination of
employment equal to the salary which he would have received over the remaining
term of his agreement, as well as certain disability and health benefits.
The aggregate of the maximum amounts payable under the above arrangements
with the Senior Executives and such other executive officer is approximately
$2,723,000 (exclusive of any gross-up payments).
Severance Plan. On January 10, 1997, the Company and certain of its
subsidiaries adopted the Renaissance Hotel Group N.V. Key Employee Severance
Plan (the "Severance Plan"), covering all Senior Vice Presidents and Vice
Presidents of the Company and its subsidiaries other than the Senior
Executives (the "Executives"). A copy of the form of the Severance Plan is
filed as Exhibit 6 hereto and is incorporated herein by reference.
The Severance Plan generally provides that if an Executive's employment with
the Company or its subsidiaries is terminated for any reason other than Cause
within two years after a Change of Control, the Executive will be entitled to
a lump sum payment upon such termination of employment equal to 2.4 times such
individual's gross annual base salary at the rate in effect on the date of
such Change of Control. The Executive would receive the same benefits if,
within two years following a Change of Control, he terminates his employment
for Good Reason.
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The Severance Plan also contains a provision which provides that, to the
extent that any payment to an Executive (under the Severance Plan or
otherwise) constitutes an excess parachute payment under Section 280G of the
Code, the Company or its subsidiaries will make a gross-up payment to such
individual in an amount necessary to enable such individual to pay the excise
tax (and any interest and penalties thereon and any income and excise taxes
thereon) with respect to such excess parachute payment and such gross-up
payment.
Stay Bonus Plan. On January 10, 1997, the Company and certain of its
subsidiaries adopted the Renaissance Hotel Group N.V. Executive Stay Bonus
Plan (the "Stay Bonus Plan"). A copy of the Stay Bonus Plan is filed as
Exhibit 7 hereto and is incorporated herein by reference.
Pursuant to the Stay Bonus Plan, those executive officers and other
employees whose management and individual performance have a direct impact on
achieving the Company's objectives in connection with a planned change of
control and who are selected by the Board of Managing Directors of the
Company, upon the recommendation of management, the Chairman of the Board or
the Compensation Committee of the Board, to participate in the Stay Bonus Plan
will share in a bonus pool of a total of $1 million. Participants in the Stay
Bonus Plan generally will be entitled to receive their respective bonuses if
they continue in employment with the Company or its subsidiaries until the
consummation of a Change of Control.
Stock Options and 401(k) Plans. On January 10, 1997, the Compensation
Committee of the Company's Board of Managing Directors adopted a resolution
providing that all stock options held under the Renaissance Hotel Group N.V.
Amended and Restated 1995 Stock Option Plan will become fully vested upon a
Change of Control of the Company. Pursuant to the Acquisition Agreement, upon
such vesting, Marriott will pay to the holder of each outstanding stock
option, the difference between the Offer Price and the exercise price of such
stock option, unless Marriott and the holder of the stock option otherwise
agree in writing. See discussion under "The Acquisition Agreement--Company
Stock Options" below. In addition, any nonvested benefits under the
Renaissance Hotels & Resorts 401(k) Plan and the Renaissance Hotels Senior
Executive Supplemental 401(k) Plan become fully vested upon a Change of
Control and certain provisions to prevent adverse changes to the amount, form
or timing of benefit payments under the Supplemental 401(k) Plan and the
Renaissance Hotels Deferred Incentive Plan become effective upon a Change of
Control.
2. THE ACQUISITION AGREEMENT
The following is a summary of certain portions of the Acquisition Agreement,
a copy of which is filed as Exhibit 1 to this Schedule 14D-9 and is
incorporated herein by reference. Such summary is not intended to be complete
and is qualified in its entirety by reference to the Acquisition Agreement.
The Offer. The Acquisition Agreement provides for the making of the Offer by
Marriott. Subject only to the conditions described below under "Conditions to
Offer," Marriott has agreed to accept for payment and pay for all Shares
tendered pursuant to the Offer as soon as practicable following the expiration
of the Offer. Without the written consent of the Company (such consent to be
authorized by the Board of Managing Directors of the Company or a duly
authorized committee thereof), Marriott shall not (i) decrease the Offer Price
or change the form of consideration payable pursuant to the Offer (other than
as set forth below), (ii) decrease the number of Shares sought or extend the
Offer (other than as set forth below), or (iii) impose any additional
conditions or amend any condition of the Offer in any manner adverse to the
holders of the Shares; provided, however, that if on the scheduled expiration
date of the Offer (as it may be extended), all conditions to the Offer shall
not have been satisfied or waived, the Offer may be extended by Marriott from
time to time to permit the satisfaction of such conditions until termination
of the Acquisition Agreement, without the consent of the Company, to permit
satisfaction of such conditions. In addition, Marriott may, without the
consent of the Company, increase the Offer Price and extend the Offer to the
extent required by law.
The obligation of Marriott to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to (i) there being, at the expiration of the
Offer, validly tendered and not withdrawn that number of Shares which
represent at least ninety percent (90%) of the capital stock entitled to vote
and then outstanding (the "Minimum Condition") and (ii) the satisfaction of
certain other conditions set forth below under "Conditions to Offer."
Recommendation. In the Acquisition Agreement, the Company consents to the
Offer and states that the Board of Managing Directors has unanimously (i)
determined that the Offer is fair to and in the best interests of
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the stockholders of the Company, (ii) approved the Acquisition Agreement and
the transactions contemplated thereby and (iii) resolved to recommend that the
stockholders of the Company accept the Offer and tender their Shares
thereunder to Marriott.
Conditions to Offer. Notwithstanding any other provisions of the Offer,
Marriott shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission including Rule 14e-l(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(relating to Marriott's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restrictions referred to
above, the payment for, any tendered Shares, and may amend the Offer
consistent with the terms of the Acquisition Agreement and the Offer or
terminate the Offer if (i) any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), has not
expired or terminated prior to the expiration of the Offer, (ii) the Minimum
Condition has not been satisfied or (iii) at any time on or after February 17,
1997 and at or before the time of acceptance of Shares for payment pursuant to
the Offer, any of the following events shall occur:
(A) there shall have occurred any change, event, occurrence or
circumstance in the business, operations, properties, financial
condition or results of operations of the Company or any of its
subsidiaries which, individually or in the aggregate, has had or
is reasonably likely to have a Company Material Adverse Effect (as
defined below) (except for changes, events, occurrences or
circumstances with respect to general economic or industry
conditions);
(B) any governmental entity or court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is
in effect and which (1) makes the acceptance for payment of, or
the payment for, some or all of the Shares illegal or otherwise
prohibits or restricts consummation of the Offer, (2) imposes
material limitations on the ability of Marriott to acquire or hold
or to exercise any rights of ownership of the Shares, or
effectively to manage or control the Company and its business,
assets and properties or (3) has had or is reasonably likely to
have a Company Material Adverse Effect; provided, however, that
the parties shall use all commercially reasonable efforts to cause
any such decree, judgment or other order to be vacated or lifted;
(C) the representations and warranties of the Company set forth
in the Acquisition Agreement shall not (i) have been true and
correct in any material respect on the date of the Acquisition
Agreement or (ii) be true and correct in any respect as of the
expiration date of the Offer (as such date may be extended) as
though made on or as of such date or the Company shall have
breached or failed in any respect to perform or comply with any
material obligation, agreement or covenant required by the
Acquisition Agreement to be performed or complied with by it
except, in each case with respect to clause (ii), (x) for changes
specifically permitted by the Acquisition Agreement and (y) (A)
for those representations and warranties that address matters only
as of a particular date which are true and correct as of such date
or (B) where the failure of representations and warranties
(without regard to materiality qualifications therein contained)
to be true and correct, or the performance or compliance with such
obligations, agreements or covenants, would not, individually or
in the aggregate, reasonably be expected to have a Company
Material Adverse Effect;
(D) the Acquisition Agreement shall have been terminated in
accordance with its terms;
(E) it shall have been publicly disclosed or Marriott shall have
learned that any person, entity or "group" (as that term is
defined in Section 13(d)(3) of the Exchange Act), other than
Marriott or its affiliates, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 of the Exchange
Act) of 20% or more of the Shares, or shall have entered into a
definitive agreement with the Company with respect to a tender
offer or exchange offer for any Shares or merger, consolidation or
other business combination with or involving the Company or any of
its subsidiaries;
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(F) the Board of Managing Directors of the Company shall have
withdrawn or modified in a manner adverse to Marriott its approval
or recommendation of the Offer, shall have recommended to the
Company's stockholders another offer or shall have adopted any
resolution to effect any of the foregoing;
(G) any of the consents, approvals, authorizations, orders or
permits required to be obtained by the Company, Marriott, or their
respective subsidiaries in connection with the Offer from, or
filings or registrations required to be made by any of the same
prior to the consummation of the Offer with, any governmental
entity in connection with the execution, delivery and performance
of the Acquisition Agreement shall not have been obtained or made
or shall have been obtained or made subject to conditions or
requirements, except (i) where the failure to have obtained or
made any such consent, approval, authorization, order, permit,
filing or registration or such conditions or requirements could
not reasonably be expected to (1) have a Company Material Adverse
Effect or a Marriott Material Adverse Effect (as defined below),
or (2) impose material limitations on the ability of Marriott to
acquire or hold or to exercise any rights of ownership of the
Shares, or effectively to manage or control the Company and its
business, assets and properties and (ii) for any such consent,
approval, authorization, order, permit, filing or registration
related to, or arising out of, compliance with statutes, rules or
regulations regulating the consumption, sale or serving of
alcoholic beverages; or
(H) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the New
York Stock Exchange, Inc., (2) the declaration of a banking
moratorium or any suspension of payments in respect of banks in
the United States (whether or not mandatory), (3) the commencement
of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States and
having had or being reasonably likely to have a Company Material
Adverse Effect or materially adversely affecting (or materially
delaying) the consummation of the Offer, (4) any limitation or
proposed limitation (whether or not mandatory) by any United
States or Dutch governmental authority or agency, or any other
event, that materially adversely affects generally the extension
of credit by banks or other financial institutions, (5) from the
date of the Acquisition Agreement through the date of termination
or expiration of the Offer, a decline of at least 25% in the
Standard & Poor's 500 Index or (6) in the case of any of the
situations described in clauses (1) through (5) inclusive,
existing at the date of the commencement of the Offer, a material
acceleration, escalation or worsening thereof;
which, in the reasonable judgment of Marriott, in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payments.
The above-described conditions are for the sole benefit of Marriott and may
be asserted by Marriott regardless of any circumstances giving rise to any
condition and may be waived by Marriott, in whole or in part at any time and
from time to time in the sole discretion of Marriott. The failure by Marriott
(or any affiliate of Marriott) at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right and each right will be deemed
an ongoing right which may be asserted at any time and from time to time.
Termination. Pursuant to the terms of the Acquisition Agreement, the
Acquisition Agreement may be terminated and the Offer may be abandoned at any
time prior to consummation of the Offer: (a) by mutual consent of Marriott and
the Company; or (b) by action of the Board of Directors of either Marriott or
the Company if: (i) (x) the Closing Date (as defined in the Acquisition
Agreement) shall not have occurred on or before June 30, 1997 (provided that
the right to terminate the Acquisition Agreement under this clause (i) is not
available to any party whose breach of any representation or warranty or
failure to fulfill any covenant or agreement under the Acquisition Agreement
was the cause of or resulted in the failure of the Offer to be consummated on
or before such date); or (y) the Offer shall have expired or been terminated
and Marriott shall not have purchased any Shares pursuant to the Offer unless,
in the case of termination by Marriott, Marriott's
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obligation to purchase Shares pursuant to the Offer shall not have been
satisfied by reason of any failure of Marriott to fulfill its obligations
hereunder; or (ii) a United States federal or state or Dutch court of
competent jurisdiction or United States federal or state or Dutch
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by the Acquisition Agreement and such order, decree, ruling or other action
shall have become final and nonappealable (provided, that the party seeking to
terminate the Acquisition Agreement pursuant to this clause (ii) shall have
used all commercially reasonable efforts to remove such injunction, order or
decree); or (c) by action of the Board of Managing Directors of the Company on
five days' prior written notice to Marriott if the Board of Managing Directors
of the Company withdraws its approval or recommendation of the Offer or the
Acquisition Agreement, by reason of an Alternative Transaction Proposal, and
the Company pays to Marriott the fee described below under "Termination Fee;
Expenses"; or (d) by action of the Board of Directors of Marriott, if the
Board of Managing Directors of the Company shall not have issued, or shall
have withdrawn or modified (including by amendment of the Schedule 14D-9) in a
manner materially adverse to Marriott, its approval or recommendation of the
Offer or the Acquisition Agreement or shall have recommended an Alternative
Transaction Proposal to the stockholders of the Company, or shall have adopted
any resolution to effect any of the foregoing. In the event of the termination
of the Acquisition Agreement and the abandonment of the Acquisition pursuant
to its terms, all future obligations and liabilities of the parties thereto
shall terminate, except any obligations of the parties to pay fees and
expenses described below under "Termination Fee; Expenses."
Other Offers. Prior to consummation of the Offer, the Company agrees (a)
that neither it nor any of its subsidiaries shall, nor shall it or any of its
subsidiaries authorize or permit their respective officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, financial advisor, attorney, accountant, consultant or
other advisor, agent, representative or expert retained by or acting on behalf
of it or any of its subsidiaries) (collectively, "Representatives") to,
directly or indirectly, initiate, solicit, negotiate, encourage, or provide
confidential information to facilitate any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to any
of its stockholders) concerning, or that may reasonably be expected to lead
to, an Alternative Transaction (any such proposal or offer being hereinafter
referred to as an "Alternative Transaction Proposal"), and (b) that it will
notify Marriott promptly if any such inquiries or proposals are received by,
any information or documents is requested from, or any negotiations or
discussions are sought to be initiated or continued with, the Company or any
of its subsidiaries; provided, however, that (i) the foregoing shall not
prohibit the Board of Managing Directors from, to the extent applicable,
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Alternative Transaction Proposal and (ii) the Company and its subsidiaries and
Representatives may furnish confidential information to and participate in
negotiations with a person making or proposing to make an Alternative
Transaction Proposal if (x) the Company's Board of Managing Directors is
advised by one or more of its financial advisors that such person has the
financial wherewithal to consummate an Alternative Transaction, (y) the Board
of Managing Directors reasonably determines, after receiving advice from the
Company's financial advisor, that such person has proposed an Alternative
Transaction that involves consideration to the Company's stockholders that is
superior to the consideration provided for under the Acquisition Agreement and
(z) based upon the advice of counsel to such effect, the Company's Board of
Managing Directors determines in good faith that it is necessary so to furnish
information and/or negotiate in order to comply with its fiduciary duty to
stockholders of the Company. The Company agreed that prior to furnishing any
such information to, or entering into any discussions or negotiations with,
any person or entity concerning an Alternative Transaction Proposal, the
Company shall (i) receive from such person or entity an executed
confidentiality agreement in customary form on terms not less favorable to the
Company than the confidentiality provisions contained in the Confidentiality
Agreement (as defined herein), providing for confidentiality of information
furnished by the Company to Marriott and its Representatives in connection
with the transactions contemplated hereby, and (ii) provide written notice to
Marriott to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity. The Company shall
provide Marriott with a summary of the terms of any Alternative Transaction
Proposal received by the Company, or its subsidiaries or Representatives. For
purposes of the Acquisition Agreement, "Alternative Transaction" shall mean
any of the following involving the Company or
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any of its subsidiaries: (i) any merger, consolidation, Buy-Out, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets
of the Company and its subsidiaries, determined on a consolidated basis in
accordance with United States generally accepted accounting principles
("GAAP"); (iii) any tender offer, exchange offer or other offer for 20% or
more of the outstanding shares of capital stock of the Company or the filing
of a registration statement under the Securities Act in connection therewith;
(iv) the acquisition by any person or entity of beneficial ownership or the
right to acquire beneficial ownership of, or the formation or existence of any
"group" (as such term is defined under Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder) which beneficially owns, or
has the right to acquire beneficial ownership of, 20% or more of the then
outstanding shares of capital stock of the Company; or (v) any public
announcement of a proposal, plan or intention to do any of the foregoing or
any agreement or commitment to engage in any of the foregoing.
Termination Fee; Expenses. Pursuant to the Acquisition Agreement, in the
event that any person shall have made an Alternative Transaction Proposal for
the Company and the Acquisition Agreement is terminated by either party, or in
the event that the Acquisition Agreement is otherwise terminated under Section
7.1(d) thereof (as described above in clause (d) under "Termination"), the
Company shall pay Marriott a fee of $27,500,000 and reimburse Marriott for its
documented out-of-pocket expenses in connection with the transactions
contemplated by the Acquisition Agreement not exceeding $1,000,000.
Except as specifically provided in the Acquisition Agreement, each party
shall bear its own respective expenses incurred in connection with the
Acquisition Agreement and the Offer, including the preparation, execution and
performance of the Acquisition Agreement and the transactions contemplated
thereby, and all fees and expenses of investment bankers, finders, brokers,
agents, representatives, counsel and accountants.
Interim Agreements of Marriott and the Company. Except as contemplated by
the Acquisition Agreement, the Company has covenanted and agreed that, during
the period from the date of the Acquisition Agreement to the consummation of
the Offer, unless Marriott has consented in writing thereto, the Company
shall, and shall cause each of its subsidiaries to: (a) conduct its business
and operations only in the ordinary course of business consistent with past
practice; (b) use all reasonable efforts to preserve intact the business
organizations, goodwill, rights, licenses, permits and franchises of the
Company and its subsidiaries and maintain their existing relationships with
customers, suppliers and other persons having business dealings with them; (c)
use its commercially reasonable efforts to keep in full force and effect
adequate insurance overages and maintain and keep its properties and assets in
good repair, working order and condition, normal wear and tear excepted; (d)
not amend or modify its respective articles or certificate of incorporation,
by-laws, partnership agreement or other charter or organization documents; (e)
not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or
agree or commit to issue, sell, grant, deliver, pledge or encumber any shares
of any class or series of capital stock of the Company or any of its
subsidiaries or any other equity or voting security or equity or voting
interest in the Company or any of its subsidiaries, any securities convertible
into or exercisable or exchangeable for any such shares, securities or
interests, or any options, warrants, calls, commitments, subscriptions or
rights to purchase or acquire any such shares, securities or interests (other
than issuances of Shares upon exercise of Stock Options (as defined below)
granted prior to the date of the Acquisition Agreement to directors, officers,
employees and consultants of the Company in accordance with the company stock
plan as currently in effect); (f) not (A) split, combine or reclassify any
shares of its capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of, or in substitution for, shares
of its capital stock, (B) in solely the case of the Company, declare, set
aside or pay any dividends on, or make other distributions in respect of, any
of the Company's capital stock, or (C) repurchase, redeem or otherwise
acquire, or agree or commit to repurchase, redeem or otherwise acquire, any
shares of capital stock or other equity or debt securities or equity interests
of the Company or any of its subsidiaries; (g) not amend or otherwise modify
the terms of any Stock Options or the Company stock plan the effect of which
shall be to make such terms more favorable to the holders thereof or persons
eligible for participation therein; (h) other than regularly scheduled
seniority increases in the ordinary course of business consistent with past
practice, not increase the compensation payable or to become payable to any
directors, officers or employees of the Company or any of its subsidiaries, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with any director or officer of the
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Company or any of its subsidiaries, or establish, adopt, enter into or amend
in any material respect or take action to accelerate any material rights or
benefits under any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee of the Company of any of its subsidiaries; (i) not acquire or agree
to acquire (including, without limitation, by merger, consolidation, or
acquisition of stock, equity securities or interests, or assets) any
corporation, partnership, joint venture, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets of any other person outside the ordinary course of business consistent
with past practice or any interest in any real properties (whether or not in
the ordinary course of business); (j) not incur, assume or guarantee any
indebtedness for borrowed money (including draw-downs on letters or lines of
credit) or issue or sell any notes, bonds, debentures, debt instruments,
evidences of indebtedness or other debt securities of the Company or any of
its subsidiaries or any options, warrants or rights to purchase or acquire any
of the same, except for (A) renewals of existing bonds and letters of credit
in the ordinary course of business not to exceed $10,000,000 and (B) advances,
loans or other indebtedness in the ordinary course of business consistent with
past practice in an aggregate amount not to exceed $5,000,000; (k) not sell,
lease, license, encumber or otherwise dispose of, or agree to sell, lease,
license, encumber or otherwise dispose of, any material properties or assets
of the Company or any of its subsidiaries; (l) not authorize or make any
capital expenditures (including by lease) in excess of $5,000,000 in the
aggregate for the Company and all of its subsidiaries; (m) not make any
material change in any of its accounting or financial reporting (including tax
accounting and reporting) methods, principles or practices, except as may be
required by GAAP; (n) not make any material tax election or settle or
compromise any material United States, Dutch or foreign tax liability; (o)
except in the ordinary course of business consistent with past practice, not
amend, modify or terminate specified contracts or waive, release or assign any
material rights or claims thereunder; (p) not adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries; (q) not take any action that would, or would be reasonably
likely to, result in any of the representations and warranties set forth in
the Acquisition Agreement not being true and correct in any material respect
or any of the conditions to the Offer not being satisfied; and (r) not agree
or commit in writing or otherwise to do (or, in the case of clauses (a)
through (c), to do anything inconsistent with) any of the foregoing.
Board of Managing Directors. The Acquisition Agreement provides that in the
event that Marriott purchases and pays for at least a majority of the
outstanding Shares, the Company shall promptly take all actions necessary and
available (including, if requested by Marriott, calling a general meeting of
the holders of Shares) to cause the Company's Board of Managing Directors to
consist solely of persons designated by Marriott.
Company Stock Options. Upon the consummation of the Offer, all outstanding
options and other rights to acquire shares under any stock option or purchase
plan, program or similar arrangement (each, as amended, an "Option Plan" and
such options and other rights, "Stock Options") of the Company, shall vest in
full and Marriott shall pay to the holder of each outstanding Stock Option an
amount equal to the difference between the Offer Price and the exercise price
of each such Stock Option, unless Marriott and the pertinent holder agree
otherwise in writing. Such amount shall be paid by Marriott in cash. If and to
the extent required by the terms of the Option Plans or the terms of any Stock
Option granted thereunder, the Company shall use its best efforts to obtain
the consent of each holder of outstanding Stock Options to the foregoing
treatment of such Stock Options and to take any other action necessary to
effectuate the foregoing provisions.
Except as otherwise agreed to by the parties and to the extent permitted by
the Option Plans, the Option Plans of the Company shall terminate as of the
Closing Date and any rights under any provisions in any other plan, program or
arrangement providing for the issuance or grant by the Company of any interest
in respect of the capital stock of the Company shall be canceled as of the
Closing Date.
Employee Benefits. Marriott acknowledges that the Company is bound by the
employee severance plans applicable to employees of the Company, and Marriott
agrees to cause the Company to perform the terms thereof. The Company agrees,
prior to consummation of the Offer, that it shall, or shall cause one of its
subsidiaries to, take such action as is necessary to avoid the requirement
under the Renaissance Hotels Executive Supplemental 401(k) Plan and
Renaissance Hotels Deferred Incentive Plan (together, the "Plans") that, upon
a change in
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control of the Company or one of its subsidiaries, the liabilities under the
Plans be funded through an irrevocable trust. Effective as of the consummation
of the Offer, Marriott shall assume the Company's and any of the Company's
subsidiaries, liabilities and obligations under the Plans, except for the
obligation to establish an irrevocable trust to fund the liabilities. The
Company and Marriott agree that employees of the Company or any of its
subsidiaries who participate in the Plans shall be fully vested in their
accrued benefits under the Plans as of the Closing Date. Marriott shall use
its best efforts to ensure that the intended timing of distributions under the
Plans and the intended tax consequences to participants in the Plans shall be
maintained on and after the consummation of the Offer, except to the extent
modified by written agreement between Marriott and such participants.
Agreements Regarding Buy-Out. Pursuant to the Acquisition Agreement, at the
request of Marriott, the Company will (i) inform Marriott of the fact that
Marriott and/or one or more of its affiliates jointly holds 95% or more of the
issued share capital in the Company, as soon as the Company has become aware
of that fact; (ii) provide Marriott with extracts from and/or copies of the
stockholders' register of the Company if so required by Marriott; and (iii)
provide Marriott and/or any auditor instructed by Marriott with such
information regarding the Company in order for Marriott and/or such auditor to
be in a position to establish the value or price of a share in the issued
capital of the Company for the purposes of proceedings pursuant to Section
2:92a of the Dutch Civil Code (the "DCC").
Indemnification. From and after the consummation of the Offer, Marriott
shall, and shall cause the Company to, indemnify and hold harmless each person
who was on February 17, 1997, or was at any time prior thereto, an officer or
director of the Company or any of its subsidiaries (the "Indemnified Parties")
against any losses, claims, damages, judgments, settlements, liabilities,
costs or expenses (including without limitation reasonable attorneys' fees and
out-of-pocket expenses) incurred in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to acts or omissions,
or alleged acts or omissions, by them in their capacities as such occurring at
or prior to the consummation of the Offer (including, without limitation, in
connection with the transactions contemplated by the Acquisition Agreement),
to the fullest extent that the Company or such subsidiaries would have been
permitted, under applicable law and the articles of incorporation or by-laws
of the Company or the organizational documents of such subsidiaries each as in
effect on the date of the Acquisition Agreement, to indemnify such person (and
Marriott or the Company shall also advance expenses as incurred to the fullest
extent permitted under applicable law upon receipt from the Indemnified Party
to whom expenses are advanced of a written undertaking to repay such
advances). Marriott and the Company shall pay all expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing
this provision. If the foregoing indemnity is not available with respect to
any Indemnified Party, then Marriott and the Company, on the one hand, and the
Indemnified Party, on the other hand, shall contribute to the amount payable
in such proportion as is appropriate to reflect relative faults and benefits.
The Acquisition Agreement provides that from and after the Closing Date
until the sixth anniversary thereof, Marriott shall cause the Company to
maintain directors' and officers' liability insurance covering the Indemnified
Parties who are covered, in their capacities as directors and officers of the
Company, by the existing directors' and officers' liability insurance of the
Company in force on the date of the Acquisition Agreement, with respect to
losses or claims arising out of acts or omissions, or alleged acts or
omissions, by them in their capacities as such occurring at or prior to the
Closing Date, and upon terms no less favorable to the Indemnified Parties than
such existing directors' and officers' liability insurance; provided, however,
that the Company shall not be required in order to maintain or procure such
coverage to pay an annual premium in excess of 150% of the current annual
premium paid by the Company for its existing coverage, and that if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual
premium in excess of such limit, the Company shall only be required to obtain
as much coverage as can be obtained by paying an annual premium equal to such
limit.
Representations and Warranties. The Acquisition Agreement contains various
customary representations and warranties of the parties including
representations by the Company (which will not survive the Closing Date)
relating to, among other things, (i) due organization, (ii) capitalization,
(iii) subsidiaries, (iv) authority relative to
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the Acquisition Agreement, (v) absence of conflicts with other obligations,
(vi) consents and approvals, (vii) filings with the Commission, (viii)
undisclosed liabilities, (ix) absence of certain changes concerning the
Company's business, (x) litigation, (xi) compliance with laws, (xii) employee
benefit plans, (xiii) labor matters, (xiv) tax matters, (xv) properties of the
Company and its subsidiaries, (xvi) environmental matters, (xvii) material
contracts and commitments, (xviii) intangible property, (xix) opinion of the
Company's financial advisor and (xx) brokers.
Reasonable Efforts; Consents and Certain Arrangements. Each of the parties
to the Acquisition Agreement agrees to use all commercially reasonable good
faith efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws
and regulations, and consult and fully cooperate with and provide reasonable
assistance to each other party to the Acquisition Agreement and their
respective Representatives in order, to consummate and make effective the
transactions contemplated by the Acquisition Agreement as promptly as
practicable, including, without limitation, (i) using all commercially
reasonable good faith efforts to make all filings, applications,
notifications, reports, submissions and registrations with, and to obtain all
consents, approvals, authorizations or permits of, governmental entities or
other persons or entities as are necessary for the consummation of the Offer
and the other transactions contemplated by the Acquisition Agreement
(including, without limitation, pursuant to the HSR Act, the Securities Act of
1933, as amended, the Exchange Act, Blue Sky Laws and other applicable laws
and regulations in effect in the United States, The Netherlands or any other
jurisdiction), and (ii) taking such actions and doing such things as any other
party to the Acquisition Agreement may reasonably request in order to cause
any of the conditions to the Offer described under "Conditions to Offer" to be
fully satisfied. Prior to making any application to or filing with any
governmental entity or other person or entity in connection with the
Acquisition Agreement, the Company, on the one hand, and Marriott, on the
other hand, shall provide the other with drafts thereof and afford the other a
reasonable opportunity to comment on such drafts.
Without limiting the generality of the foregoing, each of Marriott and the
Company has agreed to cooperate and use all commercially reasonable efforts to
vigorously contest and resist any action, suit, proceeding or claim, and to
have vacated, lifted, reversed or overturned any injunction, order, judgment
or decree (whether temporary, preliminary or permanent), that delays, prevents
or otherwise restricts the consummation of the Offer or any other transaction
contemplated by the Acquisition Agreement, and to take any and all actions
(including, without limitation, the disposition of assets, divestiture of
businesses, or the withdrawal from doing business in particular jurisdictions)
as may be required by governmental entities as a condition to the granting of
any such necessary approvals or as may be required to avoid, vacate, lift,
reverse or overturn any injunction, order, judgment, decree or regulatory
action (provided, however, that in no event shall any party to the Acquisition
Agreement take, or be required to take, any action that could reasonably be
expected to have a material adverse effect on the business, operations,
prospects, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole (a "Company Material Adverse
Effect"), or that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the business, operations,
properties, financial condition or results of operations of Marriott and its
subsidiaries, taken as a whole (a "Marriott Material Adverse Effect")).
Amendment. The Acquisition Agreement may be amended by action taken by the
parties' respective boards of directors, at any time by an instrument in
writing signed on behalf of each of the parties thereto.
3. SHAREHOLDER AGREEMENT
On February 17, 1997, Diamant Hotel Investments N.V. ("Diamant") and
Marriott entered into a Shareholder Agreement (the "Shareholder Agreement"), a
copy of which is filed as Exhibit 3 hereto and is incorporated herein by
reference. The following summary is qualified in its entirety by reference to
the full text of the Shareholder Agreement. Diamant is the record and
beneficial owner of, and has the sole right to vote and dispose of, 16,368,000
Shares or approximately 54% of the outstanding Shares. Diamant's obligations
under the Shareholder Agreement are unconditionally guaranteed by New World
Hotels (Holdings) Limited, a Hong Kong corporation ("NWHH"), which is the sole
stockholder of Diamant.
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Pursuant to the Shareholder Agreement, Diamant agreed that: (i) it will
tender all of its Shares in the Offer; (ii) neither it nor its representatives
will, directly or indirectly, initiate, solicit or encourage, or take any
action to facilitate the making of, any offer or proposal which constitutes or
is reasonably likely to lead to any Alternative Transaction or any inquiry
with respect thereto, or in the event of an unsolicited Alternative
Transaction Proposal, engage in negotiations or discussions with, or provide
any information or data to, any person (other than Marriott, any of its
affiliates or representatives) relating to any Alternative Transaction; (iii)
it will not, except pursuant to the Acquisition Agreement or the Shareholder
Agreement, sell, transfer, pledge, hypothecate, encumber, assign or otherwise
dispose of (or enter into an agreement to do the foregoing) any of its Shares;
and (iv) it will not grant any proxies, deposit any Shares into a voting trust
or enter into any voting agreement with to any Shares.
Diamant further agreed that, during the term of the Shareholder Agreement,
at any meeting of the Company's stockholders, or in connection with any
written consent of the Company's stockholders, to vote all of its Shares; (i)
in favor of the Offer, the execution and delivery by the Company of the
Acquisition Agreement and the approval and acceptance of the Offer and the
terms thereof and each of the other actions contemplated by the Acquisition
Agreement and the Shareholder Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would (A)
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Acquisition Agreement or of
Diamant under the Shareholder Agreement or (B) impede, interfere with, delay,
postpone, or adversely affect the Offer or the transactions contemplated
thereby; and (iii) except as otherwise agreed to in writing in advance by
Marriott, against the following actions (other than the Offer and the
transactions contemplated by the Acquisition Agreement and the Shareholder
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of
its subsidiaries (including any Alternative Transaction); (B) any sale, lease
or transfer of a substantial portion of the assets or business of the Company
or its subsidiaries, or reorganization, restructuring, recapitalization,
special dividend, dissolution or liquidation of the Company or its
subsidiaries; or (C) any change in the present capitalization of the Company
including any proposal to sell any equity interest in the Company or its
subsidiaries.
The Shareholder Agreement also provides for the grant by Diamant to Marriott
of an exclusive and irrevocable option (the "Option") to purchase all of
Diamant's Shares at a exercise price of $30.00 per Share. Under the
Shareholder Agreement, the Option may be exercised by Marriott at any time
during the period from and after the occurrence of a Trigger Event (as defined
below) and prior to the six-month anniversary of such Trigger Event. A
"Trigger Event" is defined in the Shareholder Agreement as any termination of
the Acquisition Agreement (i) under the circumstances described in clauses (c)
or (d) under "The Acquisition Agreement--Termination," or (ii) so long as
Marriott has not materially breached the Acquisition Agreement or the
Shareholder Agreement, under the circumstances described in clause (b)(i)(y)
under "The Acquisition Agreement--Termination" if at the expiration or
termination of the Offer there is pending or outstanding an Alternative
Transaction Proposal.
4. CONFIDENTIALITY AGREEMENT
Marriott and the Company entered into a confidentiality agreement dated
January 10, 1997 (the "Confidentiality Agreement"), a copy of which is filed
as Exhibit 4 hereto and is incorporated herein by reference. Pursuant to the
Confidentiality Agrement, Marriott agreed, among other things, that it and its
representatives would keep confidential certain information (the
"Information") furnished to it by the Company and use the Information solely
for the purpose of evaluating a business combination, restructuring, sale or
other transactions (an "Acquisition Transaction") involving Marriott and the
Company.
The Confidentiality Agreement contains a "standstill provision" which
provides that until July 10, 1998, neither Marriott nor any of its affiliates
will, without the prior written consent of the Company and its Board of
Managing Directors: (i) in any manner, acquire, attempt to acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, any voting securities or direct or indirect rights to acquire any
voting securities of the Company or any subsidiary thereof, or any assets of
the Company or any subsidiary or division
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thereof; (ii) make or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote, or seek to advise or influence
any person or entity with respect to the voting of, any voting securities of
the Company; (iii) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any extraordinary
transaction involving the Company or its securities or assets; (iv) form, join
or in any way participate in a "group" (as defined in Section 13(d)(3) of the
Exchange Act) in connection with any of the foregoing; (v) advise, assist or
encourage any other person in connection with any of the foregoing; or (vi)
take any action which might require the Company to make a public announcement
regarding the possibility of a business combination or merger or other
Acquisition Transaction.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. At a meeting held on February 16, 1997, the Company's
Board of Managing Directors unanimously (i) determined that the Offer is fair
to, and in the best interests of, the Company's stockholders, (ii) approved
the Acquisition Agreement and the transactions contemplated thereby, including
the Offer and (iii) recommended that the stockholders of the Company accept
the Offer and tender all of their Shares pursuant to the Offer. This
recommendation is based in part upon the opinion of Morgan Stanley & Co.
Incorporated ("Morgan Stanley") that the per Share consideration to be
received by the Company's stockholders in the Offer is fair to such
stockholders from a financial point of view. The full text of the Morgan
Stanley fairness opinion is attached hereto as Annex A and should be read in
its entirety.
A letter to the Company's stockholders communicating the Board's
recommendations and a press release announcing the Offer and the Acquisition
Agreement are filed herewith as Exhibits 8 and 9, respectively, and are
incorporated herein by reference.
(b) Background. In November 1996, representatives of Morgan Stanley made
presentations to Henry Cheng Kar Shun, Chairman of the Company's Board of
Managing Directors, regarding the state of the lodging industry specifically
and the environment for mergers and acquisitions generally. Although the
Company had not yet formally retained Morgan Stanley as a financial advisor,
Dr. Cheng authorized Morgan Stanley to ascertain potential interest in a
transaction with Renaissance.
From November 27, 1996 through December 10, 1996, representatives of Morgan
Stanley had preliminary conversations with two parties, including Doubletree,
regarding a possible transaction with the Company. Morgan Stanley subsequently
arranged for a meeting in Hong Kong between representatives of Doubletree and
representatives of the Company, including Dr. Cheng.
On December 29, 1996 and December 30, 1996, Dr. Cheng met in Hong Kong with
Richard J. Ferris and Peter V. Ueberroth, Co-Chairmen of Doubletree, together
with representatives of Morgan Stanley, to examine the potential for a
transaction and to analyze the effects of a combination of the two companies.
At these meetings, Messrs. Ferris and Ueberroth outlined the proposed terms of
an acquisition of the Company by Doubletree. Dr. Cheng and Messrs. Ferris and
Ueberroth then negotiated the proposed terms.
On December 30, 1996, the parties reached an agreement in principle as to
the principal terms of such an acquisition, including a price of $25.30 per
Share payable in cash and Doubletree common stock and a $50 million mutual
termination fee, subject to approval by the respective boards of directors of
the Company and Doubletree, mutual due diligence and the preparation and
negotiation of definitive documentation.
On December 31, 1996, in response to unusual trading activity in both
Doubletree's and Renaissance's stock, Doubletree and Renaissance issued a
press release announcing the proposed acquisition. On January 2, 1997, due to
certain press reports characterizing the proposed acquisition as a definitive
transaction, the Company issued a supplemental press release reiterating that
the agreement in principle was subject to certain conditions including
approval of the Company's Board of Managing Directors.
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Between January 1, 1997 and January 4, 1997, members of the Company's Board
of Managing Directors, including the directors who are not employees of the
Company or affiliated with or employed by any New World Group Members (the
"independent directors"), discussed by telephone conferences the terms of the
proposed transaction and conferred with the Company's legal and financial
advisors. The independent directors, with the consent of the Company's Board
of Managing Directors, retained independent counsel to assist in their review
of the proposed transaction.
On January 4, 1997, the Company's Board of Managing Directors, together with
its financial and legal advisors and counsel for the independent directors,
met in New York City, with the Hong Kong resident directors attending by tele-
video conference. At the meeting, Morgan Stanley presented the Board with an
overview of the lodging industry in general and the stock price performance of
the Company's common stock since its initial public offering in September
1995, reviewed various valuation analyses with respect to the Company and the
terms of the proposed transaction with Doubletree. Following the presentation,
the Board reviewed the proposed transaction in detail and authorized legal
counsel to negotiate the terms of a letter of intent.
On January 4, 1997 and January 5, 1997, pursuant to the Board's direction,
legal counsel for the Company negotiated the terms of a letter of intent with
representatives and legal counsel for Doubletree. As a result of such
negotiation, Doubletree increased the proposed acquisition consideration from
$25.30 per Share to $26.30 per Share and the parties agreed to decrease the
mutual termination fee to $15 million.
On January 5, 1997, the Company, Diamant, NWHH and Doubletree entered into a
non-binding letter of intent (the "Letter of Intent") pursuant to which
Doubletree proposed to purchase all of the outstanding Shares for an aggregate
per Share consideration of $8.00 in cash and 0.4342 shares of Doubletree's
common stock, subject to adjustment if the average closing price of
Doubletree's common stock for the five trading days prior to the closing date
is less than $40.3875 or greater than $49.3625. Under the terms of the Letter
of Intent, Renaissance agreed that if Renaissance or Diamant or NWHH entered
into a merger or acquisition agreement with a party other than Doubletree for
a consideration greater than $26.30 per Share within 120 days, Renaissance
would pay Doubletree a termination fee of $15 million. The Letter of Intent
also provided that if Doubletree failed to sign a definitive agreement with
Renaissance within 45 days for any reason (unless Doubletree shall have
offered to enter into a definitive agreement containing no terms other than
those set forth in the Letter of Intent and such other terms as shall not have
been objected to by the Company), Doubletree would pay Renaissance a fee of
$15 million. Under the terms of the Letter of Intent, Renaissance was not
permitted to solicit from third parties any inquiries, proposals or offers
with respect to the sale of Renaissance, but was not restricted from entering
into discussions or negotiations with or providing information to third
parties in response to unsolicited proposals or offers.
On January 6, 1997, the Company and Doubletree issued a joint press release
announcing the signing of the Letter of Intent and the terms thereof.
On January 7, 1997 and January 10, 1997, the Compensation Committee of the
Company's Board of Managing Directors held special meetings to discuss the
need to provide for continuity of management in light of the proposed
transaction, including adequate change of control mechanisms and severance
benefit levels. After discussions, the Board adopted the termination of
employment and change of control arrangements described in Item 3(b).
From January 6, 1997 through January 17, 1997, Morgan Stanley received
inquiries from several other lodging industry companies regarding a possible
transaction with the Company, including a written expression of interest from
Marriott on January 9, 1997. Marriott executed a confidentiality agreement
with the Company on January 10, 1997, a copy of which is attached as Exhibit 4
hereto. Four other interested companies entered into confidentiality
agreements with the Company during this period.
Between January 9, 1997 and January 20, 1997, subject to the terms of the
confidentiality agreements, Morgan Stanley provided the interested parties
information packages containing certain summary financial and other
information regarding the Company and its operations.
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Between January 7, 1997 and February 12, 1997, Doubletree and four of the
five companies which entered into confidentiality agreements, including
Marriott, and their respective legal and financial advisors conducted
extensive due diligence and document reviews of the Company at separate data
room facilities specially organized by the Company in Cleveland, Ohio, as well
as interviews with members of senior management of the Company.
During the period from January 16, 1997 through January 30, 1997, meetings
were arranged in Hong Kong between the representatives of each of four
interested companies (other than Doubletree) and Dr. Cheng, other senior
executives of the Company and the Company's financial advisor to review and
discuss the parties' intentions and proposals with respect to transactions
involving the Company, expected synergies from such transactions, business
plans with respect to the operations of the Company and the interested
parties' histories of hotel operating performance. On January 28, 1997, J.
Willard Marriott, Jr., Chairman and Chief Executive Officer of Marriott, and
other senior executives of Marriott met in Hong Kong with Dr. Cheng, other
senior executives of the Company and the Company's financial advisor.
From January 27, 1997 through February 11, 1997, the Company, its legal and
financial advisors and accountants performed due diligence and document
reviews with respect to three interested parties, including Doubletree, which
indicated an intention to include stock in their proposed consideration for
Renaissance.
During the week of February 3, 1997, each of the interested companies (other
than Doubletree), including Marriott, was requested by the Company's financial
advisor to submit to the Company in writing by not later than February 11,
1997, their respective acquisition proposals and comments on a draft of a
proposed acquisition agreement supplied by the Company's counsel.
From February 7, 1997 through February 9, 1997, representatives of each of
the interested companies (other than Doubletree) met, at the Company's
invitation, in Beaver Creek, Colorado, with Dr. Cheng, members of senior
management of the Company and the Company's legal and financial advisors to
further discuss their intentions and proposals with respect to transactions
involving the Company, expected synergies from such transactions, business
plans with respect to the ongoing operations of the Company and their
respective history of hotel operating performance.
On February 11, 1997, Marriott submitted a written proposal to acquire all
of the outstanding Shares at a price per Share of $28.00 in cash. Another
written proposal was submitted by one other interested party on February 12,
1997 which provided for the acquisition of such third party by the Company in
consideration of the issuance of shares of common stock of the Company.
On February 13, 1997, Morgan Stanley contacted Richard Ferris of Doubletree
to inquire as to Doubletree's intention to submit a revised proposal. Mr.
Ferris indicated that it was Doubletree's intention to submit a revised
proposal after Doubletree's Board of Directors meeting scheduled for February
14, 1997.
In the evening of February 13, 1997 and in the afternoon of February 14,
1997, Dr. Cheng, other representatives of the Company and the Company's legal
and financial advisors met with Arne Sorenson, Senior Vice President, Business
Development of Marriott, in Palm Springs, California to review Marriott's
proposal and to have further discussions with respect to Marriott's future
plans for the Company. On the evening of February 14, 1997, representatives of
the Company and its legal counsel met with representatives of Marriott and its
legal advisors to commence negotiations on the terms of the Acquisition
Agreement and the Shareholder Agreement.
At midday on February 15, 1997, Morgan Stanley received an increased offer
from Doubletree which provided for an aggregate per Share consideration of
$8.00 in cash and 0.4834 shares of Doubletree's common stock, subject to
adjustment, for a total per Share consideration ranging from $27.64 to $29.80
depending on the average trading price of Doubletree's stock for a period
prior to closing. The exchange ratio of 0.4834 shares would be subject to
upward adjustment to maintain the minimum value of $27.64 per Share if
Doubletree's average trading price fell below $40.625 per Doubletree share;
provided that the ratio would remain fixed at 0.5433 shares of Doubletree
stock for each Share if Doubletree's average trading price was less than
$36.15 per Doubletree share. The exchange ratio would be subject to downward
adjustment to maintain the maximum value
14
<PAGE>
of $29.80 per Share if Doubletree's average trading price increased above
$45.10 per Doubletree share. If Doubletree's average trading price was less
than $30.00 or greater than $50.00 per share, either party would have had the
right to terminate the agreement.
In the afternoon of February 15, 1997, the Company's Board of Managing
Directors held a special meeting in Los Angeles, California, to review, with
the advice and assistance of the Company's financial and legal advisors, the
terms and conditions of the various offers, including the Marriott and
Doubletree offers. Morgan Stanley made a presentation to the Board which
included a report on the history and the current status of the various offers,
a description of the offers as well as an analysis of the valuation of such
offers other than an analysis of the increased offer that had been made that
day by Doubletree. Following such presentation, the Company's legal counsel
summarized for the Board the terms of the various proposals and acquisition
agreements, explained the differences in the legal structure, timing and
conditions to the bidders' obligations to consummate the transaction and
discussed the legal due diligence reviews conducted with respect to the
bidders whose proposals included stock. In the evening, the Board adjourned
its meeting to the following day.
During the morning of February 16, 1997, Dr. Cheng met with Mr. Sorenson in
Los Angeles, California, to further negotiate Marriott's proposal. Mr.
Sorenson advised Dr. Cheng that he would seek authority to increase Marriott's
offer and, thereafter, Mr. Sorenson delivered a letter to Dr. Cheng increasing
Marriott's offer to $30.00 per Share in cash.
At the reconvened meeting of the Board of Managing Directors on February 16,
1997, Morgan Stanley made a presentation to the Board of its analysis of
Doubletree's increased offer that had been received the previous day and the
increased Marriott offer was presented to the Board. After reviewing the terms
of the increased Marriott offer and the increased Doubletree offer with its
financial and legal advisors, the Board, subject to receipt of Morgan
Stanley's written fairness opinion and finalization of the terms of the
Acquisition Agreement, unanimously resolved to accept Marriott's increased
offer. The Board determined that the Offer is fair to and in the best
interests of the Company's stockholders, approved the proposed Acquisition
Agreement substantially in the form that had been presented at the meeting on
February 15, 1997 and the transactions contemplated thereby, including the
Offer, and recommended that the stockholders of the Company accept the Offer
and tender all of their Shares pursuant to the Offer.
Through the afternoon and evening of February 16, 1997, members of senior
management of the Company and its legal advisors completed negotiations with
members of senior management of Marriott and its legal advisors on the
Acquisition Agreement and the Shareholder Agreement and resolved certain
remaining open issues including the conditions to the Offer, certain
representations and warranties of the Company and the terms of the Shareholder
Agreement.
On February 17, 1997, Morgan Stanley delivered its written fairness opinion
to the Company, the Company and Marriott executed the Acquisition Agreement
and Diamant and NWHH executed the Shareholder Agreement.
On February 18, 1997, Marriott and the Company issued a joint press release
announcing the transaction.
Reasons for Recommendation. In reaching its conclusion to approve the
Acquisition Agreement and the transactions contemplated thereby, including the
Offer, and to unanimously recommend that the holders of Shares tender their
Shares pursuant to the Offer, the Board of Managing Directors considered a
number of factors, including the following:
1. The Offer resulted from a comprehensive process that the Board
believes was conducted in a manner calculated to result in the most
attractive alternative available to the Company's stockholders. See
"Background" above;
2. The presentations of Morgan Stanley at the February 15, 1997 and
February 16, 1997 meetings of the Board of Managing Directors and the
written opinion of Morgan Stanley dated February 17, 1997 to the effect
that, as of such date and based upon its review and analysis and subject to
the limitations set forth
15
<PAGE>
therein, the consideration to be received by the holders of Shares pursuant
to the Offer is fair from a financial point of view to such holders. A copy
of the written opinion dated February 17, 1997 of Morgan Stanley, which
accompanies this Schedule 14D-9, setting forth the assumptions made,
factors considered and the scope of the review undertaken by Morgan
Stanley, is attached hereto as Annex A, has been filed as Exhibit 10 hereto
and is incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ THE
OPINION OF MORGAN STANLEY CAREFULLY AND IN ITS ENTIRETY;
3. The financial and other terms and conditions of the Offer and the
Acquisition Agreement, including the fact that the Offer is structured as
an immediate cash tender offer for all of the outstanding Shares, thereby
enabling the stockholders of the Company to obtain cash for all of their
Shares at the earliest possible time;
4. Diamant, the owner of a majority of the Company's outstanding Shares,
agreed to tender all of its Shares in the Offer, was prepared to support
the Acquisition Agreement by entering into the Shareholder Agreement and
would be treated equally with all other stockholders in the Offer;
5. The financial strength of Marriot and that the Offer is not
conditioned on the availability of financing; and
6. Although the Board believes that the Offer presents the most
attractive alternative available to the Company's stockholders, the
Acquisition Agreement provides that if the Board should receive an
unsolicited Alternative Transaction Proposal by a third party which it
wishes to accept, the Board may, in the exercise of its fiduciary duties,
terminate the Acquisition Agreement and recommend the Alternative
Transaction.
The Board of Managing Directors did not assign relative weights to the
factors or determine that any factor was of particular importance. Rather, the
Board of Managing Directors viewed its position and recommendation as being
based on the totality of the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated December 30, 1996 (the "Engagement
Letter"), the Company retained Morgan Stanley to furnish financial advisory
services with respect to a proposed merger or similar transaction. Pursuant to
the terms of the Engagement Letter, the Company agreed to pay Morgan Stanley a
fee of $5 million if and when control of 50% or more of the Shares changes
hands. The Company also agreed to reimburse Morgan Stanley for its expenses
incurred in connection with its engagement (including fees of outside counsel
and other professional advisors), and to indemnify Morgan Stanley against
certain liabilities and reasonable expenses related to, arising out of or in
connection with the engagement of Morgan Stanley under the Engagement Letter,
including liabilities under the federal securities laws.
In the past, Morgan Stanley and its affiliates have underwritten the
Company's initial public offering and debt offering and have received
customary fees for the rendering of such services.
In the ordinary course of its trading and brokerage activities, Morgan
Stanley or its affiliates may at any time hold long or short positions, and
may trade or otherwise effect transactions for its own account or the accounts
of customers, in debt or equity securities of the Company or any other company
that may be involved in a transaction with the Company.
Except as disclosed herein, neither the Company nor any person acting on its
behalf has employed, retained or compensated, or currently intends to employ,
retain or compensate, any other person to make solicitations or
recommendations to stockholders of the Company on its behalf concerning the
Offer or the Acquisition Agreement.
16
<PAGE>
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past 60 days
by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company, except as follows:
(i) the approval of the Acquisition Agreement as described above in Item 3(b);
and (ii) the execution of the Shareholder Agreement by Diamant and NWHH
described above in Item 3(b).
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates or subsidiaries owning Shares currently intend to tender
all Shares beneficially owned by them pursuant to the Offer. See Item 3(b)
above describing the terms of the Shareholder Agreement.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer which
relates to or would result in (i) an extraordinary transaction such as a
merger or reorganization, involving the Company or any subsidiary of the
Company; (ii) a purchase, sale or transfer of a material amount of assets by
the Company or any subsidiary of the Company; (iii) a tender offer for or
other acquisition of securities by or of the Company; or (iv) any material
change in the present capitalization or dividend policy of the Company.
(b) Except as described in Item 3(b) and Item 4, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer which relate to or would result in one or more of the matters
referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
Exhibit 1. Acquisition Agreement, dated as of February 17, 1997, by and
between Marriott International, Inc. and Renaissance Hotel Group
N.V.
Exhibit 2. Pages 11-13 and 27-29 of the Company's Form 20-F for the fiscal
year ended June 30, 1996.
Exhibit 3. Shareholder Agreement, dated as of February 17, 1997, by and among
Marriott International, Inc., Diamant Hotel Investments N.V. and
New World Hotels (Holdings) Limited.
Exhibit 4. Confidentiality Agreement, dated January 10, 1997, between
Renaissance Hotel Group N.V. and Marriott International, Inc.
Exhibit 5. Form of Change of Control Agreements.
Exhibit 6. Form of the Renaissance Hotel Group N.V. Key Employee Severance
Plan.
Exhibit 7. The Renaissance Hotel Group N.V. Executive Stay Bonus Plan.
Exhibit 8. Letter of the Board of Managing Directors of Renaissance Hotel
Group N.V. addressed to the stockholders of Renaissance Hotel
Group N.V., dated February 24, 1997.
Exhibit 9. Press Release dated February 18, 1997.
Exhibit 10. Opinion of Morgan Stanley & Co. Incorporated to the Board of
Managing Directors of Renaissance Hotel Group N.V., dated February
17, 1997 (included as Annex A).
</TABLE>
17
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 24, 1997
Renaissance Hotel Group N.V.
By: /s/ Robert W. Olesen
-------------------------------
ROBERT W. OLESEN,
Executive Managing Director,
Executive Vice President and
Chief Financial Officer
18
<PAGE>
ANNEX A
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-4000
February 17, 1997
Board of Directors
Renaissance Hotel Group N.V.
c/o Renaissance Hotels International
17th Floor
New World Tower II
18 Queens's Road
Central, Hong Kong
Gentlemen:
We understand that Renaissance Hotel Group N.V. (the "Company") and Marriott
International, Inc. (the "Buyer") are entering into an Acquisition Agreement
dated as of February 17, 1997 (the "Acquisition Agreement"), which provides,
among other things, for the commencement by the Buyer, or a subsidiary thereof,
of a tender offer (the "Tender Offer") for all outstanding shares of common
stock, par value NLG 0.01 per share (the "Common Stock"), of the Company. We
also understand that Diamant Hotel Investments N.V., a Netherlands Antilles
corporation (the "Shareholder"), and the Buyer are entering into a Shareholder
Agreement dated as of February 17, 1997 (the "Shareholder Agreement"), in which
the Shareholder agrees to tender (or to cause the record owner thereof to
tender), pursuant to and in accordance with the terms of the Tender Offer, all
owned shares. The Shareholder will receive the same per share consideration
paid to other shareholders who have tendered their shares. The consideration to
be offered to the shareholders of the Company in the Tender Offer is $30.00 per
share in cash. The terms and conditions of the Tender Offer are more fully set
forth in the Acquisition Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Common Stock pursuant to the Tender Offer is fair from
a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed and analyzed certain publicly available financial
statements and other information of the Company including the
Company's Annual Report on Form 20-F for the fiscal year ended June
30, 1996 and the Company's Quarterly Reports on Form 6-K for the
quarters ended September 30, 1996 and December 31, 1996;
(ii) analyzed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
<PAGE>
(iii) analyzed the fiscal year 1997 budget prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed the reported prices and trading activity for the Common
Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of the Company and Buyer and certain other parties and their
financial and legal advisors;
(ix) reviewed the Acquisition Agreement, the Shareholder Agreement and
certain related documents; and
(x) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial budgets, we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have not made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any such appraisals.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Company
or any of its assets, but were allowed to respond to unsolicited proposals or
offers, provide information and negotiate with parties, other than the Buyer,
which expressed interest to us in the possible acquisition of the Company.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have underwritten
an initial public offering and debt offering for the Company and have received
fees for the rendering of these services.
Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Tender Offer is fair from a financial point of view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William M. Lewis
--------------------
William M. Lewis
Managing Director
<PAGE>
ANNEX B
ADDITIONAL INFORMATION PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This information is being furnished in connection with the possible
designation by Marriott, pursuant to the Acquisition Agreement, of persons to
be elected as Managing Directors of the Company. Under the Acquisition
Agreement, the Company agreed that, promptly upon the purchase of and payment
for any Shares by Marriott or any other subsidiary of Marriott pursuant to the
Offer which represent at least a majority of the outstanding Shares, it will
take all actions necessary and available (including, if requested by Marriott,
calling a general meeting of holders of Shares) to cause the Companys Board of
Managing Directors to consist solely of persons designated by Marriott.
Marriott has informed the Company that the individuals identified below are
its nominees for the Board of Managing Directors of the Company.
The Company is a foreign private issuer as defined at Rule 3b-4(c)
promulgated under the Exchange Act. As such, pursuant to Rule 3a12-3(b)
promulgated under the Exchange Act, the Company is exempt from Sections 14(a),
14(b), 14(c), 14(f) and 16 of the Exchange Act. Accordingly, the Company is
not required to file an information statement pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder.
Marriott has provided certain information to the Company with respect to the
individuals that would be included in an information statement pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
information set forth below concerning Marriott has been furnished to the
Company by Marriott, and the Company assumes no responsibility for the
accuracy or completeness of such information.
None of the nominees or their associates is currently a director of, or
holds any position with, the Company. The Company has been advised that, to
the best knowledge of Marriott, none of the nominees or their associates (i)
beneficially owns any equity securities of the Company, (ii) has been involved
in any transactions with the Company, any of its subsidiaries or any of its
directors or executive officers or (iii) has been involved in any legal
proceedings or other matters that, in each case, are required to be disclosed
pursuant to the rules and regulations of the Commission.
The articles of incorporation of the Company require that the Board of
Managing Directors have three or more members. Each of the following
individuals has consented to serve as a Managing Director of the Company if
appointed or elected. The name, age, present principal occupation or
employment and five-year employment history of each of the following
individuals is set forth below. Each person is a citizen of the United States
and the business address of such person is c/o Marriott International, Inc.,
10400 Fernwood Road, Bethesda, Maryland 20817.
Capitalized terms used but not defined in this Annex B have the meanings
assigned to such terms in the Schedule 14D-9 to which this Annex B is
attached.
<TABLE>
<CAPTION>
AGE
---
<S> <C> <C>
William J. Shaw 51 Mr. Shaw joined Marriott Corporation in 1974,
Executive Vice President of was Corporate Controller in 1979 and a Vice
Marriot President in 1982. In 1985, he assumed
and President-Marriott responsibility for Marriott Corporation's tax
Service Group department and risk management department and
was elected Senior Vice President-Finance. In
1986, Mr. Shaw was elected Senior Vice
President-Finance and Treasurer of Marriott
Corporation. He was elected Executive Vice
President
</TABLE>
B-1
<PAGE>
<TABLE>
<S> <C> <C>
of Marriott Corporation and promoted to Chief
Financial Officer in April 1988. In February
1992, he was elected President of the
Marriott Service Group, which now comprises
Marriott's Contract Service Group. In October
1993, effective as of the Distribution (as
defined in the Offer to Purchase), he was
named to his current position. Mr. Shaw is
also Chairman of the Board of Host Marriott
Services Corporation. Effective March 31,
1997, Mr. Shaw will become President and
Chief Operating Officer of Marriott.
Michael A. Stein 47 Mr. Stein joined Marriott Corporation in 1989
Executive Vice President as Vice President, Finance and Chief
and Chief Financial Officer Accounting Officer. In 1990, he assumed
of Marriott responsibility for Marriott Corporation's
financial planning and analysis functions. In
1991, he was elected Senior Vice President-
Finance and Corporate Controller of Marriott
Corporation and also assumed responsibility
for Marriott Corporation's internal audit
function. In October 1993, effective as of
the Distribution, he was named Executive Vice
President and Chief Financial Officer of
Marriott. Prior to joining Marriott
Corporation, Mr. Stein spent 18 years with
Arthur Andersen LLP (formerly Arthur Andersen
& Co.) where, since 1982, he was a partner.
William R. Tiefel 62 Mr. Tiefel joined Marriott Corporation in
Executive Vice President of 1961 and was named President of Marriott
Marriott Hotels, Resorts and Suites in 1988. Mr.
and President-Marriott Tiefel previously served as a resident
Lodging Group manager and general manager at several
Marriott Hotels prior to being appointed
Regional Vice President and later Executive
Vice President of Marriott Hotels, Resorts
and Suites and Marriott Ownership Resorts.
Mr. Tiefel was elected Executive Vice
President of Marriott Corporation in November
1989. In March 1992, Mr. Tiefel was elected
President-Marriott Lodging Group and assumed
responsibility for all of Marriott's lodging
brands. In October 1993, effective as of the
Distribution, he was named to his current
position.
</TABLE>
B-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
1. Acquisition Agreement, dated as of February 17, 1997, by and
between Marriott International, Inc. and Renaissance Hotel Group
N.V.
2. Pages 11-13 and 27-29 of the Company's Form 20-F for the fiscal
year ended June 30, 1996.
3. Shareholder Agreement, dated as of February 17, 1997, by and
among Marriott International, Inc., Diamant Hotel Investments
N.V. and New World Hotels (Holdings) Limited.
4. Confidentiality Agreement, dated January 10, 1997, between
Renaissance Hotel Group N.V. and Marriott International, Inc.
5. Form of Change of Control Agreements.
6. Form of the Renaissance Hotel Group N.V. Key Employee Severance
Plan.
7. The Renaissance Hotel Group N.V. Executive Stay Bonus Plan.
8. Letter of the Board of Managing Directors of Renaissance Hotel
Group N.V. addressed to the stockholders of Renaissance Hotel
Group N.V., dated February 24, 1997.
9. Press Release dated February 18, 1997.
10. Opinion of Morgan Stanley & Co. Incorporated to the Board of
Managing Directors of Renaissance Hotel Group N.V., dated
February 17, 1997 (included as Annex A).
</TABLE>
<PAGE>
Exhibit 1
ACQUISITION AGREEMENT
by and between
MARRIOTT INTERNATIONAL, INC.
and
RENAISSANCE HOTEL GROUP N.V.
Dated as of February 17, 1997
<PAGE>
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT dated as of February 17, 1997 (this
"Agreement"), by and between Marriott International, Inc., a Delaware
corporation (the "Purchaser") and Renaissance Hotel Group N.V., a company
organized under the laws of The Netherlands with its statutory seat in Amsterdam
(the "Company").
RECITALS
WHEREAS, the Board of Managing Directors of the Company has determined
that the acquisition of the Company by the Purchaser, upon the terms and subject
to the conditions set forth in this Agreement (the "Acquisition"), is fair to,
and in the best interests of, the Company and its stockholders; and
WHEREAS, the Board of Directors of the Purchaser has determined that
the Acquisition is in the best interests of the Purchaser and its stockholders;
and
WHEREAS, the Boards of Directors of the Company and the Purchaser have
each approved and adopted this Agreement and approved the Acquisition and the
other transactions contemplated hereby and recommended, in the case of the
Company, acceptance of the Offer by its stockholders; and
WHEREAS, concurrently with the execution of this Agreement, New World
Hotel Holdings Ltd. ("New World") and Diamant Hotel Investments N.V.
("Diamant"), which are the majority stockholders of the Company, have entered
into a Shareholder Agreement (the "Shareholder Agreement") pursuant to which
such entities have agreed, among other things, to tender all Shares (as defined
below) held by them into the Offer (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I.
THE OFFER
Section 1.1. The Offer. (a) As promptly as practicable following the
---------
execution hereof, the Purchaser shall make a public announcement pursuant to
Rule 14d-2(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, promptly thereafter, the Purchaser shall commence or shall
cause a wholly-owned subsidiary to commence (within the meaning of Rule 14d-2
under the Exchange Act) an offer (the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value 0.01 Netherlands Guilders per
share, of the Company (referred to herein as either the "Shares" or "Company
Common
2
<PAGE>
Stock") for (i) $30.00 per Share, net of fees and commissions, to the seller in
cash (the "Offer Price"), subject to there being, at the expiration of the
Offer, validly tendered and not withdrawn that number of Shares which represent
at least ninety percent (90%) of the capital stock entitled to vote and then
outstanding (the "Minimum Condition") and to the other conditions set forth in
Section 6.1 hereof. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as practicable after it is permitted to do so
under the Exchange Act (the "Closing Date"). The obligations of the Purchaser to
commence the Offer and to accept for payment and to pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn shall be
subject only to the Minimum Condition and the other conditions set forth in
Section 6.1 hereof. The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") containing the Minimum Condition and the other
conditions set forth in Section 6.1 hereof. Without the written consent of the
Company (such consent to be authorized by the Board of Directors of the Company
or a duly authorized committee thereof), the Purchaser shall not (i) decrease
the Offer Price or change the form of consideration payable pursuant to the
Offer (other than as set forth below), (ii) decrease the number of Shares sought
or extend the Offer (other than as set forth below), or (iii) impose any
additional conditions or amend any condition of the Offer in any manner adverse
to the holders of the Shares; provided, however, that if on the scheduled
expiration date of the Offer (as it may be extended), all conditions to the
Offer shall not have been satisfied or waived, the Offer may be extended by the
Purchaser from time to time to permit the satisfaction of such conditions until
termination of this Agreement, without the consent of the Company, to permit
satisfaction of such conditions. In addition, the Purchaser may, without the
consent of the Company, increase the Offer Price and extend the Offer to the
extent required by law.
(b) As soon as practicable on the date the Offer is commenced, the
Purchaser shall file with the United States Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1") which will include, as exhibits, the
Offer to Purchase and a form of letter of transmittal and summary advertisement
with respect to the Offer (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Purchaser represents that the
Offer Documents will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder, and all other applicable
federal securities laws and, on the date filed with the Commission and on the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Purchaser with respect
to information supplied by the Company for inclusion in the Schedule 14D-1. The
Purchaser further agrees to take all steps necessary to cause the Offer
Documents to be filed with the Commission and to be disseminated to holders of
Shares, in each case as and to the extent required by the Exchange Act and other
applicable federal securities laws. The Purchaser, on the one hand, and the
Company, on the other hand, agrees promptly to correct any information provided
by it for
3
<PAGE>
use in the Offer Documents if and to the extent that it shall have become false
and misleading in any material respect, and the Purchaser further agrees to take
all steps necessary to cause the Offer Documents, as so corrected, to be filed
with the Commission and to be disseminated to holders of Shares, in each case as
and to the extent required by the Exchange Act or other applicable federal
securities laws. The Company and its counsel shall be given the opportunity to
review and comment on the Offer Documents before they are filed with the
Commission. In addition, the Purchaser agrees to provide the Company and its
counsel in writing any comments the Purchaser or its counsel may receive from
time to time from the Commission or its staff with respect to the Schedule 14D-l
promptly after receipt of such comments.
Section 1.2. Company Stock Options. (a) At the Closing Date, all
---------------------
outstanding options and other rights to acquire shares under any stock option or
purchase plan, program or similar arrangement (each, as amended, an "Option
Plan" and such options and other rights, "Stock Options") of the Company, shall
vest in full and the Purchaser shall pay to the holder of each outstanding Stock
Option an amount equal to the difference between the Offer Price and the
exercise price of each such Stock Option, unless the Purchaser and the pertinent
holder agree otherwise in writing. Such amount shall be paid by the Purchaser in
cash. If and to the extent required by the terms of the Option Plans or the
terms of any Stock Option granted thereunder, the Company shall use its best
efforts to obtain the consent of each holder of outstanding Stock Options to the
foregoing treatment of such Stock Options and to take any other action necessary
to effectuate the foregoing provisions.
(b) Except as provided herein or as otherwise agreed to by the parties
and to the extent permitted by the Option Plans, the Option Plans of the Company
shall terminate as of the Closing Date and any rights under any provisions in
any other plan, program or arrangement providing for the issuance or grant by
the Company of any interest in respect of the capital stock of the Company shall
be canceled as of the Closing Date.
Section 1.3. Company Actions. (a) The Company hereby consents to the
---------------
Offer and represents that its Board of Managing Directors, at a meeting duly
called and held, has unanimously (i) determined that the Offer is fair to and in
the best interests of the Company's stockholders, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer, and (iii)
resolved to recommend that the stockholders of the Company accept the Offer and
tender their Shares thereunder to the Purchaser. Morgan Stanley & Co.
Incorporated has delivered to the Board of Managing Directors of the Company its
opinion that the Offer Price to be received by the holders of Shares pursuant to
the Offer is fair to such holders from a financial point of view.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the Commission a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall contain the recommendation
referred to in clause (iii) of Section 1.3(a) hereof. The Company represents
that the Schedule 14D-9 will comply in all material respects with the provisions
of the Exchange Act and any other applicable federal securities laws. No
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representation is made by the Company with respect to information supplied by
the Purchaser for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the
Commission and to be disseminated to holders of Shares, in each case as and to
the extent required by the Exchange Act and any other applicable federal
securities laws. Each of the Company, on the one hand, and the Purchaser, on the
other hand, agrees promptly to correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and to be disseminated to holders of the Shares to the extent
required by applicable federal securities laws. The Purchaser and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the Commission. In addition, the Company agrees to provide the Purchaser,
and its counsel in writing with any comments the Company or its counsel may
receive from time to time from the Commission or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the stockholders
of the Company. Subject to the requirements of law, and except for such steps as
are necessary to disseminate the Offer Documents, the Purchaser, and each of its
affiliates and associates shall hold in confidence the information contained in
any such labels, lists and files, shall use the information contained in any
such labels, lists and files only in connection with the Offer and, if this
Agreement shall be terminated pursuant to Article VII hereof, shall deliver to
the Company all copies and extracts of such information then in their possession
or under their control.
Section 1.4. Directors. (a) The Company shall, promptly upon the
---------
purchase of and payment for any Shares by the Purchaser or any other subsidiary
of the Purchaser pursuant to the Offer which represent at least a majority of
the outstanding Shares take all actions necessary and available (including, if
requested by Purchaser, calling a General Meeting of holders of Shares) to cause
the Company's Board of Managing Directors to consist solely of persons
designated by Purchaser.
(b) The Company's obligations under Section 1.4(a) shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder. The
Company shall promptly take all actions required pursuant to such Section 14(f)
and Rule 14f-1 in order to effectuate the changes contemplated by Section
1.4(a), including mailing to stockholders as part of the Schedule 14D-9 the
information required by such Section 14(f) and Rule 14f-1, as is necessary to
enable the Purchaser's designees to be elected to the Company's Board of
Directors. The Purchaser will supply the Company and be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and affiliates
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required by such Section 14(f) and Rule 14f-1. The provisions of Section 1.4(a)
are in addition to and shall not limit any rights which the Purchaser or any of
its affiliates may have as a holder or beneficial owner of Shares as a matter of
law with respect to the election of directors or otherwise.
ARTICLE II.
THE COMPULSORY BUY-OUT
Section 2.1. The Compulsory Buy-Out. Subject to the terms and conditions
----------------------
of this Agreement, and in accordance with the provisions of the Dutch Civil Code
(the "DCC"), as soon as practicable after the Closing Date, Purchaser may, at
its sole discretion, take all actions necessary and proper under the DCC to
commence the process leading to a Compulsory Buy-Out (the "Buy-Out") in
accordance with Section 2:92a of the DCC to acquire all the issued and
outstanding Company Common Stock not acquired by Purchaser pursuant to the
Offer. In order to bring Purchaser and/or any of its affiliates in a position
to exercise their rights under Section 2:92a of the DCC, the Company shall
provide Purchaser with such information regarding the Company and take such
actions as are reasonably necessary in order for Purchaser and/or an affiliate
of Purchaser to be in a position to establish the value or price of a share in
the issued capital of the Company for the purposes of the Buy-Out. The Buy-Out
shall become effective in accordance with the applicable provisions of the DCC.
Section 2.2. Statutory Merger. If the Purchaser shall acquire less than
----------------
95% of the outstanding Shares pursuant to the Offer then Purchaser may elect, to
the extent permitted by the DCC, to effectuate a statutory merger (a "Statutory
Merger") involving the Company as a disappearing entity pursuant to Section
2.308 et seq. of the DCC, in which case, to the extent permitted by the DCC, the
merger consideration shall be the same as (or shall provide equivalent value as)
the Offer Price. The Company shall use its best efforts to facilitate such a
Statutory Merger.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
Section 3.1. Organization and Qualification. The Company is a limited
------------------------------
liability company in the form of a "naamloze vennootschap" duly organized and
validly existing under the laws of The Netherlands and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. The Company is duly
qualified or licensed to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified, licensed or in good standing would not have a material adverse
effect on the business, operations, prospects,
6
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properties, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole ("Company Material Adverse Effect"). The Company
has heretofore delivered to the Purchaser true and complete copies of the
articles of incorporation and other charter or organization documents, each as
amended to date, of the Company.
Section 3.2. Capitalization. (a) The authorized capital stock of the
--------------
Company consists of 100,000,000 shares of Company Common Stock. As of September
30, 1996, (i) 30,100,000 shares of Company Common Stock were issued and
outstanding, (ii) the number of shares of Company Common Stock set forth on
Section 3.2 of the Disclosure Schedule delivered by the Company to the Purchaser
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule"), and identified thereon as "Company Option Shares", were reserved for
future issuance upon exercise of outstanding options to purchase Company Common
Stock ("Company Options"), granted to directors, officers, employees and
consultants of the Company pursuant to the Company's Stock Option Plan (the
"Company Stock Plan"), and (iii) no shares of Company Common Stock were held in
the treasury of the Company. Since such date, no additional shares of capital
stock of the Company have been issued or reserved for issuance (except for
shares of Company Common Stock issued upon exercise of Company Options granted
as aforesaid), and no options or other rights to purchase or otherwise acquire
shares of capital stock of the Company have been issued or granted (other than
the Company Options identified on Section 3.2 of the Company Disclosure Schedule
as having been granted as aforesaid). Except as set forth above in this
paragraph, no shares of capital stock or other equity or voting securities or
equivalents of the Company are issued, reserved for issuance, or outstanding.
All of the outstanding shares of capital stock of the Company are, and all
shares thereof which may be issued upon exercise of Company Options will upon
issuance be, duly authorized, validly issued, fully paid and nonassessable, and
free of any preemptive rights except as provided in the Company's articles of
incorporation.
(b) Except as set forth in Section 3.2 of the Company Disclosure
Schedule, (i) no bonds, debentures, notes or other indebtedness or obligations
of the Company or any of its subsidiaries entitling the holders thereof to have
the right to vote (or which are convertible into, or exercisable or exchangeable
for, securities entitling the holders thereof to have the right to vote) with
the stockholders of the Company or any of its subsidiaries on any matter are
issued, reserved for issuance, or outstanding, (ii) there are no options,
warrants, calls, subscriptions, convertible or exchangeable securities, or other
rights, agreements or commitments of any character obligating the Company or any
of its subsidiaries to grant, issue, transfer or sell, or cause to be granted,
issued, transferred or sold, any shares of capital stock, or any other equity or
voting security or equity or voting interest, of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to grant,
issue, extend or enter into any right, agreement or commitment with respect to
the foregoing, (iii) there are no obligations (absolute, contingent or
otherwise) of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock, or other equity or voting
security or equity or voting interest, of the Company or any of its
subsidiaries, and (iv) other than this Agreement, there are no voting trusts,
proxies or other agreements or understandings to which the Company or any of its
subsidiaries is a party or by
7
<PAGE>
which the Company or any of its subsidiaries is bound with respect to the voting
of any shares of capital stock, or any other equity or voting security or
interest, of the Company or any of its subsidiaries.
Section 3.3. Subsidiaries. (a) Each of the subsidiaries of the Company
------------
whose operations are material to the Company and its subsidiaries taken as a
whole (a "Material Subsidiary") is duly formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each subsidiary of the
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing would not have a Company Material Adverse Effect.
(b) All of the outstanding shares of capital stock of, or other equity
interests in, each of the Material Subsidiaries are duly authorized and validly
issued and (in the case of shares of capital stock) are fully paid and
nonassessable, and (except as set forth in Section 3.3 of the Company Disclosure
Schedule) all such shares or other equity interests owned directly or indirectly
by the Company are owned free and clear of all liens, security interests,
claims, pledges, rights of first refusal, limitations on voting rights, charges
or other encumbrances of any nature whatsoever.
Section 3.4. Authorization, Validity and Enforceability. The Company has
------------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Acquisition and the other transactions contemplated hereby to be consummated by
the Company. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the Acquisition and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement or the consummation of the
Acquisition or the other transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and except as the
availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
Section 3.5. No Conflict or Violation. Subject to (i) making the filings
------------------------
and obtaining the approvals identified in Section 3.6 and (ii) obtaining the
material non-governmental consents identified in Section 3.5 of the Company
Disclosure Schedule, the execution and
8
<PAGE>
delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations hereunder and the consummation by the Company of the
Acquisition and the other transactions pursuant hereto will not, (a) conflict
with or violate the articles or certificate of incorporation, bylaws,
partnership agreement or other charter or organization document of the Company
or any of its Material Subsidiaries, (b) conflict with or violate any material
law, statute, rule, regulation, order, judgment, writ, injunction or decree
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (c) result in a violation or breach of or constitute a
default under (or an event which with the giving of notice or the lapse of time
or both would constitute a default under), require any consent, approval or
authorization under, result in the loss of a benefit or result in any provision
becoming applicable or effective under, or give rise to any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any property or
asset of the Company or any of its subsidiaries may be bound or affected, except
in the case of each of clauses (b) and (c) for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, be reasonably likely to result in a Company Material Adverse Effect
or prevent the Company from performing its obligations under this Agreement in
any material respect.
Section 3.6. Consents and Approvals. The execution and delivery of this
----------------------
Agreement by the Company do not, and the performance by the Company of its
obligations hereunder and the consummation by the Company of the Acquisition and
the other transactions contemplated hereby will not, require the Company to
obtain any consent, approval, authorization or permit of, or to make any filing
with or notification to, any United States, Dutch or foreign national, federal,
state, local or other governmental, judicial or regulatory authority (each, a
"Governmental Entity"), except (a) for (i) applicable requirements, if any, of
the Securities Act, the Exchange Act and state securities or "blue sky" laws
("Blue Sky Laws"), (ii) the pre-merger notification and report requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), (iii) consents, approvals,
authorizations, orders, permits, filings or registrations related to, or arising
out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages and (iv) as set forth in
Section 3.6 of the Company Disclosure Schedule and (b) where the failure to
obtain such consents, approvals, authorizations and permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
the Company from performing its obligations under this Agreement in any material
respect or from consummating the Acquisition or any other transaction pursuant
hereto, or following the Acquisition constitute a Company Material Adverse
Effect.
Section 3.7. SEC Documents and Financial Statements. (a) The Company has
--------------------------------------
filed all forms, reports, statements and other documents required to be filed by
it with the Commission since September 26, 1995 (such forms, reports, statements
and other documents
9
<PAGE>
are hereinafter referred to as the "Company SEC Documents"). The Company SEC
Documents filed by the Company with the Commission prior to and after the date
of this Agreement (i) complied, or will comply, when filed, in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder, and (ii) did not, or will not,
when filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes or schedules thereto) contained in or incorporated by
reference in the Company SEC Documents filed prior to and after the date of this
Agreement (i) have been or will be prepared in accordance with the published
rules and regulations of the Commission and United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited consolidated quarterly statements, as permitted by Form 10-Q
of the Commission) and (ii) fairly present or will fairly present in all
material respects the consolidated financial position of the Company and its
subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its subsidiaries for the periods
indicated therein (subject, in the case of unaudited interim financial
statements, to normal recurring year-end audit adjustments).
Section 3.8. No Material Undisclosed Liabilities. Neither the Company nor
-----------------------------------
any of its subsidiaries has any debts, liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or disclosed or reserved against in, a consolidated balance
sheet of the Company and its subsidiaries or in the notes thereto, prepared in
accordance with GAAP consistently applied, except for (a) debts, liabilities and
obligations that were so reserved on, or disclosed or reflected in, the
consolidated balance sheet of the Company and its subsidiaries as of December
31, 1996 and the notes thereto, included in the Report on Form 6-K of the
Company for the quarter then ended, or the consolidated balance sheet of the
Company and its subsidiaries as of June 30, 1996 and the notes thereto, included
in the Annual Report on Form 20-F of the Company for the year then ended and (b)
debts, liabilities or obligations arising in the ordinary course of business
since September 30, 1996.
Section 3.9. Absence of Certain Changes. Since December 31, 1996, except
--------------------------
as disclosed in the Company SEC Documents filed with the Commission prior to the
date of this Agreement or as specifically contemplated by this Agreement or as
set forth in Section 3.9 of the Company Disclosure Schedule, (a) the Company and
its Material Subsidiaries have conducted their respective businesses only in the
ordinary course and in a manner consistent with past practice and (b) there has
not been (i) any change, event, occurrence or circumstance in the business,
operations, properties, financial condition or results of operations of the
Company or any of its subsidiaries which, individually or in the aggregate, has
had or is reasonably likely to have a Company Material Adverse Effect (except
for changes, events,
10
<PAGE>
occurrences or circumstances (A) with respect to general economic or industry
conditions or (B) arising as a result of the transactions contemplated hereby),
(ii) any material change by the Company in its accounting methods, principles or
practices, (iii) any declaration, setting aside or payment of any dividend or
distribution or capital return in respect of any capital stock of, or other
equity interest in, the Company or any of its subsidiaries, (iv) any material
revaluation for financial statement purposes by the Company or any of its
subsidiaries of any asset (including, without limitation, any writing down of
the value of any property, investment or asset or writing off of notes or
accounts receivable), (v) other than payment of compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course of
business consistent with past practice or the grant of Company Options as
described in (and in amounts consistent with) Section 3.2 or any transactions
described in Section 3.12 of the Company Disclosure Schedule, any material
transactions between the Company or any of its subsidiaries, on the one hand,
and any (A) officer or director of the Company or any of its subsidiaries, (B)
record or beneficial owner of five percent (5%) or more of the voting securities
of the Company, or (C) affiliate of any such officer, director or beneficial
owner, on the other hand, or (vi) other than pursuant to the terms of the plans,
programs or arrangements specifically referred to in Section 3.12 or in the
ordinary course of business consistent with past practice, any increase in or
establishment of any bonus, insurance, welfare, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any employees, officers, directors or consultants of the Company or
any of its subsidiaries, which increase or establishment, individually or in the
aggregate, will result in a material liability.
Section 3.10. Litigation. Except as disclosed in Section 3.10 of the
----------
Company Disclosure Schedule, there is no action, suit, claim, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any properties or assets of the
Company or any of its subsidiaries by or before any court, other Governmental
Entity or arbitrator which (i) could reasonably be expected to have a Company
Material Adverse Effect or (ii) could reasonably be expected to prevent or
substantially delay consummation of the Acquisition or any of the other
transactions contemplated hereby, or otherwise prevent the Company from
performing its obligations under this Agreement in any material respect. Except
as disclosed in the Company SEC Documents filed with the Commission prior to the
date of this Agreement, neither the Company nor any of its subsidiaries nor any
property or asset of the Company or any of its subsidiaries is subject to any
order, writ, injunction, judgment, decree or award which is material or which
could reasonably be expected to prevent or substantially delay consummation of
the Acquisition or any of the other transactions pursuant hereto in any material
respect, or otherwise prevent the Company from performing its obligations under
this Agreement in any material respect.
Section 3.11. Compliance. Except as set forth in Section 3.11 of the
----------
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
in conflict with, or in default or violation of, (a) its respective articles or
certificate of incorporation, bylaws, or
11
<PAGE>
other charter or organization documents, (b) any law, statute, rule, regulation,
order, judgment, writ, injunction or decree applicable to the Company or any of
its subsidiaries or any of their respective properties or assets, the effect of
which conflict, default or violation, either individually or in the aggregate,
would be reasonably likely to have a Company Material Adverse Effect, or (c) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any property or asset of the Company or any of its subsidiaries may be bound or
affected, the effect of which conflict, default or violation, either
individually or in the aggregate, would be reasonably likely to have a Company
Material Adverse Effect. The Company and its subsidiaries hold all material
licenses, permits, approvals and other authorizations of Governmental Entities,
and are in substantial compliance with all applicable laws and governmental
regulations in connection with their businesses as now being conducted.
Section 3.12. Employee Benefit Plans. (a) Section 3.12(a) of the Company
----------------------
Disclosure Schedule sets forth each plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each other
material agreement, arrangement or commitment which is an employment or
consulting agreement, executive or incentive compensation plan, bonus plan,
deferred compensation agreement, employee pension, profit sharing, savings or
retirement plan, employee stock option or stock purchase plan, group life,
health, or accident insurance or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, any commitment arising
under the laws of any jurisdiction, severance, holiday, vacation, Christmas or
other bonus plans, currently maintained by the Company or any of its
subsidiaries for the benefit of any present or former employees, officers or
directors of the Company or any of its subsidiaries ("Company Personnel") or
with respect to which the Company or any of its subsidiaries has liability or
makes or has an obligation to make contributions, other than any Foreign Plan
(as defined in Section 3.12(l) (each such plan, agreement, arrangement or
commitment set forth on Section 3.12(a) being hereinafter referred to as a
"Company Employee Plan").
(b) The Company has made available to the Purchaser (i) copies of all
Company Employee Plans or in the case of an unwritten plan, a written
description thereof, (ii) copies of the most recent annual, financial and, if
applicable, actuarial reports and Internal Revenue Service determination letters
relating to such Company Employee Plans and (iii) copies of all summary plan
descriptions relating to such Company Employee Plans and distributed to Company
Personnel.
(c) Except as disclosed in Section 3.12(c) of the Company Disclosure
Schedule, there are no Company Personnel who are entitled to any medical, dental
or life benefits to be paid under any Company Employee Plans after termination
of employment other than as required by Section 601 of ERISA, Section 4980B of
the Code or applicable state law.
(d) Each Company Employee Plan that is an employee welfare benefit plan
under Section 3(1) of ERISA is either (i) funded through an insurance company
contract and is
12
<PAGE>
not a "welfare benefit fund" within the meaning of Section 419 of the Code or
(ii) is unfunded. There is no liability in the nature of a retroactive rate
adjustment or loss-sharing or similar arrangement, with respect to any Company
Employee Plan which is an employee welfare benefit plan, which is reasonably
likely to result in a Company Material Adverse Effect.
(e) All contributions or payments due with respect to any periods prior to
the Closing Date under any Company Employee Plan have been made or appropriate
charges have been made on the financial statements. Except as disclosed in
Section 3.12(e) of the Company Disclosure Schedule, each Company Employee Plan
by its terms and operation is in compliance in all material respects with all
applicable laws (including, but not limited to, ERISA, the Code and the Age
Discrimination in Employment Act of 1967, as amended).
(f) There are no actions, suits or claims pending or, to the knowledge of
the Company, threatened (other than routine noncontested claims for benefits),
against any Company Employee Plan or, to the knowledge of the Company, any
administrator or fiduciary of any such Company Employee Plan, which is
reasonably likely to result in a Company Material Adverse Effect. As to each
Company Employee Plan for which an annual report is required to be filed under
ERISA or the Code, all such filings, including schedules, have been made on a
timely basis and, with respect to the most recent report regarding each such
Company Employee Plan, which is a funded pension benefit plan, liabilities do
not exceed assets, and no material adverse change has occurred with respect to
the financial materials covered thereby.
(g) Except as disclosed in Section 3.12(g) of the Company Disclosure
Schedule:
(x) neither the Company nor any of its subsidiaries (nor any entity that
is treated as a single employer with the Company or any of its subsidiaries
under Section 414(b), (c), (m) or (o) of the Code) maintains, contributes to or
is required to contribute to any plan under which more than one employer makes
contributions (within the meaning of Section 4064(a) of ERISA) or any plan that
is a multiemployer plan within the meaning of Section 3(37) of ERISA;
(y) neither the Company nor any of its subsidiaries (nor any entity that
is or was at the relevant time treated as a single employer with the Company or
any of its subsidiaries under Section 414(b), (c), (m) or (o) of the Code) has
at any time incurred any liability to the Pension Benefit Guaranty Corporation
or otherwise under Title IV of ERISA (other than the payment of premiums none of
which are overdue) which liability has not been satisfied and which can result
in a Company Material Adverse Effect; and
(z) neither the Company nor any of its subsidiaries (nor any entity that
is or was at the relevant time treated as a single employer with the Company or
any of its subsidiaries under Section 414(b), (c), (m) or (o) of the Code) has
at any time incurred liability in connection with an "accumulated funding
deficiency" within the meaning of Section 412 of
13
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the Code, whether or not waived which liability has not been satisfied and which
can result in a Company Material Adverse Effect. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Company Employee Plan.
(h) The Renaissance Hotels and Resorts 401(k) Plan maintained by the
Company (the "401(k) Plan") has received a favorable determination letter from
the Internal Revenue Service which provides that the 401(k) Plan is qualified
under Sections 401(a) and 401(k) of the Code (the "Company IRS Letter"). To the
knowledge of the Company, nothing has occurred since the date of the most recent
Company IRS Letter to cause such letter to be no longer valid or effective,
except for changes in the law which may be in effect but with respect to which
amendments to such Plan do not have to be adopted on or before the date hereof.
(i) Neither the Company nor any of its subsidiaries (or, to the knowledge
of the Company, any other person, including any fiduciary) has engaged in any
"prohibited transaction" (as defined in Section 4975 of the Code or Section 406
of ERISA), which could subject any of the Company Employee Plans (or their
trusts), the Company, any of its subsidiaries or any person whom the Company or
any of its subsidiaries has an obligation to indemnify, to any material tax or
penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(j) None of the assets of the Company Employee Plans is invested in any
property constituting employer real property or an employer security within the
meaning of Section 407(d) of ERISA.
(k) Except as disclosed in Section 3.12(k) of the Company Disclosure
Schedule, the events contemplated by this Agreement (either alone or together
with any other event) will not (i) entitle any Company Personnel to severance
pay or other similar payments under any Company Employee Plan, (ii) accelerate
the time of payment or vesting or increase the amount of benefits due under any
Company Employee Plan or compensation to any Company Personnel residing in the
U.S., (iii) result in any payments (including parachute payments) under any
Company Employee Plan becoming due to any Company Personnel, or (iv) terminate
or modify or give a third party a right to terminate or modify the provisions or
terms of any Company Employee Plan. Section 3.12(k) of the Company Disclosure
Schedule sets forth, for each employee of the Company or any of its subsidiaries
that will receive any parachute payment within the meaning of Section 280G of
the Code, a preliminary calculation of the base amount for such employee and of
the amount of each such parachute payment, based upon information currently
known by the Company and assuming all circumstances that could give rise to such
payment occur.
(l) Except as disclosed in Section 3.12(l) of the Company Disclosure
Schedule, each Foreign Plan has been maintained in substantial compliance with
its terms and with the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has
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been maintained, where required, in good standing with applicable regulatory
authorities. Except as disclosed in Section 3.12(l) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has incurred any
material obligation in connection with the termination or withdrawal from any
Foreign Pension Plan. Except as disclosed in Section 3.12(l) of the Company
Disclosure Schedule, the present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan which is funded,
determined as of the end of the most recently ended fiscal year of the Company
on the basis of actuarial assumptions, each of which is reasonable, did not
exceed the current value of the assets of such Foreign Pension Plan, and for
each Foreign Pension Plan which is not funded, the obligations of such Foreign
Pension Plan are properly accrued. For purposes of this Section 3.12, (i)
"Foreign Plan" shall mean any plan, fund or other similar program established or
maintained outside the United States of America by the Company or any of its
subsidiaries primarily for the benefit of employees of the Company or such
subsidiaries residing outside the United States of America and which plan is not
subject to ERISA, or any such plan as to which the Company or any of its
subsidiaries may have any liability, and (ii) "Foreign Pension Plan" shall mean
any Foreign Plan which plan, fund (including, without limitation, any
superannuation fund) or other similar program provides or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, except for any severance payments mandated
by applicable laws, statutes, rules, regulations or orders. Section 3.12(l) of
the Company Disclosure Schedule lists each non-statutory Foreign Plan.
Section 3.13. Labor Matters. Except as set forth in Section 3.13 of the
-------------
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
a party to any collective bargaining or other labor union contracts applicable
to any person employed by the Company or any of its subsidiaries. There is no
pending or, to the knowledge of the Company, threatened material labor dispute,
strike or work stoppage against the Company or any of its subsidiaries. Neither
the Company nor its subsidiaries, nor their respective representatives or
employees, has committed any material unfair labor practices in connection with
the operation of the respective businesses of the Company or its subsidiaries,
and there is no pending or, to the knowledge of the Company, threatened charge
or complaint against the Company or its subsidiaries by the National Labor
Relations Board or any comparable state or foreign governmental agency which, if
adversely determined, would have a Company Material Adverse Effect. The Company
and its subsidiaries are in compliance in all material respects with all
applicable laws and regulations respecting employment, employment practices,
labor relations, employment discrimination, safety and health, wages, hours and
terms and conditions of employment. There is no pending or, to the knowledge of
the Company, threatened grievance alleging a violation of any collective
bargaining agreement or other labor union contract which, if adversely
determined, would have a Company Material Adverse Effect. To the knowledge of
the Company, the Company and its subsidiaries have complied and are complying in
all material respects with the terms and conditions of any collective bargaining
or other labor union contracts applicable to it or them.
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Section 3.14. Tax Matters. (a) For purposes of this Agreement: (i)
-----------
"Taxes" means any taxes, charges, fees, levies, or other assessments imposed by
any U.S. or foreign governmental entity, whether national, state, county, local
or other political subdivision, including, without limitation, all net income,
gross income, sales and use, value added, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross receipt, capital stock,
business and occupation, disability, employment, payroll, license, estimated, or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties on or additions to any such taxes (and includes Taxes
for which the Company and/or any of its subsidiaries, as the case may be, may be
liable in its own right, or as the transferee of the assets of, or as successor
to, any other corporation, association, partnership, joint venture, or other
entity, or under Treasury Regulation Section 1.1502-6 or any similar provision
of foreign, state or local law); and (ii) "Tax Return" means a report, return or
other information required to be supplied to a governmental entity with respect
to Taxes including, where permitted or required, group, combined or consolidated
returns for any group of entities that includes the Company or any of its
subsidiaries.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries, and any affiliated or
combined group of which the Company or any of its subsidiaries is or was a
member for applicable Tax purposes, have (i) filed all federal income and all
other material Tax Returns required to be filed by applicable law and all such
federal income and other material Tax Returns (A) reflect the liability for
Taxes of the Company and each of its subsidiaries, and (B) were filed on a
timely basis and (ii) within the time and in the manner prescribed by law, paid
(and until the Closing Date will pay within the time and in the manner
prescribed by law) all Taxes that were or are due and payable as set forth in
such Tax Returns.
(c) Each of the Company and, where applicable, the Company's subsidiaries
has established (and until the Closing Date will maintain) on its books and
records reserves adequate to pay all Taxes of the Company or such respective
subsidiary, as the case may be, in accordance with GAAP, which are reflected in
the most recent consolidated financial statements of the Company and its
subsidiaries contained in the Company SEC Documents, as applicable, to the
extent required by GAAP.
(d) Except as disclosed in Section 3.14(d) of the Company Disclosure
Schedule, neither the Company nor any Material Subsidiary thereof has requested
any extension of time within which to file any income, franchise or other
material Tax Return, which Tax Return has not been filed as of the date hereof.
(e) Except as disclosed in Section 3.14(d) of the Company Disclosure
Schedule, neither the Company nor any subsidiary thereof has executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any income, franchise or other material
Taxes or Tax Returns.
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(f) Except as disclosed in Section 3.14(f) of the Company Disclosure
Schedule, no deficiency for any Tax which, alone or in the aggregate with any
other deficiency or deficiencies, would exceed $1,000,000, has been proposed,
asserted, or assessed against the Company and/or any subsidiary thereof that has
not been resolved and paid in full or otherwise settled, no audits or other
administrative proceedings are presently in progress or pending or threatened in
writing with regard to any Taxes or Tax Returns of the Company and/or any
subsidiary thereof, and no written claim is currently being made by any
authority in a jurisdiction where any of the Company or any subsidiary thereof,
as the case may be, does not file Tax Returns that it is or may be subject to
Tax in that jurisdiction.
(g) Except as disclosed on Section 3.14(g) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement relating to allocating or sharing of the payment of, or liability for,
Taxes.
(h) The Company does not constitute and for the past five years has not
constituted a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
Section 3.15. Properties. Section 3.15 of the Company Disclosure Schedule
----------
contains a true and complete list (identifying the relevant owners, lessors and
lessees) of all real properties owned or leased by the Company or any of its
subsidiaries. Each of the Company and its subsidiaries has good and marketable
title to all properties, assets and rights of any kind whatsoever (whether real,
personal or mixed, and whether tangible or intangible) owned by it
(collectively, the "Company Assets"), in each case free and clear of any
mortgage, security interest, deed of trust, claim, charge, title defect or other
lien or encumbrance, except (a) as shown on the consolidated balance sheet of
the Company and its subsidiaries dated September 30, 1996 and the notes thereto,
and the consolidated balance sheet of the Company and its subsidiaries dated as
of June 30, 1996 and the notes thereto, each as contained in the Company SEC
Documents, (b) for any mortgage, security interest, deed of trust, claim,
charge, title defect or other lien or encumbrance arising by reason of (i)
taxes, assessments or governmental charges not yet delinquent or which are being
contested in good faith, (ii) deposits to secure public or statutory obligations
in lieu of surety or appeal bonds entered into in the ordinary course of
business, and (iii) operation of law in favor of carriers, warehousemen,
landlords, mechanics, materialmen, laborers, employees or suppliers, incurred in
the ordinary course of business for sums which are not yet delinquent or are
being contested in good faith by negotiations or by appropriate proceedings
which suspend the collection thereof ("Permitted Liens"), or (c) as set forth on
Section 3.15 of the Company Disclosure Schedule. Except as set forth in Section
3.15 of the Company Disclosure Schedule, there are no pending or, to the
knowledge of the Company, threatened condemnation proceedings against or
affecting any material Company Assets, and none of the material Company Assets
is subject to any commitment or other arrangement for its sale to a third party
outside the ordinary course of business.
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<PAGE>
Section 3.16. Environmental Matters. Neither the Company nor any of its
---------------------
subsidiaries is the subject of any governmental investigation, and neither the
Company nor any of its subsidiaries has received any notice or claim, nor
entered into any negotiations or agreements with any third party, relating to
any material liability or remedial action or potential material liability or
remedial action under any Environmental Laws (as defined below). There are no
pending or, to the knowledge of the Company, threatened actions, suits, claims
or proceedings against or affecting the Company or any of its subsidiaries or
any of their properties, assets or operations in connection with any such
Environmental Laws. The properties, assets and operations of the Company and its
subsidiaries are in compliance in all material respects with all applicable
United States, Dutch or foreign national, federal, state and local laws, rules
and regulations, orders, decrees, judgments, permits and licenses relating to
public and worker health and safety and to the protection and clean-up of
natural environment and activities or conditions relating thereto, including,
without limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous materials (collectively, "Environmental
Laws"), except as disclosed in the "Phase I" and other reports if any,
identified in Section 3.16 of the Company Disclosure Schedule.
Section 3.17. Material Contracts and Commitments. (a) Section 3.17 of
----------------------------------
the Company Disclosure Schedule contains a true and complete list of all of the
following contracts, agreements and commitments, whether oral or written
("Contracts"), to which the Company or any of its subsidiaries is a party or by
which any of them or any of their material Company Assets are bound, as each
such contract or commitment may have been amended, modified or supplemented:
(i) all Contracts pursuant to which the Company or its
subsidiaries holds a leasehold interest in or otherwise has an
economic interest in one or more hotel facilities;
(ii) all Contracts providing for management of any hotel or hotel
business by the Company or any of its subsidiaries;
(iii) all Contracts granting a franchise or license to utilize a
brand name or other rights of a hotel chain or system, or granting a
license or sublicense of any material trademark, trade name,
copyright, patent, service mark or trade secret, or any rights therein
or application therefor;
(iv) all partnership or joint venture Contracts;
(v) all loan agreements, notes, bonds, debentures, debt
instruments, evidences of indebtedness, debt securities, or other
Contracts relating to any indebtedness of the Company or any of its
subsidiaries in an amount in excess of $1,000,000, or involving the
direct or indirect guaranty or suretyship by the Company or any of its
subsidiaries of any indebtedness in an amount in excess of $1,000,000;
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<PAGE>
(vi) all Contracts that, after the date hereof, obligate the
Company or any of its subsidiaries to pay, pledge, or encumber or
restrict assets in an amount in excess of $500,000;
(vii) all Contracts by which the Company has committed to extend
credit in a material amount to third parties; and
(viii) all Contracts that limit or restrict the ability of the
Company or any of its affiliates to compete or otherwise to conduct
business in any material manner or place.
(b) The Company has heretofore made available to the Purchaser true
and complete copies of all of the Contracts required to be set forth in Section
3.17 of the Company Disclosure Schedule. Each such Contract is valid and binding
in accordance with its terms, and is in full force and effect (except as set
forth in Section 3.17 of the Company Disclosure Schedule). Neither the Company
nor any of its subsidiaries is in default in any material respect with respect
to any such Contract, nor (to the knowledge of the Company) does any condition
exist that with notice or lapse of time or both would constitute such a material
default thereunder or permit any other party thereto on terminate such Contract.
To the knowledge of the Company, no other party to any such Contract is in
default in any material respect with respect to any such Contract. Except as set
forth in Section 3.17 of the Company Disclosure Schedule, no party has given any
written or (to the knowledge of the Company) oral notice of termination or
cancellation of any such Contract or that it intends to assert a breach of, or
seek to terminate or cancel, any such Contract, whether as a result of the
transactions contemplated hereby or otherwise. Each Contract identified in
Section 3.17 of the Company Disclosure Schedule in response to any item under
this Section 3.17 shall be deemed incorporated by reference to all other items
in this Section 3.17.
Section 3.18. Intangible Property.
-------------------
(a) The Company has made available to Purchaser a list of the
Intangible Property (as defined below) which is material to the Company and its
subsidiaries in which the Company or any of its subsidiaries has an interest.
Except as set forth on Section 3.18 of the Company Disclosure Schedule, (i) the
Company and its subsidiaries do not use any material Intangible Property by
consent of any other person and do not make any payments to others with respect
thereto; (ii) the Company and its subsidiaries have performed all material
obligations required to be performed by them, and are not in default under any
material contract or arrangement relating to any of the foregoing; and (iii)
neither the Company nor any of its subsidiaries has received any notice to the
effect (or is otherwise aware) that any material Intangible Property or the use
thereof by the Company or any of its subsidiaries conflicts with any rights of
any Person.
(b) Except as set forth on Section 3.18 of the Company Disclosure
Schedule:
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(i) to the best of the Company's knowledge, the Company and its
subsidiaries own and have the right to use, sell, license or dispose of all
Intangible Property primarily used for the conduct of its business as
presently conducted;
(ii) to the best of the Company's knowledge, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not breach, violate or conflict with
any material Intangible Property, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of, or in
any material way impair the right of the Company or any of its subsidiaries
to use, sell, license or dispose of or to bring any action for the
infringement of, any material Intangible Property or material portion
thereof;
(iii) to the best of the Company's knowledge, there are no
royalties, honoraria, fees or other payments payable by the Company or any
of its subsidiaries to any person by reason of the ownership, use, license,
sale or disposition of any material Intangible Property; and
(iv) to the best of the Company's knowledge, the conduct of the
business by the Company and its subsidiaries does not violate any license
or agreement with any third party or infringe any Intangible Property of
any other person.
(c) As used herein "Intangible Property" means all intellectual
property rights, including patents, patent applications (pending or otherwise),
computer software, research findings, market and competitive analyses, brand
names, copyrights, service marks, trademarks, tradenames, and all registrations
or applications for registration of any of the foregoing.
Section 3.19. Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of Morgan Stanley & Co. Incorporated to the effect that the
consideration to be received by the stockholders of the Company pursuant to the
Acquisition is fair to such stockholders from a financial point of view.
Section 3.20. Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its affiliates, other than Morgan Stanley &
Co. Incorporated (the fees and expenses of which shall be paid in full by the
Company). The Company has heretofore furnished to the Purchaser a true and
complete copy of all agreements between the Company and such firm pursuant to
which such firm would be entitled to any payment relating to the Acquisition or
the transactions contemplated hereby.
Section 3.21. Aggregation. The representations and warranties set forth
-----------
in this Article III would in the aggregate be true and correct without regard to
the materiality exceptions or qualifications contained therein except for such
exceptions and qualifications which, in the
20
<PAGE>
aggregate for all such representations and warranties, would not constitute and
would not be reasonably expected to constitute a Company Material Adverse
Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
Section 4.1. Organization and Qualification. The Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. The Purchaser is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not have a material adverse effect
on the business, operations, properties, financial condition or results of
operations of the Purchaser and its subsidiaries, taken as a whole (a "Purchaser
Material Adverse Effect").
Section 4.2. Authorization, Validity and Enforceability. The Purchaser
------------------------------------------
has all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Acquisition and the other transactions contemplated hereby to be consummated by
the Purchaser. The execution, delivery and performance of this Agreement by the
Purchaser and the consummation by the Purchaser of the Acquisition and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Purchaser and no other corporate
proceedings on the part or the Purchaser are necessary to authorize the
execution, delivery and performance of this Agreement or the consummation of the
Acquisition or the other transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Purchaser and constitutes the legal,
valid and binding obligation of each of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity).
Section 4.3. No Conflict or Violation. Subject to making the filings and
------------------------
obtaining the approvals identified in Section 4.4, the execution and delivery of
this Agreement by the Purchaser do not, and the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
Acquisition and the other transactions pursuant hereto will not, (a) conflict
with or violate the certificate of incorporation, by-laws or other charter or
organization document of the Purchaser or any material subsidiary of the
Purchaser, (b)
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<PAGE>
conflict with or violate any material law, statute, rule, regulation, order,
judgment, writ, injunction or decree applicable to the Purchaser or any of its
subsidiaries or any of their respective properties or assets, or (c) result in a
violation or breach of or constitute a default under (or an event which with the
giving of notice or the lapse of time or both would constitute a default under),
require any consent, approval or authorization under, result in the loss of a
material benefit or result in any provision becoming applicable or effective
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Purchaser or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Purchaser or
any of its subsidiaries is a party or by which the Purchaser or any of its
subsidiaries or any material property or asset of the Purchaser or any of its
subsidiaries may be bound or affected, except in the case of each of clauses (b)
and (c) for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, be reasonably
likely to result in a Purchaser Material Adverse Effect or prevent the Purchaser
from performing its obligations under this Agreement in any material respect.
Section 4.4. Consents and Approvals. The execution and delivery of this
----------------------
Agreement by the Purchaser do not, and the performance by the Purchaser of its
obligations hereunder and the consummation by the Purchaser of the transactions
contemplated hereby will not, require the Purchaser to obtain any consent,
approval, authorization or permit of, or to make any filing with or notification
to, any Governmental Entity, except (a) for (i) applicable requirements, if any,
of the Securities Act, the Exchange Act, Blue Sky Laws, and (ii) the pre-merger
notification and report requirements of the HSR Act, (iii) consents, approvals,
authorizations, orders, permits, filings or registrations related to, or arising
out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages and (iv) as set forth in
Section 4.4 of the Purchaser Disclosure Schedule, and (b) where the failure to
obtain such consents, approvals, authorizations and permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
the Purchaser from performing its obligations under this Agreement in any
material respect or from consummating the Acquisition or any other transaction
pursuant hereto.
Section 4.5. Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its affiliates, other than Salomon Brothers
Inc (the fees and expenses of which shall be paid in full by the Purchaser).
Section 4.6. Financing. The Purchaser has adequate cash resources
---------
available to consummate the Offer.
ARTICLE V.
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<PAGE>
COVENANTS
Section 5.1. Interim Operations. From the date of this Agreement until
------------------
the Closing Date, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement,
unless the Purchaser has consented in writing thereto, the Company shall, and
shall cause each of its subsidiaries to:
(a) conduct its business and operations only in the ordinary
course of business consistent with past practice;
(b) use all reasonable efforts to preserve intact the business
organizations, goodwill, rights, licenses, permits and franchises of
the Company and its subsidiaries and maintain their existing
relationships with customers, suppliers and other persons having
business dealings with them;
(c) use its commercially reasonable efforts to keep in full
force and effect adequate insurance overages and maintain and keep its
properties and assets in good repair, working order and condition,
normal wear and tear excepted;
(d) not amend or modify its respective articles or certificate
of incorporation, by-laws, partnership agreement or other charter or
organization documents;
(e) not authorize for issuance, issue, sell, grant, deliver,
pledge or encumber or agree or commit to issue, sell, grant, deliver,
pledge or encumber any shares of any class or series of capital stock
of the Company or any of its subsidiaries or any other equity or
voting security or equity or voting interest in the Company or any of
its subsidiaries, any securities convertible into or exercisable or
exchangeable for any such shares, securities or interests, or any
options, warrants, calls, commitments, subscriptions or rights to
purchase or acquire any such shares, securities or interests (other
than issuances of Company Common Stock upon exercise of Company
Options granted prior to the date of this Agreement to directors,
officers, employees and consultants of the Company in accordance with
the Company Stock Plan as currently in effect);
(f) not (A) split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for,
shares of its capital stock, (B) in solely the case of the Company,
declare, set aside or pay any dividends on, or make other
distributions in respect of, any of the Company's capital stock, or
(C) repurchase, redeem or otherwise acquire, or agree or commit to
repurchase,
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<PAGE>
redeem or otherwise acquire, any shares of capital stock or other
equity or debt securities or equity interests of the Company or any of
its subsidiaries;
(g) not amend or otherwise modify the terms of any Company
Options or the Company Stock Plan the effect of which shall be to make
such terms more favorable to the holders thereof or persons eligible
for participation therein;
(h) other than regularly scheduled seniority increases in the
ordinary course of business consistent with past practice, not
increase the compensation payable or to become payable to any
directors, officers or employees of the Company or any of its
subsidiaries, or grant any severance or termination pay to, or enter
into any employment or severance agreement with any director or
officer of the Company or any of its subsidiaries, or establish,
adopt, enter into or amend in any material respect or take action to
accelerate any material rights or benefits under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer
or employee of the Company of any of its subsidiaries;
(i) not acquire or agree to acquire (including, without
limitation, by merger, consolidation, or acquisition of stock, equity
securities or interests, or assets) any corporation, partnership,
joint venture, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets of any
other person outside the ordinary course of business consistent with
past practice or any interest in any real properties (whether or not
in the ordinary course of business);
(j) not incur, assume or guarantee any indebtedness for borrowed
money (including draw-downs on letters or lines of credit) or issue or
sell any notes, bonds, debentures, debt instruments, evidences of
indebtedness or other debt securities of the Company or any of its
subsidiaries or any options, warrants or rights to purchase or acquire
any of the same, except for (A) renewals of existing bonds and letters
of credit in the ordinary course of business not to exceed $10,000,000
and (B) advances, loans or other indebtedness in the ordinary course
of business consistent with past practice in an aggregate amount not
to exceed $5,000,000;
(k) not sell, lease, license, encumber or otherwise dispose of,
or agree to sell, lease, license, encumber or otherwise dispose of,
any material properties or assets of the Company or any of its
subsidiaries;
24
<PAGE>
(l) not authorize or make any capital expenditures (including by
lease) in excess of $5,000,000 in the aggregate for the Company and
all of its subsidiaries;
(m) not make any material change in any of its accounting or
financial reporting (including Tax accounting and reporting) methods,
principles or practices, except as may be required by GAAP;
(n) not make any material tax election or settle or compromise
any material United States, Dutch or foreign tax liability;
(o) except in the ordinary course of business consistent with
past practice, not amend, modify or terminate any Contract required to
be listed in Section 3.17 of the Company Disclosure Schedule or waive,
release or assign any material rights or claims thereunder;
(p) not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries;
(q) not take any action that would, or would be reasonably
likely to, result in any of the representations and warranties set
forth in this Agreement not being true and correct in any material
respect or any of the conditions set forth in Article VI not being
satisfied; and
(r) not agree or commit in writing or otherwise to do (or, in
the case of clauses (i) through (iii), to do anything inconsistent
with) any of the foregoing.
Section 5.2. No Solicitation. Prior to the Closing Date, the Company
---------------
agrees (a) that neither it nor any of its subsidiaries shall, nor shall it or
any of its subsidiaries authorize or permit their respective officers,
directors, employees, agents and representatives (including, without limitation,
any investment banker, financial advisor, attorney, accountant, consultant or
other advisor, agent, representative or expert retained by or acting on behalf
of it or any of its subsidiaries) (collectively, "Representatives") to, directly
or indirectly, initiate, solicit, negotiate, encourage, or provide confidential
information to facilitate any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to any of its
stockholders) concerning, or that may reasonably be expected to lead to, an
Alternative Transaction (any such proposal or offer being hereinafter referred
to as an "Alternative Transaction Proposal"), and (b) that it will notify the
Purchaser promptly if any such inquiries or proposals are received by, any
information or documents is requested from, or any negotiations or discussions
are sought to be initiated or continued with, the Company or any of its
subsidiaries; provided, however, that (i) nothing contained in this Section 5.2
------------------
shall prohibit the Board of Directors of the Company from, to the extent
applicable, complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Transaction Proposal
25
<PAGE>
and (ii) the Company and its subsidiaries and Representatives may furnish
confidential information to and participate in negotiations with a person making
or proposing to make an Alternative Transaction Proposal if (x) the Company's
Board of Directors is advised by one or more of its financial advisors that such
person has the financial wherewithal to consummate an Alternative Transaction,
(ii) the Board of Directors reasonably determines, after receiving advice from
the Company's financial advisor, that such person has proposed an Alternative
Transaction that involves consideration to the Company's stockholders that is
superior to the consideration provided for under this Agreement and (iii) based
upon the advice of counsel to such effect, the Company's Board of Directors
determines in good faith that it is necessary so to furnish information and/or
negotiate in order to comply with its fiduciary duty to stockholders of the
Company. The Company agrees that prior to furnishing any such information to, or
entering into any discussions or negotiations with, any person or entity
concerning an Alternative Transaction Proposal, the Company shall (i) receive
from such person or entity an executed confidentiality agreement in customary
form on terms not less favorable to the Company than the confidentiality
provisions contained in the Confidentiality Agreement dated January, 1997
between the Purchaser and the Company (the "Confidentiality Agreement"),
providing for confidentiality of information furnished by the Company to the
Purchaser and its Representatives in connection with the transactions
contemplated hereby, and (ii) provide written notice to the Purchaser to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity. The Company shall provide the
Purchaser with a summary of the terms of any Alternative Transaction Proposal
received by the Company, or its subsidiaries or Representatives. For purposes of
this Agreement, "Alternative Transaction" shall mean any of the following
involving the Company or any of its subsidiaries: (i) any merger, consolidation,
Buy-Out, business combination or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 20% or more
of the assets of the Company and its subsidiaries, determined on a consolidated
basis in accordance with GAAP; (iii) any tender offer, exchange offer or other
offer for 20% or more of the outstanding shares of capital stock of the Company
or the filing of a registration statement under the Securities Act in connection
therewith; (iv) the acquisition by any person or entity of beneficial ownership
or the right to acquire beneficial ownership of, or the formation or existence
of any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) which beneficially owns,
or has the right to acquire beneficial ownership of, 20% or more of the then
outstanding shares of capital stock of the Company; or (v) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement or commitment to engage in any of the foregoing.
Section 5.3. Access to Information. From the date of this Agreement until
---------------------
the Closing Date, upon reasonable prior notice, the Company shall (and shall
cause each of its subsidiaries to) give the Purchaser and its Representatives
(including lenders to and financing sources for such party) full access, during
normal business hours and at other reasonable times without disruption to the
Company's normal business affairs, to the officers, employees, agents, books,
records, contracts, commitments, properties, offices, hotels and other
facilities of it and its subsidiaries, and shall furnish promptly to the
Purchaser and its Representatives such
26
<PAGE>
financial and operating data and other information concerning the business,
operations, properties, contracts, records and personnel of the Company and its
subsidiaries as the Purchaser may from time to time reasonably request. All
information obtained by the Purchaser pursuant to this Section 5.3 shall be kept
confidential in accordance with the confidentiality provisions of the
Confidentiality Agreement. No representations and warranties or conditions to
the consummation of the Acquisition contained herein or in any certificate or
instrument delivered in connection herewith shall be deemed waived or otherwise
affected by any investigation made by the parties or their respective
Representatives.
Section 5.4. Notice of Certain Matters. The Company shall give prompt
-------------------------
notice to the Purchaser, and the Purchaser shall give prompt notice to the
Company, of (a) the occurrence or non-occurrence of any event which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect or (ii) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied in all material respects and (b) any failure of the Company or of the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder in any material
respect; provided that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.5. Further Actions. (a) Each of the parties hereto shall use
---------------
all commercially reasonable good faith efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, and consult and fully cooperate
with and provide reasonable assistance to each other party hereto and their
respective Representatives in order, to consummate and make effective the
Acquisition and the other transactions contemplated by this Agreement as
promptly as practicable hereafter, including, without limitation, (i) using all
commercially reasonable good faith efforts to make all filings, applications,
notifications, reports, submissions and registrations with, and to obtain all
consents, approvals, authorizations or permits of, Governmental Entities or
other persons or entities as are necessary for the consummation of the
Acquisition and the other transactions contemplated hereby (including, without
limitation, pursuant to the HSR Act, the Securities Act, the Exchange Act, Blue
Sky Laws and other applicable laws and regulations in effect in the United
States, The Netherlands or any other jurisdiction), and (ii) taking such actions
and doing such things as any other party hereto may reasonably request in order
to cause any of the conditions to such other party's obligation to consummate
the Acquisition as specified in Article VI of this Agreement to be fully
satisfied. Prior to making any application to or filing with any Governmental
Entity or other person or entity in connection with this Agreement, the Company,
on the one hand, and the Purchaser, on the other hand, shall provide the other
with drafts thereof and afford the other a reasonable opportunity to comment on
such drafts.
(b) Without limiting the generality of the foregoing, each of the
Purchaser and the Company agree to cooperate and use all commercially reasonable
efforts to vigorously contest and resist any action, suit, proceeding or claim,
and to have vacated, lifted, reversed
27
<PAGE>
or overturned any injunction, order, judgment or decree (whether temporary,
preliminary or permanent), that delays, prevents or otherwise restricts the
consummation of the Acquisition or any other transaction contemplated by this
Agreement, and to take any and all actions (including, without limitation, the
disposition of assets, divestiture of businesses, or the withdrawal from doing
business in particular jurisdictions) as may be required by Governmental
Entities as a condition to the granting of any such necessary approvals or as
may be required to avoid, vacate, lift, reverse or overturn any injunction,
order, judgment, decree or regulatory action (provided, however, that in no
event shall any party hereto take, or be required to take, any action that could
reasonably be expected to have a Company Material Adverse Effect or that,
individually or in the aggregate, could reasonably be expected to have a
Purchaser Material Adverse Effect).
(c) The Company shall, and shall cause its respective representatives
to, fully cooperate with the Purchaser and its respective representatives in the
preparation of the Registration Statement, and shall, upon request, furnish the
Purchaser with all information concerning it and its affiliates, directors,
officers and stockholders as the Purchaser may reasonably request in connection
with the preparation of the Registration Statement. Without limiting the
generality of the foregoing, the Company shall notify the Purchaser as promptly
as practicable upon becoming aware of any event or circumstance which should be
described in an amendment of, or a supplement to, the Registration Statement.
Section 5.6. Compulsory Buy-Out. (a) The Company acknowledges that the
------------------
Purchaser may desire to obtain all of the outstanding shares of Company Common
Stock and Company Options pursuant to the consummation of the Offer and the
Acquisition. In order to bring the Purchaser and/or any of its affiliates in a
position to exercise their rights under Section 2:92a of the DCC, the Company
shall at the request of the Purchaser: (i) inform the Purchaser of the fact that
the Purchaser and/or one or more of its affiliates jointly holds 95% or more of
the issued share capital in the Company, as soon as the Company has become aware
of that fact; (ii) provide the Purchaser with extracts from and/or copies of the
shareholders' register of the Company if so required by the Purchaser; and (iii)
provide the Purchaser and/or any auditor instructed by the Purchaser with such
information regarding the Company in order for the Purchaser and/or such auditor
to be in a position to establish the value or price of a share in the issued
capital of the Company for the purposes of proceedings pursuant to Section 2:92a
of the DCC.
(b) The Company further acknowledges that upon expiration of the Offer
and acceptance of the shares of Company Common Stock thereunder, the Purchaser
may from time to time purchase or acquire beneficial ownership of shares of
Company Common Stock in the open market at market prices then prevailing and
such prices may be greater or lower than the consideration offered pursuant to
the Offer.
Section 5.7. Public Announcements. Unless otherwise required by
--------------------
applicable law or stock exchange requirements, at all times prior to the earlier
of the Closing Date or the termination of this Agreement, no party hereto shall
or shall permit any of its subsidiaries to
28
<PAGE>
(and each party shall use its reasonable best efforts to cause its affiliates
and Representatives not to) issue any press release concerning this Agreement,
the Acquisition or any other transaction contemplated hereby, without prior
consultation with the other parties hereto.
Section 5.8. Expenses. Whether or not the Acquisition is consummated,
--------
subject to Section 7.2 hereof, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, fees and disbursements of Representatives) shall be borne by the
party which incurs such cost or expense; provided, however, that (a) the filing
fee in connection with the filings under the HSR Act required in connection
herewith, and (b) all out-of-pocket costs and expenses related to the printing,
filing and mailing (as applicable) of the Offer Documents, and all Commission
and other regulatory filing fees incurred in connection with the Offer, shall be
borne by the Purchaser.
Section 5.9. Indemnification. (a) From and after the Closing Date, the
---------------
Purchaser shall, and shall cause the Company to, indemnify and hold harmless
each person who is now, or has been at any time prior to the date hereof, an
officer or director of the Company or any of its subsidiaries (the "Indemnified
Parties") against any losses, claims, damages, judgments, settlements,
liabilities, costs or expenses (including without limitation reasonable
attorneys' fees and out-of-pocket expenses) incurred in connection with any
claim, action, suit, proceeding or investigation arising out of or pertaining to
acts or omissions, or alleged acts or omissions, by them in their capacities as
such occurring at or prior to the Closing Date (including, without limitation,
in connection with the Acquisition and the other transactions contemplated by
this Agreement), to the fullest extent that the Company or such subsidiaries
would have been permitted, under applicable law and the articles of
incorporation or by-laws of the Company or the organizational documents of such
subsidiaries each as in effect on the date of this Agreement, to indemnify such
person (and the Purchaser or the Company shall also advance expenses as incurred
to the fullest extent permitted under applicable law upon receipt from the
Indemnified Party to whom expenses are advanced of a written undertaking to
repay such advances). The Purchaser and the Company shall pay all expenses,
including attorneys' fees, that may be incurred by any Indemnified Party in
enforcing this Section 5.9. If the indemnity provided by this Section 5.9(a) is
not available with respect to any Indemnified Party, then the Purchaser and the
Company, on the one hand, and the Indemnified Party, on the other hand, shall
contribute to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits.
(b) In the event of any such claim, action, suit, proceeding or
investigation, (i) any Indemnified Party wishing to claim indemnification under
this Section 5.9 shall, upon becoming aware of any such claim, action, suit,
proceeding or investigation, promptly notify the Company thereof (provided that
the failure to provide such notice shall not relieve the Purchaser or the
Company of any liability or obligation it may have to such Indemnified Party
under this Section unless such failure materially prejudices the Purchaser or
the Company, (ii) the Purchaser or the Company shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably acceptable to the Purchaser and the Company, (iii) the Purchaser and
the Company shall cooperate in the defense of any such
29
<PAGE>
matter; provided, however, that neither the Purchaser nor the Company shall be
liable for any settlement effected without its prior written consent (not to be
unreasonably withheld); and provided, further, that neither the Purchaser nor
the Company shall be liable under this Section 5.9 for the fees and expenses of
more than one counsel for all Indemnified Parties in any single claim, action,
suit, proceeding or investigation, except to the extent that, in the opinion of
counsel for the Indemnified Parties, two or more of such Indemnified Parties
have conflicting interests in the outcome of such claim, action, suit,
proceeding or investigation such that additional counsel is required to be
retained by such Indemnified Parties under applicable standards of professional
conduct.
(c) From and after the Closing Date until the sixth anniversary
thereof, the Purchaser shall cause the Company to maintain, without any gaps or
lapses in coverage, directors' and officers' liability insurance covering the
Indemnified Parties who are covered, in their capacities as directors and
officers of the Company, by the existing directors' and officers' liability
insurance of the Company in force on the date of this Agreement, with respect to
losses or claims arising out of acts or omissions, or alleged acts or omissions,
by them in their capacities as such occurring at or prior to the Closing Date,
and upon terms no less favorable to the Indemnified Parties than such existing
directors' and officers' liability insurance; provided, however, that the
Company shall not be required in order to maintain or procure such coverage to
pay an annual premium in excess of 150% of the current annual premium paid by
the Company for its existing coverage, and that if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of such
limit, the Company shall only be required to obtain as much coverage as can be
obtained by paying an annual premium equal to such limit.
(d) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives.
Section 5.10. Employee Benefit Matters. (a) The Purchaser acknowledges
------------------------
that the Company is bound by the Employee Severance Plans applicable to
employees of the Company, and Purchaser agrees to cause the Company to perform
the terms thereof.
(b) Before the Closing Date, the Company shall, or shall cause one of
its Subsidiaries to take such action as is necessary to avoid the requirement
under the Renaissance Hotels Executive Supplemental 401(k) Plan and Renaissance
Hotels Deferred Incentive Plan (together, the "Plans") that, upon a change in
control of the Company or one of its Subsidiaries, the liabilities under the
Plans be funded through an irrevocable trust. Effective as of the Closing Date,
the Purchaser shall assume the Company's and any of the Company's Subsidiaries
liabilities and obligations under the Plans, except for the obligation to
establish an irrevocable trust to fund the liabilities. The Company and the
Purchaser agree that employees of the Company or any of its Subsidiaries who
participate in the Plans shall be fully vested in their accrued benefits under
the Plans as of the Closing Date. The Purchaser shall use its best efforts to
ensure that the intended timing of distributions under the Plans and the
intended tax consequences to participants in the Plans shall be maintained on
and after the Closing Date,
30
<PAGE>
except to the extent modified by written agreement between the Purchaser and
such participants.
ARTICLE VI.
CONDITIONS TO THE OFFER
Section 6.1. Conditions to the Offer. (a) Notwithstanding any other
-----------------------
provisions of the Offer, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission including
Rule 14e-l(c) under the Exchange Act (relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restrictions referred to above, the payment for, any tendered Shares, and may
amend the Offer consistent with the terms of this Agreement or terminate the
Offer if (i) any applicable waiting period under the HSR Act has not expired or
terminated prior to the expiration of the Offer, (ii) the Minimum Condition has
not been satisfied, or (iii) at any time on or after February 17, 1997 and at or
before the time of acceptance of Shares for payment pursuant to the Offer, any
of the following events shall occur:
(A) from the date of this Agreement until the Closing Date,
there shall have occurred any change, event, occurrence or
circumstance in the business, operations, properties, financial
condition or results of operations of the Company or any of its
subsidiaries which, individually or in the aggregate, has had or
is reasonably likely to have a Company Material Adverse Effect
(except for changes, events, occurrences or circumstances with
respect to general economic or industry conditions);
(B) any Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which (1) makes the acceptance
for payment of, or the payment for, some or all of the Shares
illegal or otherwise prohibits or restricts consummation of the
Offer, (2) imposes material limitations on the ability of the
Purchaser to acquire or hold or to exercise any rights of
ownership of the Shares, or effectively to manage or control the
Company and its business, assets and properties or (3) has had or
is reasonably likely to have a Company Material Adverse Effect;
provided, however, that the parties shall use all commercially
-----------------
reasonable efforts (subject to the proviso in Section 5.5(b)) to
cause any such decree, judgment or other order to be vacated or
lifted;
(C) the representations and warranties of the Company set
forth in this Agreement shall not (i) have been true and correct
in any material respect on the date hereof or (ii) be true and
correct in any respect as of the scheduled
31
<PAGE>
expiration date (as such date may be extended) of the Offer as
though made on or as of such date or the Company shall have
breached or failed in any respect to perform or comply with any
material obligation, agreement or covenant required by this
Agreement to be performed or complied with by it except, in each
case with respect to clause (ii), (x) for changes specifically
permitted by this Agreement and (y) (A) for those representations
and warranties that address matters only as of a particular date
which are true and correct as of such date or (B) where the
failure of representations and warranties (without regard to
materiality qualifications therein contained) to be true and
correct, or the performance or compliance with such obligations,
agreements or covenants, would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect;
(D) this Agreement shall have been terminated in accordance
with its terms;
(E) it shall have been publicly disclosed or Purchaser shall
have learned that any person, entity or "group" (as that term is
defined in Section 13(d)(3) of the Exchange Act), other than
Purchaser or its affiliates, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 of the Exchange
Act) of 20% or more of the Shares, or shall have entered into a
definitive agreement with the Company with respect to a tender
offer or exchange offer for any Shares or merger, consolidation or
other business combination with or involving the Company or any of
its subsidiaries;
(F) the Board of Managing Directors of the Company shall have
withdrawn or modified in a manner adverse to Purchaser its
approval or recommendation of the Offer, shall have recommended to
the Company's shareholders another offer or shall have adopted any
resolution to effect any of the foregoing;
(G) any of the consents, approvals, authorizations, orders or
permits required to be obtained by the Company, the Purchaser, or
their respective subsidiaries in connection with the Acquisition
from, or filings or registrations required to be made by any of
the same prior to the Closing Date with, any Governmental Entity
in connection with the execution, delivery and performance of this
Agreement shall not have been obtained or made or shall have been
obtained or made subject to conditions or requirements, except (i)
where the failure to have obtained or made any such consent,
approval, authorization, order, permit, filing or registration or
such conditions or requirements could not reasonably be expected
to (1) have a Company Material Adverse Effect or a Purchaser
Material Adverse Effect or (2) impose material limitations on the
ability of the Purchaser to acquire or hold or to exercise any
rights of ownership of the Shares, or effectively to manage or
control the
32
<PAGE>
Company and its business, assets and properties and (ii) for any
such consent, approval, authorization, order, permit, filing or
registration related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or
serving of alcoholic beverages; or
(H) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the
New York Stock Exchange, Inc., (2) the declaration of a banking
moratorium or any suspension of payments in respect of banks in
the United States (whether or not mandatory), (3) the commencement
of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States and
having had or being reasonably likely to have a Company Material
Adverse Effect or materially adversely affecting (or materially
delaying) the consummation of the Offer, (4) any limitation or
proposed limitation (whether or not mandatory) by any United
States or Dutch governmental authority or agency, or any other
event, that materially adversely affects generally the extension
of credit by banks or other financial institutions, (5) from the
date of this Agreement through the date of termination or
expiration of the Offer, a decline of at least 25% in the Standard
& Poor's 500 Index or (6) in the case of any of the situations
described in clauses (1) through (5) inclusive, existing at the
date of the commencement of the Offer, a material acceleration,
escalation or worsening thereof;
which, in the reasonable judgment of Purchaser, in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
(b) The conditions set forth in Section 6.1(a) are for the sole
benefit of Purchaser and may be asserted by Purchaser regardless of any
circumstances giving rise to any condition and may be waived by Purchaser, in
whole or in part at any time and from time to time in the sole discretion of
Purchaser. The failure by Purchaser (or any affiliate of Purchaser) at any time
to exercise any of the foregoing rights will not be deemed a waiver of any right
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
ARTICLE VII.
TERMINATION
Section 7.1. Termination. This Agreement may be terminated and the Offer
-----------
and the Acquisition may be abandoned at any time prior to the Closing Date:
(a) by mutual consent of the Purchaser and the Company; or
33
<PAGE>
(b) by action of the Board of Directors of either the Purchaser or
the Company if:
(i) (x) the Closing Date shall not have occurred on or
before June 30, 1997 (provided that the right to terminate this
Agreement under this clause (i) shall not be available to any
party whose breach of any representation or warranty or failure to
fulfill any covenant or agreement under this Agreement has been
the cause of or resulted in the failure of the Acquisition to
occur on or before such date); or (y) the Offer shall have expired
or been terminated and the Purchaser shall not have purchased any
shares of Company Common Stock pursuant to the Offer unless, in
the case of termination by the Purchaser, the Purchaser's
obligation to purchase shares of Company Common Stock pursuant to
the Offer shall not have been satisfied by reason of any failure
of the Purchaser to fulfill its obligations hereunder; or
(ii) a United States federal or state or Dutch court of
competent jurisdiction or United States federal or state or Dutch
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-
appealable (provided, that the party seeking to terminate this
Agreement pursuant to this clause (ii) shall have used all
commercially reasonable efforts (subject to the provisions of
Section 5.5.(b)) to remove such injunction, order or decree); or
(c) by action of the Board of Managing Directors of the Company on
five days' prior written notice to Purchaser if the Board of Managing
Directors of the Company withdraws its approval or recommendation of the
Offer, the Acquisition or this Agreement, by reason of an Alternative
Transaction Proposal, and the Company pays to the Purchaser the fee
provided in Section 7.2; or
(d) by action of the Board of Directors of the Purchaser, if the
Board of Managing Directors of the Company shall not have issued, or shall
have withdrawn or modified (including by amendment of the Schedule 14D-9)
in a manner materially adverse to the Purchaser, its approval or
recommendation of the Offer, the Acquisition or this Agreement or shall
have recommended an Alternative Transaction Proposal to the stockholders
of the Company, or shall have adopted any resolution to effect any of the
foregoing.
Section 7.2. Effect of Termination. (a) In the event that any person
---------------------
shall have made an Alternative Transaction Proposal for the Company and this
Agreement is terminated by either party, or in the event that this Agreement is
otherwise terminated under Section 7.1(d) pay the Purchaser a fee of $27,500,000
and, notwithstanding Section 5.8, reimburse the Purchaser for its documented
out-of-pocket expenses in connection with the transactions
34
<PAGE>
contemplated hereby not exceeding $1,000,000, which amount shall be payable by
wire transfer of same day funds prior to or upon termination of this Agreement.
The Company acknowledges that the agreements contained in this Section 7.2(a)
are an integral part of the transactions contemplated in this Agreement, and
that, without these agreements, the Purchaser would not enter into this
Agreement.
(b) In the event of the termination of this Agreement and the
abandonment of the Acquisition pursuant to this Article VII, all future
obligations and liabilities of the parties hereto shall terminate, except the
obligations of the parties pursuant to this Section 7.2.
Section 7.3. Extension; Waiver. At any time prior to the Closing Date, any
-----------------
party hereto, by action taken by its Board of Directors, may, to the extent
locally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by or on behalf of the party or parties to be bound
thereby.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.
---------------------------------------------------------
All representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Acquisition and shall not
survive the Acquisition and thereafter neither the Purchaser, the Company, nor
any affiliate, officer, director, employee or shareholder shall have any
liability with respect thereto; provided, however, that the agreements contained
in Articles I and II and Section 5.9, this Article VIII, the Shareholder
Agreement, and any other covenant or agreement which contemplates performance
after the Closing Date shall survive the Acquisition.
Section 8.2. Notices. Any notice required to be given hereunder shall be
-------
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
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<PAGE>
(a) if to the Purchaser, to
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20857
Attention: General Counsel, Dept. 52/923
Telecopier: (301) 380-6727
with a copy to:
O'Melveny & Myers LLP
555 13th Street, Suite 500 W
Washington, D.C. 20004
Attention: Jeffrey J. Rosen, Esq.
Telecopier: (202) 383-5414
(b) if to the Company, to
Renaissance Hotel Group N.V.
c/o Renaissance Hotels International
29800 Bainbridge Road
Solon, Ohio 66139
Attention: Robert W. Olesen
Telecopier: (216) 498-0750
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Stephan H. Haimo, Esq.
Telecopier: (212) 806-6006
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated or personally delivered or on the fifth business day after
being deposited in the United States mail, if mailed.
Section 8.3. Certain Definitions. The following terms shall, when used in
-------------------
this Agreement, have the following respective meanings:
(a) "affiliate" shall have the meaning assigned to such term in
Section 12(b)-2 of the Exchange Act.
36
<PAGE>
(b) "business day" shall have the meaning set forth in Rule 14d-
l(c)(6) under the Exchange Act.
(c) "person" means any natural person, corporation, limited
liability company, partnership, unincorporated organization, government or
department or agency thereof, or other legal entity.
(d) "subsidiary" of any person means any corporation, partnership,
joint venture or other organization, whether incorporated or unincorporated, of
which such person directly or indirectly owns or controls at least 50% of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
partnership or other organization of which such person directly or indirectly
owns a 50% or greater equity interest.
Section 8.4. Assignment; Binding Effect. Neither this Agreement nor any
--------------------------
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, provided, however, that Purchaser may
-----------------
assign its rights and delegate its obligations hereunder to a wholly-owned
subsidiary of the Purchaser and further provided that such assignment and
delegation shall not relieve Purchaser of its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Section 8.6 nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 8.5. Entire Agreement. This Agreement (including the Company
----------------
Disclosure Schedule), and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
Section 8.6. Amendment. This Agreement may be amended by the parties
---------
hereto, by action taken by their respective Boards of Directors, at any time by
an instrument in writing signed on behalf of each of the parties hereto. After
the Closing Date, none of the Sections or Articles specified in Section 8.1 may
be amended.
Section 8.7. Waivers. Except as provided in this Agreement, no action
-------
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement.
37
<PAGE>
The waiver by any party hereto of a breach of any provision hereunder shall not
operate or be construed as a waiver of any prior or subsequent breach of the
same or any other provision hereunder.
Section 8.8. Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 8.9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without regard to
its rules of conflict of laws. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America located in the
State of New York (the "New York Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in the New York Courts),
waives any objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum.
Section 8.10. Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any New York Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 8.11. Incorporation of Exhibits. The Company Disclosure Schedule
-------------------------
is hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein. Inclusion of information in the Company Disclosure
Schedule does not constitute an admission or acknowledgment of the materiality
of such information.
Section 8.12. Interpretation. In this Agreement, unless the context
--------------
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders.
Section 8.13. Headings. The headings of the Articles and Sections of this
--------
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
38
<PAGE>
Section 8.14. Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all which counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Arne Sorenson
-----------------------------------
Name: Arne Sorenson
Title: Senior Vice President
RENAISSANCE HOTEL GROUP N.V.
By: /s/ Henry Cheng Kar-Shun
-----------------------------------
Name: Henry Cheng Kar-Shun
Title: Managing Director
39
<PAGE>
Exhibit 2
Pages 11-13
Affiliated-Party Management Agreements
HPI. Pursuant to the Restructuring, the Company transferred all of its
real estate interests (except certain of its joint venture interests) to HPI and
entered into the HPI Management Agreement to manage HPI's 42 owned and leased
hotels (including one hotel currently under development) for a term of 25 years.
The Company has the right to renew the HPI Management Agreement for each hotel
for three successive ten-year periods. However, for 35 hotels subject to the
HPI Management Agreement which are not owned by HPI, the Company's right to
manage such hotels is subject to the terms of the underlying leases, a
substantial number of which have remaining terms of less than 25 years. The
hotels managed pursuant to the HPI Management Agreement represented
approximately 38% of all of the hotels managed by the Company as of June 30,
1996. The HPI Management Agreement generated management and marketing fees of
$20.7 million in fiscal 1996 and $18.2 million in fiscal 1995, which represented
16.1% and 15.6%, respectively, of the Company's revenue in such periods.
CTF. A subsidiary of the Company has entered into the CTF Management
Agreement which expires in 2015 to manage 23 luxury CTF properties. Dr. Henry
Cheng Kar-Shun, the Company's Chairman ("Dr. Cheng") and members of Dr. Cheng's
family (collectively with Dr. Cheng, the "Cheng Family") control CTF. Pursuant
to the CTF Management Agreement, the Company assumed the responsibility for the
hotel management obligations of the CTF hotel management subsidiary arising
under its separate hotel management agreements, some of which have shorter terms
than the CTF Management Agreement, with other CTF subsidiaries and unaffiliated
parties owning or holding long-term leasehold interest in the hotels.
Accordingly, the Company's management rights to the CTF properties are subject
to the continuing financial viability of such CTF subsidiaries and, to the
satisfactory performance of the terms of the underlying management agreements,
and, in the case of six hotels, to the timely payment by CTF subsidiaries of
underlying lease obligations to unaffiliated parties. The CTF Management
Agreement generated management and marketing fees of $35.9 million in fiscal
1996 and $33.2 million in fiscal 1995, which represented 28.0% and 28.4%,
respectively, of the Company's revenues in such periods. Upon the expiration of
the CTF Management Agreement in 2015, and pursuant to the Strategic Alliance
Agreement (as defined in "Item 13--Interest Of Management In Certain
Transactions"), the Company will have a right of first refusal with respect to
the management of the CTF properties then owned or leased by CTF.
Exclusive License Agreements
HFS Exclusive License Agreement
The Company has licensed the Ramada service mark and related marks, Ramada
brands, logos and franchise system for hotel lodging products pursuant to the
HFS Exclusive License Agreement (the "HFS Agreement") between Franchise Systems
Holdings, Inc., an indirect wholly-owned subsidiary of the Company, and Ramada
Franchise Systems, Inc. ("RFS"), a wholly-owned subsidiary of HFS. The HFS
Agreement allows RFS to license the Ramada marks to hotel owners in the United
States. As of June 30, 1996, there were approximately 831 Ramada hotels
franchised by HFS (including three Ramada hotels managed by the Company). Fee
income from the HFS Agreement and additional agreements between the Company and
RFS described below totaled $20.7 million in fiscal 1996 and $17.9 million in
fiscal 1995, which represented 16.1% and 15.3%, respectively, of the Company's
revenues in such periods.
The HFS Agreement has an initial term of 35 years, commencing on December
20, 1989 and terminating on March 31, 2024. At the end of the initial term, RFS
must either (i) extend the HFS Agreement for a period of five years (April 1,
2024 to March 31, 2029) or (ii) purchase the U.S. Ramada marks for an amount
equal to the greater of (a)
<PAGE>
$56,000,000 or (b) the fair market value of the Ramada marks at such date (as
agreed by the parties to the HFS Agreement or as determined by an independent
appraiser).
The HFS Agreement requires that RFS pay to the Company a fee consisting of
(i) a license fee ranging from $15 million for each year beginning April 1, 1991
and increasing in several steps to $20 million for each year beginning on or
after April 1, 1998, plus (ii) the excess, if any, of 1% of the aggregate annual
gross room sales of Ramada franchises over an amount provided under schedules
for each year and (iii) the amount of license fees actually payable pursuant to
contracts and agreements relating to facilities the gross revenue of which are
excluded from the calculation of gross room sales. Fees are payable quarterly,
in advance. HFS has guaranteed certain of RFS's obligations under the HFS
Agreement. The HFS Agreement is included as an exhibit to this Annual Report.
This summary does not purport to be a complete description and is qualified in
its entirety by reference to such exhibit.
RFS and the Company have entered into additional license agreements with
substantially the same terms and conditions as the HFS Agreement with respect to
the use of the Ramada Limited and Ramada Vacation Suites service marks and
related marks and logos. Ramada Limited hotels are limited- service hotels.
The additional license agreement for Ramada Limited hotels requires RFS to pay a
license fee to the Company of an amount equal to an aggregate of (i) 1.5% of the
gross room sales of each Ramada Limited hotel, plus (ii) 50% of the license fees
received from each Ramada Limited hotel in excess of 4% of the gross room sales
of the Ramada Limited hotel for such payment year. Ramada Vacation Suites are
interval ownership units, or timeshare properties. The Ramada Vacation Suites
license agreement requires RFS to pay a license fee to the Company of an amount
equal to 50% of the gross revenue collected by RFS with respect to the sale,
marketing and licensing of timeshares.
RFCI Exclusive License Agreement
The Company has exclusively licensed the use of the Ramada service mark and
related marks, brands, logos and franchise system for hotel lodging products in
Canada pursuant to the RFCI Exclusive License Agreement (the "RFCI Agreement").
The RFCI Agreement allows RFCI to franchise the Ramada marks to hotel facility
owners in Canada subject to the Company's quality standards. As of June 30,
1996, RFCI had franchised 38 Ramada hotels in Canada. Fees from the RFCI
Agreement totaled $0.5 million in fiscal 1996 and $0.7 million in fiscal 1995,
which represented 0.4% and 0.6%, respectively, of the Company's revenues in such
periods.
Item 2. DESCRIPTION OF PROPERTY.
The principal executive offices of the Company are located in Hong Kong and
are occupied pursuant to a lease with New World Development expiring in 1997.
In addition, the Company leases corporate office space for its other regional
divisions in Cleveland and Frankfurt pursuant to leases expiring in 2007 and
2005, respectively. In the United States, the Company leases office space for
regional operations in Phoenix and Miami. The Company leases space for its
international sales offices in New York, Chicago, Los Angeles, Washington, D.C.,
Melbourne, Tokyo, London and Paris. Many of these offices are located in hotels
managed by the Company. Management believes that these facilities are
sufficient to meet its present needs.
Item 3. LEGAL PROCEEDINGS.
In the ordinary course of its business, the Company is a party to
litigation regarding the operation of managed or franchised hotels, including
general tort lawsuits. The Company generally is indemnified by hotel owners for
lawsuits and damages against it in its capacity as hotel manager or franchiser.
The Company is currently not the subject of any legal actions which, if
determined adversely to the Company, would individually or in the aggregate have
a material effect on the Company's financial position and results of operations,
nor, to management's knowledge, is any such litigation threatened. See Note 18
to the Company's audited consolidated financial statements included elsewhere
herein.
<PAGE>
In 1989, Simulnet East Associates, a New York limited partnership, brought
an action against a subsidiary of the Company for breach of contract in
connection with the provision of satellite television services to the Company's
hotels. In April, 1995 a jury returned a verdict for breach of contract in the
amount of approximately $10.2 million against the Company's subsidiary. The
District Court granted Simulnet's motion for interest, which as of June 30, 1995
increased the total judgment to $17.9 million. The Company's subsidiary has
appealed the decision to the ninth circuit court of appeals. As of October 1,
1996 there had been no decision on the appeal. As a result of the Restructuring,
the Company and its subsidiary have been indemnified against any loss incurred
in this case by HPI. The HPI indemnification of approximately $11.9 million as
of June 30, 1996 has been recorded by the Company as an amount receivable from
shareholder. HFS also has an obligation to indemnify the Company's subsidiary
for approximately 34% of the ultimate judgment which, as of June 30, 1996, was
approximately $6.0 million. The Company has recorded a liability for the full
$17.9 million judgment and the amount that HFS is obligated to pay is included
in other current assets.
Item 4. CONTROL OF REGISTRANT.
As of June 30, 1996, approximately 54.4% of the Company's outstanding
shares of Common Stock were held by the majority shareholder, Diamant Hotel
Investments N.V., a Netherlands Antilles limited liability company ("Diamant")
that is indirectly wholly-owned by certain New World Group Members. As a
result, New World Group Members, acting singly or together, control the Company
and have the power to elect all of its Managing Directors and to approve any
action requiring shareholder approval.
The Company's only outstanding equity securities are the shares of Common
Stock. The following table sets forth certain information regarding beneficial
ownership of the Company's shares of Common Stock as of June 30, 1996 by (i)
each person who is known by the Company to be the beneficial owner of more than
10% of the Company's shares of Common Stock and (ii) all Managing Directors and
executive officers of the Company, as a group.
<TABLE>
<CAPTION>
10% Shareholders and Managing Shares of Common Percent of Common
Directors and Executive Officers Stock Owned(1) Stock Owned
----------------------------------------------------------------------
<S> <C> <C>
New World Development (2) 16,368,000 54.4%
Cheng Family (3) 18,053,846 60.0
All Managing Directors and
executive officers, as a group 18,402,432 61.1
</TABLE>
(1) Unless otherwise indicated, the persons named in the table have sole voting
and investment power with respect to all the shares of Common Stock shown
as beneficially owned by them, subject to community property laws where
applicable and the information contained in this table and these notes.
The table does not include 800,000 shares issuable pursuant to stock
options granted to Managing Directors of the Company as of June 30, 1996,
which have not vested.
<PAGE>
(2) All shares included as beneficially owned by New World Development are held
by Diamant. New World Development indirectly owns approximately 64% of
Diamant.
(3) The Shares included as beneficially owned by the Cheng Family include the
shares of Common Stock beneficially held by New World Development. Chow
Tai Fook Enterprises Limited ("CTFEL"), a closely-held Hong Kong
corporation controlled by the Cheng Family, owns approximately 38% of New
World Development. Dr. Cheng, the Company's Chairman, is the Managing
Director of New World Development.
Item 5. NATURE OF TRADING MARKET.
Renaissance Hotel Group N.V. common shares are listed for trading only on
the New York Stock Exchange under the trading symbol RHG. As of June 30, 1996,
the Company had approximately 14 shareholders of record in the United States.
Approximately 35.1% of the Company's outstanding shares of Common Stock are held
in the United States. The high and low sales prices of the Company's shares
since September 27, 1995, the date of its initial public offering, are listed
below:
<TABLE>
<CAPTION>
1996 High Low
<S> <C> <C>
1st Quarter * 18 17
2nd Quarter 25 1/2 17 1/8
3rd Quarter 25 7/8 19 3/4
4th Quarter 22 5/8 19
</TABLE>
* Represents the activity from the date of the Company's initial public
offering (September 27, 1995) through the end of the first quarter of fiscal
1996 (September 30, 1995.)
Item 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.
The Company is a limited liability company incorporated under the laws of
the Kingdom of The Netherlands ("The Netherlands"), and a majority of its
Managing Directors and executive officers reside outside the United States.
There are no governmental laws, decrees or regulations in The Netherlands that
restrict the export or import of capital, including, but not limited to, foreign
exchange controls, or that affect the remittance of dividends, interest or other
payments to non-resident holders of the registrants securities. There are no
limitations under Netherlands law or the Articles of Incorporation of the
Company on the right of nonresident or foreign persons to hold shares of Common
Stock. Each shareholder of record is entitled to one vote for each Common Stock
held, without cumulative voting, on every matter submitted to a vote of
shareholders of the Company.
<PAGE>
Pages 27-29
Item 10. DIRECTORS AND OFFICERS OF REGISTRANT.
Responsibility for the management of the Company lies with the Board of
Managing Directors. The general meeting of shareholders of the Company appoints
the Managing Directors for one-year terms and grants each the title of Director
or Executive Director. The Board of Managing Directors, as a group, and each
Executive Director, individually, is authorized to represent and bind the
Company. Managing Directors serve until the expiration of their respective
terms or their resignation, death, removal or suspension, with or without cause,
by the shareholders of the Company.
The following table sets forth certain information regarding the members of
the Company's Board of Managing Directors and its executive officers. Some of
these persons are, or may serve as directors or executive officers of, New World
Group Members.
<TABLE>
<CAPTION>
Current
Position
Position with Held
Name Age the Company Since
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Henry Cheng Kar-Shun(1) 49 Chairman and 1995
Director
William W.H. Doo(1) 51 Vice Chairman 1995
and Director
James K.C. Choi 48 Vice Chairman 1996
and Executive
Director
Michael Williams 56 Executive 1996
Director,
President and
Chief Executive Officer
Robert W. Olesen 39 Executive 1995
Director,
Executive Vice
President and Chief
Financial Officer
Erwin J. Rieck 53 Executive 1995
Director,
Managing
Director--
Europe
Thomas G. Stauffer 64 Executive 1995
Director,
President--
Americas
Andrew Wong Kwok Kin 50 Executive 1995
Director,
Executive
Director--
New World Hotels
J. Carter Beese, Jr. 40 Director 1996
W. Grant Gregory 55 Director 1996
Thomas Hsieh 64 Director 1996
</TABLE>
(1) Dr. Cheng and Mr. Doo are brothers-in-law.
Item 11. COMPENSATION OF DIRECTORS AND OFFICERS.
Any Managing Director who is a New World Group Member or who is employed by
the Company will not receive compensation for service as a Managing Director.
Independent directors each receive an annual retainer of $40,000, and an
additional $10,000 is paid to the chairpersons of the Audit Committee and the
Compensation Committee. All Managing Directors are entitled to reimbursement of
their out-of-pocket expenses incurred in connection with their attendance at
meetings of the Board of Managing Directors or in the performance of their
duties as Managing Directors. No fees are paid to the Managing Directors for
their attendance at board meetings.
Executive officers of the Company receive compensation determined by the
Board of Managing Directors. For fiscal 1996, the aggregate compensation
accrued by the Company to all members of the Board of Managing Directors and
executive officers, as a group, was approximately $2.6 million. The Board of
Directors has adopted an incentive bonus plan in which all Executive Directors
of the Company participate. Each year, the Compensation Committee determines,
based upon the recommendation of the Chief Executive Officer, the level and
criteria for bonus awards for the upcoming year. For fiscal 1996, the Company
awarded bonuses to its Executive Directors aggregating approximately $0.9
million. The Company does not to disclose to its shareholders or otherwise make
available information regarding the compensation of its individual Managing
Directors or its executive officers.
<PAGE>
Item 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES.
In June 1995, the Company adopted the 1995 Stock Option Plan (the "1995
Stock Plan") to attract, retain and motivate officers, key employees,
consultants and directors. An aggregate of 2,250,000 shares of Common Stock,
subject to adjustment for stock splits, stock dividends and similar events, has
been authorized for issuance upon exercise of options under the 1995 Stock Plan.
The Compensation Committee of the Board of Managing Directors administers the
1995 Stock Plan and determines to whom options are to be granted and the terms
and conditions thereof, including the number of shares and the period of
exercisability.
In September 1995, the Board of Managing Directors approved the following
grant of options for shares of Common Stock at an exercise price of $17.00 per
share, the initial offering price per share in the Company's initial public
offering, to the executive officers and other employees as follows:
<TABLE>
<CAPTION>
Name Number of Shares
---------------------------------------------------------
<S> <C>
James K.C. Choi 200,000
Robert W. Olesen 100,000
Erwin J. Rieck 100,000
Thomas G. Stauffer 100,000
Andrew Wong Kwok Kin 100,000
Other employees (34 individuals) 256,500
-------
856,500
</TABLE>
In addition to the grant of options described above, the Compensation
Committee approved the grant of options for 200,000 shares of Common Stock to
Michael Williams, on May 22, 1996, upon his appointment as the Company's Chief
Executive Officer and President. These options have an exercise price of $22.50
per share, which was the fair market price as of the grant date.
The disinterested members of the Compensation Committee approved the
following grant of options for shares of Common Stock on July 10, 1996, at an
exercise price of $21.00 per share, the fair market price at the date of grant:
<TABLE>
<CAPTION>
Name Number of Shares
---------------------------------------------------------
<S> <C>
Henry Cheng Kar-Shun 300,000
William W.H. Doo 50,000
Thomas Hsieh 50,000
J. Carter Beese, Jr. 50,000
W. Grant Gregory 50,000
-------
500,000
</TABLE>
On September 24, 1996, the Compensation Committee approved the following
grant of options for shares of Common Stock at an exercise price of $20.50 per
share, the fair market price at the date of grant:
<TABLE>
<CAPTION>
Name Number of Shares
---------------------------------------------------------
<S> <C>
Robert W. Olesen 25,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Erwin J. Rieck 25,000
Andrew Wong Kwok Kin 25,000
Other employees (34 individuals) 163,000
-------
238,000
</TABLE>
The balance of the shares reserved for issuance under the 1995 Stock Plan
will be available for future grants of options. All options vest in various
proportions over time and expire on the tenth anniversary of their respective
grant date.
Item 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS.
The agreements summarized below have been included as exhibits to this
Annual Report. The summaries do not purport to be complete descriptions of
these agreements and are qualified in their entirety by reference to such
exhibits.
In connection with the Company's transfer of its hotel real estate
leasehold and ownership interests in the Restructuring, the Company and HPI
entered into a framework agreement dated June 30, 1995. Pursuant to this
agreement, HPI has assumed and agreed to indemnify the Company against the
liabilities associated with the transferred real estate interests, including
contingent liabilities, taxes and contractual obligations.
Pursuant to the CTF Management Agreement, the Company manages 23 CTF
properties, and in connection with the Restructuring, the Company entered into
the HPI Management Agreement for the management of 42 hotels (including one
hotel currently under development). See "Item 1. Description of Business--
Management Agreements." Mr. Cheng has provided a personal unsecured guarantee in
favor of the Company to the effect that if any accrued fees or payments due
under the CTF Management Agreement to the Company are not ultimately paid by
CTF, he will pay those sums to the Company on demand.
New World Development; Chow Tai Fook Enterprises Limited, a New World Group
Member controlled by the Cheng Family ("CTFEL"); and the Company are parties to
an indemnification agreement (the "Indemnification Agreement") whereby New World
Development and CTFEL have severally agreed to indemnify the Company, each in
proportion to its ownership interest in NWHH, in respect of all liabilities
relating to the hotel leases and other real property transferred by the Company
to HPI in the Restructuring. In addition, New World Development and CTFEL have
agreed that, notwithstanding any transfer of their respective interests in HPI,
there will be no adjustment or reduction of their proportionate indemnity
obligations for a period of ten years from June 30, 1995. Pursuant to this
agreement, New World Development and CTFEL have agreed to cause HPI and its
subsidiaries owning or leasing hotels managed by the Company to remain solvent
for a period of ten years. The indemnity agreement remains in full force and
effect indefinitely.
The Company has entered into a Strategic Alliance Agreement with the New
World Group Members in respect of their ownership and operation of hotels
throughout the world. Pursuant to the Strategic Alliance Agreement, New World
Group Members have agreed to give the Company a right of first and last refusal
to manage any hotel controlled by them, to use reasonable best efforts to refer
to the Company all hotel management opportunities available to them with
<PAGE>
respect to any hotel not controlled by them and to use their reasonable best
efforts to cause such opportunities to be made available to the Company, and to
give the Company a right of first negotiation with respect to any hotel interest
that they wish to sell or lease. New World Group Members also have agreed not to
compete with the Company in, and engage in the business of, the management or
operation of hotels, including through rendering management services to hotels,
resorts or other lodging facilities, franchising hotel and lodging operations,
and acquiring or developing hotel brand names or chains. The Strategic Alliance
Agreement became effective on August 29, 1995 and will continue until the later
of August 29, 2015 or such time as New World Group Members shall beneficially
own less than 20% of the Company's shares of Common Stock. As of June 30, 1996,
New World Development has developed 14 hotels in Asia, including nine New World
hotels, one Renaissance hotel and two Ramada hotels which are managed by the
Company and two hotels which are currently managed by unaffiliated parties. The
two hotels managed by unaffiliated parties will not be subject to the Strategic
Alliance Agreement. New World Development is constructing four additional New
World hotels in Asia. New World Development is one of the largest property
developers in Asia where it has local knowledge and contacts and is one of the
largest foreign owners of land use rights in China.
The Company believes that its management contracts and other agreements
with New World Group Members are on terms no less favorable to the Company than
those that could have been obtained from unaffiliated parties. The existing
agreements between the Company and New World Group Members may not be amended
without the approval of a majority of the Independent Directors of the Company.
In addition, the Board of Managing Directors has adopted a conflicts of interest
policy requiring that any transaction or agreement with a related party
involving aggregate consideration of more than $1.0 million, any amendment or
waiver of the agreements entered into with New World Group Members in connection
with the Restructuring, any compensation for services rendered by a New World
Group Member, and any loans, guarantees or indemnities granted to New World
Group Members be approved by a majority of the Independent Directors. The
conflicts of interest policy may not be altered without the consent of a
majority of the Independent Directors, and may not be repealed, so long as New
World Group Members own less than 95% of the Company's outstanding voting
securities or any Notes remain outstanding. An "Independent Director" means a
person who (i) is not a New World Group Member or any person controlled by, in
control of or under common control with a New World Group Member and (ii) does
not have an employment or consulting relationship with any New World Group
Member or the Company (except as a Managing Director).
<PAGE>
Exhibit 3
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") dated as of February 17,
1997 is by and among Marriott International, Inc., a Delaware corporation
("PARENT"), and Diamant Hotel Investments N.V., a Netherlands Antilles
corporation ("SHAREHOLDER").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent
and Renaissance Hotel Group N.V., a Netherlands corporation (the "COMPANY"),
have entered into an Acquisition Agreement (as such Acquisition Agreement may
hereafter be amended from time to time, the "ACQUISITION AGREEMENT"), pursuant
to which Parent has agreed, among other things, to commence a cash tender offer
(as such tender offer may hereafter be amended from time to time, the "OFFER")
to purchase all shares of common stock of the Company (the "COMPANY COMMON
STOCK");
WHEREAS, as of the date hereof, Shareholder is the record and
beneficial owner of, and has the sole right to vote and dispose of, 16,368,000
shares of Company Common Stock;
WHEREAS, as an inducement and a condition to its entering into the
Acquisition Agreement and incurring the obligations set forth therein, including
the Offer, Parent has required that Shareholder enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Acquisition Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Acquisition
Agreement. In addition, for purposes of this Agreement:
"AFFILIATE" means, with respect to any specified Person, any Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to Shareholder, "AFFILIATE" shall not
include the Company and the Persons that directly, or indirectly through one or
more intermediaries, are controlled by the Company.
"BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities means having "BENEFICIAL OWNERSHIP" of such securities (as determined
pursuant to Rule
1
<PAGE>
13d-3 under the Exchange Act), including pursuant to any agreement, arrangement
or understanding, whether or not in writing.
"OWNED SHARES" means the shares of Company Common Stock owned by
Shareholder on the date hereof, together with any other shares of Company Common
Stock, or any other securities of the Company entitled, or which may be
entitled, to vote generally in the election of directors and any securities
convertible into or exercisable or exchangeable for such securities (whether or
not subject to contingencies with respect to any matter or proposal submitted
for the vote or consent of shareholders of the Company) now or hereafter
Beneficially Owned by Shareholder.
"PERSON" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"TRANSFER" means, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security
or the Beneficial Ownership thereof, the offer to make such a sale, transfer or
other disposition, and each option, agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing. As a verb,
"TRANSFER" shall have a correlative meaning.
2. Tender of Shares. Shareholder hereby agrees to tender (or to
----------------
cause the record owner thereof to tender), pursuant to and in accordance with
the terms of the Offer, all Owned Shares. Shareholder hereby acknowledges and
agrees that Parent's obligation to accept for payment and pay for shares of
Company Common Stock in the Offer, including any Owned Shares tendered by
Shareholder, is subject to the terms and conditions of the Offer. The parties
agree that Shareholder will, for all Owned Shares tendered by Shareholder in the
offer and accepted for payment and paid for by Parent, receive the same per
share consideration paid to other shareholders who have tendered into the Offer.
3. Voting of Owned Shares. Shareholder hereby agrees that during
----------------------
the period commencing on the date hereof and continuing until the earlier of
(x) the consummation of the Offer and (y) termination of the Option Period (as
hereinafter defined) (such period being referred to as the "VOTING PERIOD"), at
any meeting (whether annual or special, and whether or not an adjourned or
postponed meeting) of the Company's shareholders, however called, or in
connection with any written consent of the Company's shareholders, subject to
the absence of a preliminary or permanent injunction or other final order by any
United States federal, state or foreign court barring such action, Shareholder
shall vote (or cause to be voted) all Owned Shares: (i) in favor of the Offer,
the execution and delivery by the Company of the Acquisition Agreement and the
approval and acceptance of the Offer and the terms thereof and each of the other
actions contemplated by the Acquisition Agreement and this Agreement and any
actions required in furtherance thereof and hereof; (ii) against any action or
agreement that would (A) result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the
Acquisition
2
<PAGE>
Agreement or of Shareholder under this Agreement or (B) impede, interfere with,
delay, postpone, or adversely affect the Offer or the transactions contemplated
thereby or hereby; and (iii) except as otherwise agreed to in writing in advance
by Parent, against the following actions (other than the Offer and the
transactions contemplated by the Acquisition Agreement and this Agreement): (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or any of its subsidiaries
(including any Alternative Transaction); (B) any sale, lease or transfer of a
substantial portion of the assets or business of the Company or its
subsidiaries, or reorganization, restructuring, recapitalization, special
dividend, dissolution or liquidation of the Company or its subsidiaries; or (C)
any change in the present capitalization of the Company including any proposal
to sell any equity interest in the Company or any of its subsidiaries.
Shareholder shall not enter into any agreement, arrangement or understanding
with any Person the effect of which would be inconsistent or violative of the
provisions and agreements contained in this Section 3.
4. Restrictions on Transfer, Proxies; No Solicitation.
--------------------------------------------------
(a) Shareholder shall not, until the termination of the Option Period,
directly or indirectly: (i) except as provided in Sections 2 and 5
hereof, Transfer (including the Transfer of any securities of an Affiliate which
is the record holder of Owned Shares if, as the result of such Transfer, such
Person would cease to be an Affiliate of Shareholder) to any Person any or all
Owned Shares; (ii) grant any proxies or powers of attorney, deposit any Owned
Shares into a voting trust or enter into a voting agreement, understanding or
arrangement with respect to such Owned Shares; or (iii) take any action that
would make any representation or warranty of Shareholder contained herein untrue
or incorrect or would result in a breach by Shareholder of its obligations under
this Agreement or a breach by the Company of its obligations under the
Acquisition Agreement.
(b) Until the termination of the Option Period, Shareholder shall
not, and shall cause its Representatives not to, directly or indirectly,
(i) initiate, solicit or encourage, or take any action to facilitate the making
of, any offer or proposal which constitutes or is reasonably likely to lead to
any Alternative Transaction or any inquiry with respect thereto, or (ii) in the
event of an unsolicited Alternative Transaction Proposal, engage in negotiations
or discussions with, or provide any information or data to, any Person (other
than Parent, any of its Affiliates or representatives) relating to any
Alternative Transaction. Shareholder agrees to notify Parent orally and in
writing of any such offers, proposals, inquires relating to the purchase or
acquisition by any Person of any Owned Shares (including without limitation the
terms and conditions thereof and the identity of the Person making it), within
24 hours of the receipt thereof. Shareholder shall, and shall cause its
Representatives to, immediately cease and cause to be terminated all existing
activities, discussions and negotiations, if any, with any parties conducted
heretofore with respect to any Alternative Transaction relating to the Company,
other than discussions or negotiations with Parent and its Affiliates.
(c) During the Voting Period, Shareholder will not, directly or
indirectly, make any public comment, statement or communication, or take any
action
3
<PAGE>
that would otherwise require any public disclosure by Shareholder, Parent or any
other Person, concerning the Offer and the other transactions contemplated by
the Acquisition Agreement and this Agreement except for any disclosure
(i) concerning the status of Shareholder as a party to such agreements, the
terms thereof, and its beneficial ownership of Shares required pursuant to
Section 13(d) of the Exchange Act or (ii) required in the Schedule 14D-9 or
otherwise by applicable law.
5. The Option.
----------
(a) Grant of Option. Shareholder hereby grants to Parent an exclusive
----------------
and irrevocable option (the "OPTION") to purchase, during the period and subject
to the conditions set forth in this Section 5, all Owned Shares at the exercise
price specified in Section 5(b) hereof.
(b) Exercise Price. The exercise price for each Owned Share (the "PER
--------------
SHARE EXERCISE PRICE") with respect to which the Option is exercised shall be
$30.00.
(c) Exercise of Option. The Option may be exercised by Parent or any
------------------
holder of the Option at any time during the period (the "OPTION PERIOD"), from
and after the occurrence of a Trigger Event (as defined below) and prior to the
six-month anniversary of such Trigger Event by sending a written notice (a
"NOTICE OF EXERCISE") to Shareholder at the address specified for notice
pursuant to Section 12(f), specifying (i) the location (which shall be in
Washington, D.C.), date and time for the closing (the "CLOSING") of such
purchase (which date shall be no later than 60 business days and no earlier than
two business days after the date such notice is given, and in no event earlier
than the date on or by which the condition specified in Section 5(e)(i) has been
satisfied or waived) and (ii) the Per Share Exercise Price. Parent shall have
the right to revoke or cancel a Notice of Exercise or to postpone the Closing at
any time prior to such Closing, and no such revocation, cancellation or
postponement shall cause the Option to terminate or become unenforceable, and
Parent's rights under this Agreement shall remain in full force and effect.
"TRIGGER EVENT" means any termination of the Acquisition Agreement (x) under
Section 7.1(c) or (d) of the Acquisition Agreement, or (y) so long as Parent
shall not have materially breached the Acquisition Agreement or this Agreement,
under Section 7.1(b)(i)(y) of the Acquisition Agreement if at the expiration or
termination of the Offer there is pending or outstanding an Alternative
Transaction Proposal.
(d) Closing. At the Closing, Parent shall deliver to Shareholder
-------
(x) the Per Share Exercise Price multiplied by (y) the number of Owned Shares,
and Shareholder shall deliver to Parent certificates representing all Owned
Shares free and clear of all liens, claims, charges, encumbrances, rights or
interests of any kind or nature whatsoever, duly endorsed for transfer or
accompanied by stock powers duly executed in blank, and any other documents
necessary to effectuate and evidence the transfer.
4
<PAGE>
(e) Conditions to Closing. The obligations of Parent to proceed with
---------------------
any Closing shall be subject to the satisfaction or waiver by Parent of the
following conditions prior to such Closing:
(i) any waiting period(s) under any applicable laws shall have
expired or been terminated and any required governmental approvals shall
have been obtained; and
(ii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or governmental authority, subsequent
to the date of this Agreement, which prohibits or restricts any of the
transactions contemplated by this Agreement or the Acquisition Agreement.
6. [Intentionally Omitted]
7. Non-Solicitation. For a period of one year from the date hereof,
----------------
neither Shareholder nor any of its Representatives or Affiliates shall solicit
for hire any employees of Parent, or any of its subsidiaries with whom
Shareholder or its Representatives have had contact in connection with this
Agreement and the Acquisition Agreement or any employees of the Company or its
subsidiaries.
8. Representations and Warranties of Shareholder. Shareholder hereby
---------------------------------------------
represents, warrants and covenants to Parent as follows:
(a) Shareholder is a corporation duly organized and validly existing
under the laws of the Netherlands Antilles. Shareholder has all necessary power
and authority to execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery by Shareholder of this Agreement and the
performance by Shareholder of its obligations hereunder have been duly and
validly authorized by all requisite corporate action on the part of Shareholder,
and no other proceedings or actions on the part of Shareholder are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered by
Shareholder and constitutes the valid and binding agreement of Shareholder,
enforceable against Shareholder in accordance with its terms except (i) to the
extent limited by applicable bankruptcy, insolvency or similar laws affecting
creditors rights and (ii) the remedy of specified performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(c) Shareholder is the sole record holder and Beneficial Owner of
16,368,000 shares of Company Common Stock, and has good and marketable title to
all
5
<PAGE>
of such shares, free and clear of all liens, claims, options, proxies, voting
agreements, security interests, charges and encumbrances. The Owned Shares
constitute all of the capital stock of the Company Beneficially Owned by
Shareholder, and except for the Owned Shares Shareholder does not Beneficially
Own or have any right to acquire (whether currently, upon lapse of time,
following the satisfaction of any conditions, upon the occurrence of any event
or any combination of the foregoing) any shares of Company Common Stock or any
securities convertible into Company Common Stock. Except as provided in Section
2(b) hereof and in this Section 8(c), Shareholder has sole power to vote and to
dispose of the Owned Shares, and sole power to issue instructions with respect
to the Owned Shares to the extent appropriate in respect of the matters set
forth in this Agreement, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case which
respect to all of the Owned Shares, with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the terms
of this Agreement.
(d) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and the Exchange
Act, (i) no filing will, and no permit, authorization, consent or approval of,
any state or federal governmental body or authority is necessary for the
execution of this Agreement by Shareholder and the consummation by Shareholder
of the transactions contemplated hereby and (ii) none of the execution and
delivery of this Agreement by Shareholder, the consummation by Shareholder of
the transactions contemplated hereby or compliance by Shareholder with any of
the provisions hereof shall (A) conflict with or result in any breach of the
certificate or incorporation or by-laws or other organizational documents of
Shareholder, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
Shareholder is a party or by which Shareholder or any of its properties or
assets (including the Owned Shares) may be bound, or (C) violate any order,
writ, injunction, decree, judgment, statute, rule or regulation applicable to
Shareholder or any of its properties or assets.
(e) Shareholder understands and acknowledges that Parent is entering
into the Acquisition Agreement, and is incurring the obligations set forth
therein, in reliance upon Shareholder's execution and delivery of this
Agreement.
(f) Shareholder agrees with and covenants to Parent that Shareholder
shall not request that the Company or Parent, as the case may be, register the
Transfer (book-entry or otherwise) of any certificated or uncertificated
interest representing any of the securities of the Company or of Parent, as the
case may be, unless such Transfer is made in compliance with this Agreement.
6
<PAGE>
9. Representations and Warranties of Parent. Parent hereby
----------------------------------------
represents, warrants and covenants to Shareholder as follows:
(a) Parent is a corporation duly organized and validly existing under
the laws of its jurisdiction of incorporation and is in good standing under the
laws of its jurisdiction of incorporation. Parent has all necessary corporate
power and authority to execute and deliver this Agreement and perform its
respective obligations hereunder. The execution and delivery by Parent of this
Agreement and the performance by Parent of its obligation hereunder have been
duly and validly authorized by the Board of Directors of Parent and no other
corporate proceedings on the part of Parent are necessary to authorize the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered by
Parent and constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms except (i) to the extent limited by
applicable bankruptcy, insolvency or similar laws affecting creditors rights and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by Parent, the consummation by Parent of the transactions
contemplated hereby or compliance by Parent with any of the provisions hereof
shall (A) conflict with or result in any breach of the certificate of
incorporation or by-laws of Parent, or (B) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Parent is a party or by which Parent or any of
its properties or assets may be bound, or violate any order, writ, injunction,
decree, judgment, statute, rule or regulation applicable to Parent or any of its
properties or assets.
10. Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
7
<PAGE>
11. Termination. All representations, warranties and agreements
-----------
contained in this Agreement shall terminate on the third anniversary of the date
hereof unless any such representation, warranty or agreement explicitly
terminates earlier in accordance with the terms of this Agreement.
12. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Shareholder agrees that this Agreement and the respective rights
and obligations of Shareholder hereunder shall attach to any shares of Company
Common Stock, and any securities convertible into such shares, that may become
Beneficially Owned by Shareholder.
(c) Except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, and
Parent, on the one hand, and Shareholder, on the other hand, shall indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any brokerage fees, commissions or finders' fees
asserted by any person on the basis of any act or statement alleged to have been
made by such party or its Affiliates.
(d) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either party (whether by operation
of Law or otherwise) without the prior written consent of the other party;
provided, that Parent may assign its rights and obligations hereunder to any
- --------
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder. It is understood that Parent expects to delegate its
rights and obligations hereunder and under the Acquisition Agreement to a
wholly-owned Netherlands subsidiary. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
8
<PAGE>
(f) All notices and other communications hereunder shall be in writing
and shall be deemed given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight carrier
or when delivered by hand or (c) the expiration of five business days after the
day when mailed by certified or registered mail, postage prepaid, addressed at
the following addresses (or at such other address for a party as shall be
specified by like notice):
If to Shareholder:
c/o ABN Amro Trust Company
Pietermaai nr.15
Curacao, Netherlands Antilles
copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: Stephan H. Haimo, Esq.
If to Parent:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20857
Attn: General Counsel, Dept. 52/923
copy to:
O'Melveny & Myers LLP
555 13th Street, Suite 500 W
Washington, D.C. 20004
Attn: Jeffrey J. Rosen, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without affecting the
validity or enforceability of the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9
<PAGE>
(h) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (a) will waive, in
any action for specific performance, the defense of adequacy of a remedy at law
and (b) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in New York.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to its rules of conflict
of laws. Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States of America located in the State of New York
(the "New York Courts") for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in the New York Courts), waives any
objection to the laying of venue of any such litigation in the New York Courts
and agrees not to plead or claim in any New York Court that such litigation
brought therein has been brought in an inconvenient forum.
(k) The descriptive headings used herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. "Include," "includes," and "including" shall
be deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import.
(l) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument.
10
<PAGE>
IN WITNESS WHEREOF, Parent and Shareholder have caused this Agreement
to be duly executed as of the day and year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Arne Sorenson
------------------------------------
Name: Arne Sorenson
Title: Senior Vice President
DIAMANT HOTEL INVESTMENTS N.V.
By: /s/ Robert W. Oleson
-----------------------------------
Name: Robert W. Oleson
Title: Managing Director
New World Hotel (Holdings) Limited, a Hong Kong corporation,
represents that it is the Beneficial Owner of all of the outstanding capital
stock of Shareholder and hereby unconditionally guarantees the performance by
Shareholder of all of its obligations under the foregoing Shareholder Agreement.
NEW WORLD HOTEL (HOLDINGS) LIMITED
By: /s/ Henry Cheng Kar-Shun
------------------------------------
Name: Henry Cheng Kar-Shun
Title: Managing Director
S-1
<PAGE>
Exhibit 4
RENAISSANCE HOTEL GROUP N.V.
29800 Bainbridge Road
Solon, Ohio 44139
Marriott International, Inc.
Marriott Drive
Washington, DC 20058
January 10, 1997
CONFIDENTIALITY AGREEMENT
-------------------------
Ladies and Gentlemen:
In connection with your possible interest in various business combination,
restructuring, sale or other transactions (an "Acquisition Transaction")
involving Renaissance Hotel Group N.V. (the "Company"), you have requested that
we or our representatives furnish you or your representatives with certain
information relating to the Company. All such information (whether written or
oral) furnished (whether before or after the date hereof) by us or our
directors, officers, employees, affiliates, representatives (including, without
limitation, financial advisors, attorneys and accountants) or agents
(collectively, "our Representatives") to you or your directors, officers,
employees, affiliates, representatives (including, without limitation, financial
advisors, attorneys and accountants) or agents or your potential sources of
financing for the Transaction (collectively, "your Representatives") and all
analyses, compilations, forecasts, studies or other documents prepared by you or
your Representatives in connection with your or their review of, or your
interest in, the Company or an Acquisition Transaction which contain or reflect
any such information is hereinafter referred to as the "Information." The term
Information will not, however, include information which (i) is or becomes
publicly available other than as a result of a disclosure by you or your
Representatives or (ii) is or becomes available to you on a nonconfidential
basis from a source (other than us or our Representatives) which, to the best of
your knowledge after due inquiry, is not prohibited from disclosing such
information to you by a legal, contractual or fiduciary obligation to us.
Accordingly, you hereby agree that:
1. You and your Representatives (i) will keep the Information confidential and
will not (except as required by applicable law, regulation or legal
process, and only after compliance with paragraph 3 below), without our
prior written consent, disclose any Information in any manner whatsoever,
and (ii) will not use any Information other than solely for the purpose of
evaluating a possible negotiated Acquisition Transaction; provided,
--------
however, that you may reveal the Information to your Representatives (a)
-------
who need to know the Information for the purpose of evaluating a possible
Acquisition
<PAGE>
Transaction, (b) who are informed by you of the confidential nature of the
Information and (c) who agree to act in accordance with the terms of this
letter agreement. You will cause your Representatives to observe the terms
of this letter agreement, and you will be responsible for any breach of
this letter agreement by any of your Representatives.
2. You and your Representatives will not (except as required by applicable
law, regulation or legal process, and only after compliance with paragraph
3 below), without our prior written consent, disclose to any person the
fact that the Information exists or has been made available, that you are
considering an Acquisition Transaction or any other transaction involving
the Company, or that discussions or negotiations are taking or have taken
place concerning an Acquisition Transaction or involving the Company or any
term, condition or other fact relating to an Acquisition Transaction or
such discussions or negotiations, including, without limitation, the status
thereof. The term "person" will be interpreted broadly to include, without
limitation, any individual, corporation, estate, partnership, joint
venture, limited liability company, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or other
entity.
3. In the event that you or any of your Representatives are requested pursuant
to, or required by, applicable law, regulation or legal process to disclose
any of the Information, you will notify us promptly so that we may seek a
protective order or other appropriate remedy or, in our sole discretion,
waive compliance with the terms of this letter agreement. In the event
that no such protective order or other remedy is obtained, or that the
Company waives compliance with the terms of this letter agreement, you will
furnish only that portion of the Information which you are advised by
counsel is legally required and will exercise all reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded the
Information.
4. If you determine not to proceed with an Acquisition Transaction within a
reasonable time, you will promptly inform our Representative, Morgan
Stanley & Co. Incorporated ("Morgan Stanley"), of that decision and, in
that case, and at any time upon the request of the Company or any of our
Representatives, you will either (i) promptly destroy all copies of the
written Information in your or your Representatives' possession and confirm
such destruction to us in writing, or (ii) promptly deliver to the Company
at your own expense all copies of the written Information in your or your
Representatives' possession. Any oral Information will continue to be
subject to the terms of this letter agreement.
5. You acknowledge that neither we, nor Morgan Stanley or its affiliates, nor
our other Representatives, nor any of our or their respective officers,
directors, employees, agents or controlling persons within the meaning of
Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), makes any express or implied representation or warranty as
to the accuracy or completeness of the Information, and you agree that no
such person will have any liability relating to the Information or for any
errors therein or omissions therefrom. You further agree that you are not
entitled to rely on the accuracy or completeness of the Information and
that you will be entitled to rely solely on such
-2-
<PAGE>
representations and warranties as may be included in any definitive
agreement with respect to an Acquisition Transaction, subject to such
limitations and restrictions as may be contained therein.
6. You are aware, and you will advise your Representatives who are informed of
the matters that are the subject of this letter agreement, of the
restrictions imposed by the United States securities laws on the purchase
or sale of securities by any person who has received material, non-public
information from the issuer of such securities and on the communication of
such information to any other person when it is reasonably foreseeable that
such other person is likely to purchase or sell such securities in reliance
upon such information.
7. You agree that, for a period of 18 months from the date of this letter
agreement, neither you nor any of your affiliates will, without the prior
written consent of the Company or its Board of Directors: (i) in any
manner, acquire, attempt to acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights to acquire any voting securities of the Company
or any subsidiary thereof, or any assets of the Company or any subsidiary
or division thereof (provided, however, that nothing in this clause shall
be interpreted to prevent you from competing with us in the hotel
management business); (ii) make or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) to vote, or seek to
advise or influence any person or entity with respect to the voting of, any
voting securities of the Company; (iii) make any public announcement with
respect to, or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving the Company or its
securities or assets; (iv) form, join or in any way participate in a
"group" (as defined in Section 13(d)(3) of the Exchange Act) in connection
with any of the foregoing; (v) advise, assist or encourage any other person
in connection with any of the foregoing; or (vi) take any action which
might require the Company to make a public announcement regarding the
possibility of a business combination or merger or other Acquisition
Transaction. You also agree during such period not to request the Company
or any of our Representatives, directly or indirectly, to amend or waive
any provision of this paragraph (including this sentence). You will
promptly advise the Company of any inquiry or proposal made to you with
respect to any of the foregoing.
8. You agree that, for a period of two years from the date of this letter
agreement, you will not, directly or indirectly, solicit for employment or
hire any "Senior Level" employee of the Company or any of its subsidiaries
with whom you have had contact or who became known to you in connection
with your consideration of an Acquisition Transaction; provided, however,
-------- -------
that the foregoing provision will not prevent you from employing any such
person with whom you have had contact prior to the date hereof or who
contacts you on his or her own initiative without any direct or indirect
solicitation by or encouragement from you. "Senior Level" means any
corporate employee with the title of Vice President or above.
-3-
<PAGE>
9. You agree that all (i) communications regarding an Acquisition Transaction,
(ii) requests for additional information, facility tours or management
meetings, and (iii) discussions or questions regarding procedures with
respect to an Acquisition Transaction, will be first submitted or directed
to Morgan Stanley and not to the Company. You also understand and agree
that no contract or agreement providing for any Acquisition Transaction
involving the Company shall be deemed to exist between you and the Company
and/or stockholders of the Company unless and until a Definitive Agreement
has been executed and delivered, and you also agree that unless and until a
Definitive Agreement between the Company and/or its stockholders and you
with respect to any Acquisition Transaction involving the Company has been
executed and delivered, neither the Company nor its stockholders has any
legal obligation of any kind whatsoever with respect to any such
transaction by virtue of this agreement or any other written or oral
expression with respect to such transaction except, in the case of this
agreement, for the matters specifically agreed to herein. For purposes of
this paragraph, the term "Definitive Agreement" does not include an
executed letter of intent or any other preliminary written agreement, nor
does it include any written or verbal agreement in principal or acceptance
of an offer or bid on your part. You further acknowledge and agree that
(a) we and our Representatives are free to conduct the process leading up
to any Acquisition Transaction as we and our Representatives, in our sole
discretion, determine (including, without limitation, by negotiating with
any prospective buyer and entering into a preliminary agreement or
Definitive Agreement without prior notice to you or any other person), (b)
we reserve the right, in our sole discretion, to change the procedures
relating to our consideration of an Acquisition Transaction at any time
without prior notice to you or any other person, to reject any and all
proposals made by you or any of your Representatives with regard to an
Acquisition Transaction, and to terminate discussions and negotiations with
you at any time and for any reason, and (c) unless and until a written
Definitive Agreement with you concerning an Acquisition Transaction has
been executed, neither we nor any of our Representatives will have any
liability to you with respect to any Acquisition Transaction, whether by
virtue of this letter agreement, any other written or oral expression with
respect to an Acquisition Transaction or otherwise.
10. You acknowledge that remedies at law may be inadequate to protect us
against any actual or threatened breach of this letter agreement by you or
by your Representatives, and, without prejudice to any other rights and
remedies otherwise available to us, you agree to the granting of injunctive
relief in our favor without proof of actual damages. In the event of
litigation relating to this letter agreement, if a court of competent
jurisdiction determines that this letter agreement has been breached by you
or by your Representatives, then you will reimburse the Company for its
costs and expenses (including, without limitation, legal fees and expenses)
incurred in connection with all such litigation.
-4-
<PAGE>
11. You agree that no failure or delay by us in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any right, power or privilege hereunder.
12. This letter agreement is for the benefit of the Company, Morgan Stanley and
their respective directors, officers, stockholders, owners, affiliates and
agents and will be governed by, and construed in accordance with, the laws
of the State of New York, without giving effect to principles of conflicts
of laws.
13. This letter agreement contains the entire agreement between you and us
concerning the confidentiality of the Information, and no modifications of
this letter agreement or waiver of the terms and conditions hereof will be
binding upon you or us, unless approved in writing by each of you and us.
Please confirm your agreement with the foregoing by signing and returning to the
undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
RENAISSANCE GROUP HOTEL N.V.
By: /s/ Robert W. Olesen
------------------------
Name: Robert W. Olesen
Title: Executive Vice President
Accepted and Agreed as of the date
set forth below:
MARRIOTT INTERNATIONAL, INC
- ---------------------------------------------------------
By: /s/ Arne M. Sorenson
------------------------------------------------------
Name: Arne M. Sorenson
-------------------------------------------------
Title Senior Vice President, Business Development
-------------------------------------------------
Date: January 10, 1997
-------------------------------------------------
-5-
<PAGE>
Exhibit 5
THIS AGREEMENT (the "Agreement") made as of January 10, 1997 between
RENAISSANCE HOTEL OPERATING COMPANY (the "Employer") and ___________ (the
"Employee").
W I T N E S S E T H
-------------------
WHEREAS, the Employee has had a long and valued association with the
Employer; and
WHEREAS, the Employee's expertise and service to the Employer have been
of an extraordinary character and of particular importance to the Employer; and
WHEREAS, the Employer wishes to retain the Employee's services and allow
him to devote his undivided attention to the affairs of the Employer by
providing a benefit to the Employee in the event of a "Change of Control" of the
Employer's parent company;
NOW, THEREFORE, for the reasons set forth above, and in consideration of
the mutual covenants and promises of the parties hereto, the Employer and the
Employee agree as follows:
1. Definitions. The following words and phrases as used herein shall
-----------
have the following meanings, unless a different meaning is required by the
context:
"Cause" shall mean any act or any failure to act on the part of the
Employee which constitutes a felony for which the Employee is convicted
or pleads nolo contendere.
---- ----------
"Change of Control" shall mean the first to occur of the following
events:
(a) the sale or other divestiture of all or substantially all of the
assets of the Company or the Employer;
(b) the acquisition by any person or affiliated group of persons of
more than 50% of the outstanding common stock of the Company or
of the Employer; or
(c) a change in the composition of the Board such that a majority of
the Board is not comprised of persons affiliated with or employed
by New World Group Members (as such term is defined in the
Company's prospectus with respect to its September 1995 initial
public offering).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
"Company" shall mean Renaissance Hotel Group N.V., the parent company of
the Employer.
"Good Reason" shall mean the occurrence of any of the following with
respect to the Employee or his status, position, responsibilities or
compensation existing immediately prior to a Change of Control, unless
the Employee has consented thereto in writing: (i) any limitation of the
Employee's responsibilities or duties, or any demotion in the Employee's
position, (ii) any removal of the Employee from, or failure to re-elect
the Employee to, any of the positions with the Employer or the Company
held by the Employee, (iii) any reduction in the Employee's annual base
salary or fringe benefit coverages, (iv) any detrimental change in the
Employee's bonus entitlement or in the formula or method of calculation
of such bonus, (v) any change in the Employee's travel obligations, or
(vi) any change in the Employee's principal work location or the location
of the Employee's primary work group by more than 35 miles from such
Employee's or work group's current location.
"Involuntary Termination" shall mean a termination by the Employer of the
Employee's employment for any reason other than Cause or the resignation
by the Employee from his employment with the Employer for Good Reason.
"Severance Amount" shall mean the amount determined pursuant to
Section 2.
2. Amount of Severance Benefit. The Severance Amount to which the
---------------------------
Employee shall be entitled under this Agreement shall be equal to U.S.
$_________.
3. Entitlement; Payment in Lump Sum. In the event the Employee's
--------------------------------
employment with the Employer terminates within two years after a Change of
Control due to an Involuntary Termination, the Severance Amount shall be paid in
a lump sum by the Employer immediately upon or following the Employee's
Involuntary Termination.
4. Excess Parachute Tax Gross-Up. To provide the Employee with adequate
-----------------------------
protection in connection with the Employee's ongoing employment with the
Employer, the Employer provides the Employee with various benefits pursuant to
this Agreement and otherwise. On or following a "Change in Control," within the
meaning of Section 280G of the Code, it is possible that a portion of those
benefits might be characterized as "excess parachute payments," within the
meaning of Section 280G of the Code. The Employer acknowledges that the
protections set forth in this Section 4 are important, and it is agreed that the
Employee should not have to bear the burden of any excise tax that might be
levied under Section 4999 of the Code in the event that a portion of the
benefits payable to the Employee pursuant to this Agreement or otherwise are
treated as excess parachute payments. The Employer and the Employee therefore
agree as follows:
2
<PAGE>
(a) Notwithstanding any other provision of this Agreement to the
contrary, if it shall be determined that any payment or
benefit provided by the Employer and any other person to or
for the benefit of the Employee (whether paid or payable or
provided or providable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 4) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code, or any interest or penalties are
incurred by the Employee with respect to such excise tax
(such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the
"Excise Tax"), then the Employer shall pay to or on behalf
of the Employee an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Employee of all
taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any
income taxes (and any interest or penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) All determinations required to be made under this Section 4,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by an independent public accounting firm with a
national reputation in the United States that is selected by
the Employer (the "Accounting Firm") which shall provide
detailed support and calculations both to the Employee and
to the Employer within fifteen (15) business days after the
receipt of notice from the Employer that there has been a
Payment. The amount of any Gross-Up Payment shall be paid
in a lump sum within seven days following such determination
by the Accounting Firm. In the event that the Accounting
Firm's determination is not finally accepted by the Internal
Revenue Service upon any audit, then an appropriate
adjustment, including penalties and interest, if any, shall
be computed (with an additional Gross-Up Payment, if
applicable) by the Accounting Firm based upon the final
amount of the Excise Tax so determined. Such adjustment
shall be paid by the appropriate party in a lump sum within
seven days following the computation of such adjustment by
the Accounting Firm. All fees and expenses of the
Accounting Firm shall be borne solely by the Employer.
3
<PAGE>
5. Withholding. Payments under this Agreement are subject to such
-----------
federal, state and local income tax withholding and all other federal, state and
local taxes as are applicable. The Employer shall withhold from any payments it
makes all applicable federal, state and local withholding taxes.
6. ERISA. To the extent that this Agreement is considered to be a plan
-----
for purposes of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), it shall be considered an unfunded plan maintained primarily for the
purpose of providing benefits for a select group of management or highly
compensated employees, within the meaning of U.S. Department of Labor
Regulations Section 2520.104-24.
7. Non-Property Interest. All benefits payable under this Agreement shall
---------------------
be paid out of the general assets of the Employer. The Employee shall have
solely the status of a general unsecured creditor of the Employer and this
Agreement constitutes a mere promise by the Employer to make benefit payments in
the future. Nothing herein contained shall be construed to give to or vest in
the Employee or any other person now or at any time in the future, any right,
title, interest or claim in or to any specific asset, fund, reserve, account,
insurance or annuity policy or contract or other property of any kind whatsoever
owned by the Employer or the Company, or in which the Employer or the Company
may have any right, title or interest now or at any time in the future. It is
the intention of the Employer and the Employee that this Agreement be unfunded
for tax purposes and for purposes of Title I of ERISA.
8. Other Rights. This Agreement shall not affect or impair the rights or
------------
obligations of the Employee, the Employer or the Company under any other
written agreement, contract, arrangement, or pension, profit sharing or other
compensation agreement; provided, however, that, from and after a Change of
Control and so long as this Agreement is in effect, the Employee shall not be
entitled to any severance benefits under any other agreement or policy of the
Employer or the Company or any other agreement between the Employee and the
Employer or the Company, including any salary continuation or other post-
termination benefits under an employment agreement between the Employee and the
Employer or the Company. Notwithstanding any other provision of this Agreement,
the Employer may require the Employee to execute an appropriate release with
respect to any such employment agreement as a condition to the receipt of the
Severance Amount under this Agreement.
9. Modification of Agreement. No waiver or modification of this Agreement
-------------------------
or of any covenant, condition or limitation herein contained shall be valid
unless in writing and duly executed by the Employer and the Employee.
10. Severability. If any term or condition of this Agreement shall be
------------
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, with the exception of such invalid or unenforceable
provision, shall not be affected thereby and shall continue in effect and
application to its fullest extent.
4
<PAGE>
11. No Employment Rights. Neither this Agreement nor any provisions of
--------------------
this Agreement shall be held or construed to confer upon any employee the right
to a continuation of employment by the Employer. Subject to any applicable
employment agreement, the Employer reserves the right to dismiss the Employee,
or otherwise deal with the Employee to the same extent as though this Agreement
had not been entered into.
12. Incapacity. If the Employer determines that the Employee is unable
----------
to care for his affairs because of illness or accident, any benefit due the
Employee may be paid to the Employee's spouse or to any other person deemed by
the Employer to have incurred expense for the Employee (including a duly
appointed guardian, committee or other legal representative), and any such
payment shall be a complete discharge of the Employer's obligation hereunder.
13. Transferability of Rights. The Employer shall have the unrestricted
-------------------------
right to transfer its obligations under this Agreement to any person, including,
but not limited to, any purchaser of all or any part of the Employer's or the
Company's business. The Employee's rights to benefit payments under this
Agreement are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Employee. This Agreement shall inure to the benefit of and be
binding upon the Employee, his heirs, executors and administrators, and the
Employer, its successors and assigns.
14. Notices. All notices, requests, consents and other communications
-------
which either party is required or may desire to serve upon the other shall be in
writing and shall be personally delivered, or mailed in the United States mail,
enclosed in a registered or certified postpaid envelope, addressed to the other
party at the address set forth below its signature hereto or to such changed
address as such party may have fixed by notice. Any notice shall be deemed
given when received.
15. Governing Law. This Agreement shall be construed, administered, and
-------------
enforced according to the laws of the State of New York, except to the extent
that such laws are preempted by the federal laws of the United States of
America.
16. Arbitration of All Disputes. Any controversy or claim arising out of
---------------------------
or relating to this Agreement shall be settled exclusively by arbitration in the
City of Cleveland, Ohio. The arbitration shall be conducted in accordance with
the then existing rules of the American Arbitration Association. The
arbitrators shall not have the power to add to or delete from or otherwise
amend the provisions of this Agreement. The decision rendered by the arbitrators
shall be final and binding upon all parties. The costs and expenses of the
arbitration shall be borne by
5
<PAGE>
each respective party; provided, however, that the arbitrators shall award costs
and expenses to the Employee if the Employee is the prevailing party. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
RENAISSANCE HOTEL OPERATING COMPANY
By:
--------------------------------------------------
Address: 29800 Bainbridge Road
Cleveland, OH 44139-2297
-----------------------------------------------------
Address:
6
<PAGE>
Exhibit 6
Renaissance Hotel Group N.V.
Key Employee Severance Plan
ARTICLE 1
PURPOSE AND DEFINITIONS
-----------------------
1.1 Purpose. The purpose of this Renaissance Hotel Group N.V. Key Employee
-------
Severance Plan ("Plan") is to protect a select group of key employees
against an involuntary loss of employment under certain circumstances
following a change in control of Renaissance Hotel Group N.V. To the
extent that the Plan is considered to be a plan for purposes of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), it
shall be considered an unfunded plan maintained primarily for the purpose
of providing benefits for a select group of management or highly
compensated employees, within the meaning of U.S. Department of Labor
Regulations Section 2520.104-24.
1.2 Definitions. The following words and phrases as used herein shall have the
-----------
following meanings, unless a different meaning is required by the context:
"Annual Compensation" shall mean, with respect to a Participant, the
Participant's gross annual base salary at the rate in effect on the date of
a Change of Control (as defined herein).
"Board of Directors" or "Board" shall mean the Board of Managing Directors
of the Company as constituted at any time.
"Cause" shall mean any act or any failure to act on the part of a
Participant which constitutes a felony for which the Participant is
convicted or pleads nolo contendere.
---- ----------
"Change of Control" shall mean the first to occur of the following events:
(a) the sale or other divestiture of all or substantially all of the
assets of the Company or the Subsidiary;
(b) the acquisition by any person or affiliated group of persons of
more than 50% of the outstanding common stock of the Company or
of the Subsidiary; or
(c) a change in the composition of the Board such that a majority of
the Board is not comprised of persons affiliated with or employed
by New World
<PAGE>
Group Members (as such term is defined in the such term is
defined in the Company's prospectus with respect to its September
1995 initial public offering).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board.
"Company" shall mean Renaissance Hotel Group N.V., and any successors
thereto by merger, consolidation, liquidation or other reorganization.
"Good Reason" shall mean the occurrence of any of the following with
respect to a Participant or his or her status, position, responsibilities
or compensation existing immediately prior to a Change of Control, unless
the Participant has consented thereto in writing: (i) any limitation of the
Participant's responsibilities or duties, or any demotion in the
Participant's position, (ii) any removal of the Participant from, or
failure to re-elect the Participant to, any of the positions with the
Company or the Subsidiary held by the Participant, (iii) any reduction in
the Participant's annual base salary or fringe benefit coverages, (iv) any
detrimental change in the Participant's bonus entitlement or in the formula
or method of calculation of such bonus, (v) any increase in the
Participant's travel obligations, or (vi) any change in the Participant's
principal work location or the location of the Participant's primary work
group by more than 35 miles from such Participant's or primary work group's
current location.
"Involuntary Termination" shall mean a termination by the Company or the
Subsidiary of a Participant"s employment for any reason other than Cause or
the resignation by a Participant from his or her employment with the
Company or the Subsidiary for Good Reason.
"Participant" shall mean any employee who is entitled to participate in the
Plan in accordance with Section 2.2.
"Severance Amount" shall mean the amount determined pursuant to Section
3.1.
"Subsidiary" shall mean Renaissance Hotel Operating Company, a subsidiary
of the Company.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
-----------------------------
2.1 Eligibility. Each employee of the Company or the Subsidiary whose title
-----------
is listed on
2
<PAGE>
Schedule A hereto and any other employee of the Company or the
Subsidiary who has been approved by the Compensation Committee for
participation in the Plan shall be eligible to become a Participant
pursuant to Section 2.2.
2.2 Participation. The Company shall, as soon as practicable after the
-------------
effective date of the Plan, prepare and send a separate letter of
participation ("Participation Letter") to each such employee who is
eligible to participate in the Plan. The Participation Letter shall set
forth the formula for the Severance Amount applicable to the Participant,
shall set forth the prohibition on duplicative severance benefits as set
forth in Section 6.2, and shall incorporate by reference the terms and
conditions of the Plan. An employee shall not become a Participant unless
and until he or she signs and agrees to his or her Participation Letter and
the terms and conditions of the Plan.
ARTICLE 3
BENEFITS
--------
3.1 Amount of Severance Benefit. The Severance Amount to which a Participant
---------------------------
shall be entitled under the Plan shall be equal to the Participant's
Annual Compensation multiplied by two and four-tenths (2.4).
3.2 Entitlement; Payment in Lump Sum. In the event a Participant's employment
--------------------------------
with the Company or the Subsidiary terminates within two years after a
Change of Control due to an Involuntary Termination, the Severance Amount
shall be paid in a lump sum by the Company or Subsidiary immediately upon
or following the Participant*s Involuntary Termination.
3.3 Excess Parachute Tax Gross-Up. To provide the Participant with adequate
-----------------------------
protection in connection with the Participant's ongoing employment with the
Company, the Company provides the Participant with various benefits
pursuant to this Plan and otherwise. On or following a "Change in
Control," within the meaning of Section 280G of the Code, it is possible
that a portion of those benefits might be characterized as "excess
parachute payments," within the meaning of Section 280G of the Code. The
Company acknowledges that the protections set forth in this Section 3.3 are
important, and it is agreed that the Participant should not have to bear
the burden of any excise tax that might be levied under Section 4999 of the
Code in the event that a portion of the benefits payable to the Participant
pursuant to this Plan or otherwise are treated as excess parachute
payments. The following shall therefore apply:
(a) Notwithstanding any other provision of this Plan to the contrary,
if it shall be determined that any payment or benefit provided by
the Company or
3
<PAGE>
the Subsidiary and any other person to or for the benefit of the
Participant (whether paid or payable or provided or providable
pursuant to the terms of this Plan or otherwise, but determined
without regard to any additional payments required under this
Section 3.3) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties
are incurred by the Participant with respect to such excise tax
(such excise tax, together with any such interest and penalties,
being hereinafter collectively referred to as the "Excise Tax"),
then the Company or the Subsidiary shall pay to or on behalf of
the Participant an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Participant of all taxes
(including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest or penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Participant retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payment.
(b) All determinations required to be made under this Section 3.3,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by an
independent public accounting firm with a national reputation in
the United States that is selected by the Company (the
"Accounting Firm") which shall provide detailed support and
calculations both to the Participant and to the Company within
fifteen (15) business days after the receipt of notice from the
Company that there has been a Payment. The amount of any Gross-
Up Payment shall be paid in a lump sum within seven days
following such determination by the Accounting Firm. In the
event that the Accounting Firm's determination is not finally
accepted by the Internal Revenue Service upon any audit, then an
appropriate adjustment, including penalties and interest, if any,
shall be computed (with an additional Gross-Up Payment, if
applicable) by the Accounting Firm based upon the final amount of
the Excise Tax so determined. Such adjustment shall be paid by
the appropriate party in a lump sum within seven days following
the computation of such adjustment by the Accounting Firm. All
fees and expenses of the Accounting Firm shall be borne solely by
the Company.
3.4 Withholding. Payments under the Plan are subject to such federal, state
-----------
and local income tax withholding and all other federal, state and local
taxes as are applicable. The Company and the Subsidiary shall withhold
from any payments it makes all applicable federal, state and local
withholding taxes.
4
<PAGE>
ARTICLE 4
CLAIMS
------
4.1 Claims Procedure. If any Participant has a claim for benefits which are
----------------
not being paid, such claimant may file with the Committee a written claim
setting forth the amount and nature of the claim, supporting facts, and the
claimant's address. The Committee shall notify each claimant of its
decision in writing by registered or certified mail within 30 days after
its receipt of a claim, unless otherwise agreed by the claimant. If a
claim is denied, the written notice of denial shall set forth the reasons
for such denial, refer to pertinent Plan provisions on which the denial is
based, describe any additional material or information necessary for the
claimant to realize the claim, and explain the claim review procedure under
the Plan.
4.2 Claims Review Procedure. A claimant whose claim has been denied or such
-----------------------
claimant's duly authorized representative may file, within 60 days after
notice of such denial is received by the claimant, a written request for
review of such claim by the Committee. If a request is so filed, the
Committee shall review the claim and notify the claimant in writing of its
decision within 30 days after receipt of such request. In special
circumstances, the Committee may extend for up to 15 additional days the
deadline for its decision. The notice of the final decision of the
Committee shall include the reasons for its decision and specific
references to the Plan provisions on which the decision is based. The
decision of the Committee may be appealed only pursuant to Section 6.9.
ARTICLE 5
ADMINISTRATION
--------------
5.1 Plan Administrator. The Company shall be the Plan Administrator and shall
------------------
administer the Plan through the Committee.
5.2 Powers. The Committee shall have the power to do all things necessary or
------
convenient to effect the intent and purposes of the Plan, whether or not
such powers are specifically set forth herein, and, by way of amplification
and not limitation of the foregoing, the Committee shall have authority, in
its reasonable judgment, to:
(a) provide rules for the management, operation and administration of
the Plan, and, from time to time, amend or supplement such rules;
(b) construe the Plan in good faith to the fullest extent permitted
by law;
5
<PAGE>
(c) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as it
shall deem appropriate in its reasonable discretion to carry the
same into effect; and
(d) make reasonable determinations as to a Participant's eligibility
for benefits under the Plan, including determinations as to Cause
and Good Reason.
5.3 Binding Authority. The decisions of the Committee shall be final and
-----------------
conclusive for all purposes of the Plan, subject to any appeal or review
pursuant to Sections 4.2 and 6.9.
5.4 Exculpation. No member of the Board or Committee shall be directly or
-----------
indirectly responsible or otherwise liable by reason of any action or
default in connection with the Plan, or by reason of the exercise of or
failure to exercise any power or discretion in connection with the Plan,
except for any action, default, exercise or failure to exercise in
connection with the Plan resulting from such member's bad faith, gross
negligence or willful misconduct. No member of the Board or Committee
shall be liable in any way for the acts or defaults of any other member of
the Board, or any of its advisors, agents or representatives.
5.5 Indemnification. The Company shall indemnify and hold harmless each member
---------------
of the Board and Committee against any and all expenses and liabilities in
connection with the Plan arising out of his membership on the Board or
Committee, except for expenses and liabilities arising out of a member*s
bad faith, gross negligence or willful misconduct.
5.6 Compensation and Expenses. Members of the Board or Committee who are
-------------------------
employees of the Company shall not receive any compensation for their
services rendered as such members. The Company shall pay for all expenses
of the Board and Committee reasonably incurred in connection with the Plan,
including but not limited to legal expenses.
5.7 Information. The Company and the Subsidiary shall furnish to the Committee
-----------
in writing all information the Committee may deem appropriate for the
exercise of its powers and duties in the administration of the Plan. Such
information shall be conclusive for all purposes of the Plan, and the
Committee shall be entitled to rely thereon without any investigation
thereof.
ARTICLE 6
GENERAL PROVISIONS
------------------
6
<PAGE>
6.1 Non-Property Interest. All benefits payable under the Plan shall be paid
---------------------
out of the general assets of the Company or the Subsidiary. Any
Participant who may have or claim any interest in or right to any
compensation, payment or benefit payable hereunder, shall have solely the
status of a general unsecured creditor of the Company and the Subsidiary
and the Plan constitutes a mere promise by the Company and the Subsidiary
to make benefit payments in the future. Nothing herein contained shall be
construed to give to or vest in the Participant or any other person now or
at any time in the future, any right, title, interest or claim in or to any
specific asset, fund, reserve, account, insurance or annuity policy or
contract or other property of any kind whatsoever owned by the Company or
the Subsidiary, or in which the Company or the Subsidiary may have any
right, title or interest now or at any time in the future. It is the
intention of the Company, the Subsidiary and Participants that the Plan be
unfunded for tax purposes and for purposes of Title I of ERISA.
6.2 Other Rights. The Plan shall not affect or impair the rights or
------------
obligations of the Company or the Subsidiary or a Participant under any
other written plan, contract, arrangement, or pension, profit sharing or
other compensation plan; provided, however, that, from and after a Change
in Control and so long as this Plan is in effect, a Participant shall not
be entitled to any severance benefits under any other plan or policy of the
Company or the Subsidiary or any other agreement between the Participant
and the Company or Subsidiary, including any salary continuation or other
post-termination benefits under an employment agreement between the
Participant and the Company or the Subsidiary. Notwithstanding any other
provision of the Plan, the Company or the Subsidiary may require a
Participant who is a party to such an employment agreement to execute an
appropriate release with respect to such agreement as a condition to the
receipt of a Severance Amount under the Plan. For purposes of the
prohibition on duplicative benefits under this Section 6.2, benefits under
a vacation or sick pay policy, if any, shall not be deemed to be severance
benefits.
6.3 Amendment or Termination. The Plan may be amended, modified, suspended, or
------------------------
terminated by the Company at any time and from time to time by action of
the Board; provided, however, that any such amendment, modification,
suspension or termination which would adversely affect the rights of any
person who is then a Participant shall be subject to the prior written
consent of such Participant.
6.4 Severability. If any term or condition of the Plan shall be invalid or
------------
unenforceable to any extent or in any application, then the remainder of
the Plan, with the exception of such invalid or unenforceable provision,
shall not be affected thereby and shall continue in effect and application
to its fullest extent.
6.5 No Employment Rights. Neither the establishment of the Plan, any
--------------------
provisions of the Plan, nor any action of the Board or the Committee shall
be held or construed to confer
7
<PAGE>
upon any employee the right to a continuation of employment by the Company
or the Subsidiary. Subject to any applicable employment agreement, the
Company and the Subsidiary each reserves the right to dismiss any employee,
or otherwise deal with any employee to the same extent as though the Plan
had not been adopted.
6.6 Incapacity. If the Committee determines that a Participant is unable to
----------
care for his or her affairs because of illness or accident, any benefit due
the Participant may be paid to the Participant*s spouse or to any other
person deemed by the Committee to have incurred expense for such
Participant (including a duly appointed guardian, committee or other legal
representative), and any such payment shall be a complete discharge of the
Company's or the Subsidiary's obligation hereunder.
6.7 Transferability of Rights. The Company and the Subsidiary each shall have
-------------------------
the unrestricted right to transfer its obligations under the Plan with
respect to one or more Participants to any person, including, but not
limited to, any purchaser of all or any part of the Company*s business. A
Participant*s rights to benefit payments under the Plan are not subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Participant.
Any attempt to transfer or assign a benefit, or any rights granted
hereunder, by a Participant shall, in the sole discretion of the Committee
(after consideration of such facts as it deems pertinent), be grounds for
terminating any rights of the Participant to any portion of the Plan
benefits not previously paid.
6.8 Governing Law. The Plan shall be construed, administered, and enforced
-------------
according to the laws of the State of New York, except to the extent that
such laws are preempted by the federal laws of the United States of
America.
6.9 Arbitration of All Disputes. Any controversy or claim arising out of or
---------------------------
relating to the Plan, after exhaustion of the procedures under Article IV,
shall be settled exclusively by arbitration in the City of Cleveland,
Ohio. The arbitration shall be conducted in accordance with the then
existing rules of the American Arbitration Association. The arbitrators
shall not have the power to add to or delete from or otherwise amend the
provisions of the Plan. If a Participant is dissatisfied with the written
decision of the Committee under Section 4.2 he shall have the right to
appeal the matter to arbitration pursuant to this Section 6.9. A demand
for arbitration must be submitted in writing to the Committee within 120
days after receipt of the Committee's written decision under Section 4.2.
If an arbitration is demanded, the Committee shall submit to the
arbitrators a certified copy of the record upon which the Committee's
decision was made. The decision rendered by the arbitrators shall be final
and binding upon all parties. The costs and expenses of the arbitration
shall be borne by each respective party; provided, however, that the
arbitrators shall award costs and expenses to the Participant if the
8
<PAGE>
Participant is the prevailing party. Judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
6.10 Gender Neutrality. The masculine pronoun shall be deemed to include the
-----------------
feminine, and the singular number shall be deemed to include the plural
unless a different meaning is plainly required by the context.
6.11 Effective Date. The Plan was authorized and adopted by the Board as of,
--------------
and shall be effective at, January 10, 1997.
RENAISSANCE HOTEL GROUP N.V.
By:________________________________________
9
<PAGE>
Schedule A
----------
Titles
------
Senior Vice President
Vice President
10
<PAGE>
Exhibit 7
Renaissance Hotel Group N.V.
Executive Stay Bonus Plan
ARTICLE 1.
PURPOSE AND DEFINITIONS
-----------------------
1.1. Purpose. The purpose of this Renaissance Hotel Group N.V. Executive
-------
Stay Bonus Plan ("Plan") is to reward those executives and other key
employees whose management and individual performance have a direct
impact on achieving the Company's objectives in connection with a
planned change of control and to provide an incentive for the Company's
executives and other key employees to continue in the employ of the
Company or its Subsidiary and to put forth maximum efforts on behalf of
the Company.
1.2. Definitions. The following words and phrases as used herein shall
-----------
have the following meanings, unless a different meaning is required by
the context:
"Board of Directors" or "Board" shall mean the Board of Managing
Directors of the Company as constituted at any time.
"Bonus Amount" shall mean, with respect to a Participant, the amount of
the bonus pool allocated to the Participant pursuant to Section 2.2.
"Change of Control" shall mean the first to occur of the following
events:
(a) the sale or other divestiture of all or substantially all
of the assets of the Company or of the Subsidiary;
(b) the acquisition by any person or affiliated group of
persons of more than 50% of the outstanding common stock of
the Company or of the Subsidiary; or
(c) a change in the composition of the Board such that a
majority of the Board is not comprised of persons
affiliated with or employed by New World Group Members (as
such term is defined in the Company's prospectus with
respect to its September 1995 initial public offering.)
"Committee" shall mean the Compensation Committee of the Board.
"Company" shall mean Renaissance Hotel Group N.V., and any successors
thereto by merger, consolidation, liquidation or other reorganization.
<PAGE>
"Executive Officer" shall mean each executive officer of the Company or
the Subsidiary.
"Participant" shall mean any employee who is entitled to participate in
the Plan in accordance with Section 2.1.
"Subsidiary" shall mean Renaissance Hotel Operation Company, a
subsidiary of the Company.
ARTICLE 2
PARTICIPATION AND BONUSES
-------------------------
2.1 Participation. The Board may designate, upon the recommendation of
-------------
management, the Chairman of the Board or the Committee, any
Executive Officer or other employee whose services are considered
extraordinary in connection with a Change of Control, as a
Participant in the Plan.
2.2 Amount of Bonus Pool and Allocation Thereof. There shall be a
-------------------------------------------
bonus pool of $1,000,000. The portion of the bonus pool that will
be allocated to each Participant shall be determined by the Board
in its discretion on the basis of the recommendations of the
Chairman thereof or the Committee.
2.3 Entitlement; Payment in Lump Sum. A Participant shall be entitled
--------------------------------
to receive his or her Bonus Amount if he or she remains
continuously employed by the Company or the Subsidiary until the
consummation of the Change of Control (or until immediately prior
thereto). The Bonus Amount shall be paid to each Participant
entitled thereto in a lump sum by the Company or the Subsidiary
upon or immediately prior to the consummation of the Change of
Control. Notwithstanding the foregoing, if a Participant's
employment terminates prior to the consummation of a Change of
Control due to his or her permanent and total disability or death,
the Participant or the Participant's estate shall be entitled to
receive such portion, if any, of his or her Bonus Amount as the
Board shall determine.
2.4 Withholding. Payments under the Plan are subject to such federal,
-----------
state and local income tax withholding and all other federal, state
and local taxes as are applicable. The Company and the Subsidiary
shall withhold from any payments it makes all applicable federal,
state and local withholding taxes.
2
<PAGE>
ARTICLE 3
ADMINISTRATION
--------------
3.1 Plan Administrator. The Company shall be the Plan Administrator
------------------
and shall administer the Plan through the Committee.
3.2 Powers. The Committee shall have the authority and power to do all
------
things necessary or convenient in its reasonable judgment to effect
the intent and purposes of the Plan, whether or not such powers are
specifically set forth herein.
3.3 Binding Authority. The decisions of the Committee shall be final
-----------------
and conclusive for all purposes of the Plan.
3.4 Exculpation. No member of the Board or Committee shall be
-----------
directly or indirectly responsible or otherwise liable by reason of
any action or default in connection with the Plan, or by reason of
the exercise of or failure to exercise any power or discretion in
connection with the Plan, except for any action, default, exercise
or failure to exercise in connection with the Plan resulting from
such member's bad faith, gross negligence or willful misconduct. No
member of the Board or Committee shall be liable in any way for the
acts or defaults of any other member of the Board, or any of its
advisors, agents or representatives.
3.5 Indemnification. The Company shall indemnify and hold harmless
---------------
each member of the Board and Committee against any and all expenses
and liabilities in connection with the Plan arising out of his
membership on the Board or Committee, except for expenses and
liabilities arising out of a member's bad faith, gross negligence
or willful misconduct.
3.6 Compensation and Expenses. Members of the Board or Committee who
-------------------------
are employees of the Company shall not receive any compensation for
their services rendered as such members. The Company shall pay for
all expenses of the Board and Committee reasonably incurred in
connection with the Plan, including but not limited to legal
expenses.
3.7 Information. The Company and the Subsidiary shall furnish to the
-----------
Committee all information the Committee may deem appropriate for
the exercise of its powers and duties in the administration of the
Plan. Such information shall be conclusive for all purposes of the
Plan, and the Committee shall be entitled to rely thereon without
any investigation thereof.
3
<PAGE>
ARTICLE 4
GENERAL PROVISIONS
------------------
4.1 Non-Property Interest. All benefits payable under the Plan shall
---------------------
be paid out of the general assets of the Company or the Subsidiary.
Any Participant who may have or claim any interest in or right to
any compensation, payment or benefit payable hereunder, shall have
solely the status of a general unsecured creditor of the Company
and the Subsidiary and the Plan constitutes a mere promise by the
Company and the Subsidiary to make benefit payments in the future.
Nothing herein contained shall be construed to give to or vest in
the Participant or any other person now or at any time in the
future, any right, title, interest or claim in or to any specific
asset, fund, reserve, account, insurance or annuity policy or
contract or other property of any kind whatsoever owned by the
Company or the Subsidiary, or in which the Company or the
Subsidiary may have any right, title or interest now or at any time
in the future. It is the intention of the Company, the Subsidiary
and Participants that the Plan be unfunded for tax purposes.
4.2 Other Rights. The Plan shall not affect or impair the rights or
------------
obligations of the Company or the Subsidiary or a Participant under
any other written plan, contract, arrangement, or pension, profit
sharing or other compensation plan.
4.3 Amendment or Termination. The Plan may be amended, modified,
------------------------
suspended, or terminated by the Company at any time and from time
to time by action of the Board; provided, however, that any such
amendment, modification, suspension or termination which would
adversely affect the rights of any person who is then a Participant
shall be subject to the prior written consent of such Participant.
4.4 Severability. If any term or condition of the Plan shall be
------------
invalid or unenforceable to any extent or in any application, then
the remainder of the Plan, with the exception of such invalid or
unenforceable provision, shall not be affected thereby and shall
continue in effect and application to its fullest extent.
4.5 No Employment Rights. Neither the establishment of the Plan, any
--------------------
provisions of the Plan, nor any action of the Board or the
Committee shall be held or construed to confer upon any employee
the right to a continuation of employment by the Company or the
Subsidiary. Subject to any applicable employment agreement, the
Company and the Subsidiary each reserves the right to dismiss any
employee, or otherwise deal with any employee to the same extent as
though the Plan had not been adopted.
4
<PAGE>
4.6 Incapacity. If the Committee determines that a Participant is
----------
unable to care for his or her affairs because of illness or
accident, any benefit due the Participant may be paid to the
Participant's spouse or to any other person deemed by the Committee
to have incurred expense for such Participant (including a duly
appointed guardian, committee or other legal representative), and
any such payment shall be a complete discharge of the Company's or
the Subsidiary's obligation hereunder.
4.7 Transferability of Rights. The Company and the Subsidiary each
-------------------------
shall have the unrestricted right to transfer its obligations under
the Plan with respect to one or more Participants to any person,
including, but not limited to, any purchaser of all or any part of
the Company's business. A Participant's rights to benefit payments
under the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant. Any
attempt to transfer or assign a benefit, or any rights granted
hereunder, by a Participant shall, in the sole discretion of the
Committee (after consideration of such facts as it deems
pertinent), be grounds for terminating any rights of the
Participant to any portion of the Plan benefits not previously
paid.
4.8 Governing Law. The Plan shall be construed, administered, and
-------------
enforced according to the laws of the State of New York, except to
the extent that such laws are preempted by the federal laws of the
United States of America.
4.9 Gender Neutrality. The masculine pronoun shall be deemed to
-----------------
include the feminine, and the singular number shall be deemed to
include the plural unless a different meaning is plainly required
by the context.
4.10 Effective Date. The Plan was authorized and adopted by the Board
--------------
as of, and shall be effective at, January 10, 1997.
RENAISSANCE HOTEL GROUP N.V.
By:
--------------------------------
5
<PAGE>
Exhibit 8
RENAISSANCE HOTEL GROUP N.V.
17TH FLOOR, NEW WORLD TOWER II
18 QUEEN'S ROAD
CENTRAL, HONG KONG
February 24, 1997
Dear Stockholder:
I am pleased to inform you that on February 17, 1997, Renaissance Hotel
Group N.V. (the "Company") entered into an Acquisition Agreement (the
"Acquisition Agreement") with Marriott International, Inc., a Delaware
corporation ("Marriott"). Pursuant to the Acquisition Agreement, Marriott is
today commencing a tender offer (the "Offer") to purchase all outstanding
shares of common stock, par value 0.01 Netherlands Guilders per share, of the
Company (the "Shares"), at a price per Share of $30.00, net to the seller in
cash.
YOUR BOARD OF MANAGING DIRECTORS HAS UNANIMOUSLY APPROVED THE ACQUISITION
AGREEMENT AND THE OFFER AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
MANAGING DIRECTORS RECOMMENDS THAT YOU ACCEPT THE OFFER AND TENDER YOUR SHARES
TO MARRIOTT.
In arriving at its recommendation, the Board of Managing Directors gave
careful consideration to a number of factors which are described in the
enclosed Schedule 14D-9. Among such factors is the opinion of Morgan Stanley &
Co. Incorporated ("Morgan Stanley"), the Company's financial advisor, that the
cash consideration of $30.00 per Share to be received by the stockholders in
the Offer is fair to the stockholders from a financial point of view. The full
text of the written opinion of Morgan Stanley is attached hereto and you are
urged to read such opinion in its entirety.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9, including a copy of the full text of the opinion of
Morgan Stanley. Also enclosed is Marriott's Offer to Purchase and related
materials, including a Letter of Transmittal to be used for tendering your
Shares. These documents set forth the terms and conditions of the Offer and
provide instructions as to how to tender your Shares. We urge you to read the
enclosed material and consider this information carefully.
On Behalf of the Board of Managing
Directors
Sincerely,
/s/ Henry Cheng Kar Shun
Henry Cheng Kar Shun
Chairman of the Board
<PAGE>
Exhibit 9
MARRIOTT INTERNATIONAL TO ACQUIRE
RENAISSANCE HOTEL GROUP
ACQUISITION MORE THAN DOUBLES INTERNATIONAL PRESENCE
MAJOR ASIAN ALLIANCE ESTABLISHED
WASHINGTON, DC -- February 18, 1997-- Marriott International, Inc. (MAR/NYSE)
and Renaissance Hotel Group, N.V. (RHG/NYSE) today announced an executed
agreement for Marriott to acquire Renaissance Hotel Group, a premier operator
and franchisor of 150 hotels (46,425 rooms) worldwide in 38 countries. Combined,
Marriott International and Renaissance Hotel Group operate or franchise more
than 1,300 hotels worldwide (273,000 rooms) across ten brands, including nearly
200 hotels (55,000 rooms) outside of the United States. By year-end 1997,
Marriott's worldwide lodging system is expected to exceed 300,000 hotel rooms.
Renaissance Hotel Group shareholders will receive $30 per share in cash. The
total acquisition cost is approximately $1 billion, including transaction costs
and existing net debt of Renaissance Hotel Group. Shareholders of Renaissance
Hotel Group, owning more than 54 percent of the voting stock, have agreed to the
terms of the acquisition. Marriott expects to commence a tender offer for all
outstanding Renaissance Hotel Group shares within five business days.
Renaissance Hotel Group operates or franchises its hotels and resorts under
three established brand names: Renaissance is a quality international brand for
affluent business and leisure travelers; New World is a quality hotel brand in
Asia and the Pacific region; and, Ramada International is a mid-priced lodging
brand outside of the United States and Canada. Renaissance Hotel Group also
master licenses the Ramada name in the United States and Canada to others under
long-term agreements. The company does not have any significant owned real
estate.
J.W. Marriott, Jr., Chairman of the Board and Chief Executive Officer of
Marriott International, and Dr. Henry K.S. Cheng, Chairman of Renaissance Hotel
Group and Managing Director of New World Development Co., Ltd., jointly
announced the agreement in Los Angeles, California.
"This acquisition provides a dramatic increase in rooms and market position for
Marriott International," said Mr. Marriott. "With the addition of these three
outstanding brands to our portfolio, we immediately will reach customers in 40
new markets including Russia, China, Japan, India, Italy and Turkey, and more
than double our presence outside of the United States."
(MORE)
<PAGE>
PAGE TWO
MARRIOTT AND RENAISSANCE
Mr. Marriott added, "The acquisition also creates considerable growth
opportunities for Marriott. Specifically:
. In the Asia/Pacific region, the New World brand will add new
locations in rapidly growing markets and provide infrastructure to
support growth.
. In addition to international opportunities, we will expand the
Renaissance brand in the United States, broadening our presence in the
quality tier of the full-service hotel market. We expect to achieve
exceptional results as we aggressively leverage our operating and
marketing skills across a growing number of lodging products. The
Renaissance affiliation with Marriott is expected to yield double-
digit revenue per available room growth for U.S. Renaissance hotels.
. With the Ramada International brand, we will increase our distribution
of moderate priced lodging products to 22 countries.
Each of these brands will provide additional development opportunities for
owners and franchisees."
New World Development Co., Ltd., a major Hong Kong-based real estate development
company, is the principal owner of Renaissance Hotel Group. New World's
substantial real estate and commercial interests are located throughout Asia,
particularly in the People's Republic of China. In addition to its Renaissance
stock holdings, New World or its affiliates control 83 hotels operated by
Renaissance.
"New World Development and Marriott will be important strategic partners in
future hotel expansion. I have tremendous respect for Dr. Cheng and have
invited him to join Marriott International's Board of Directors. His knowledge
and perspective will be valuable additions to our company," Mr. Marriott said.
"I am delighted to join Bill Marriott in announcing this transaction. We share
similar corporate cultures and complement each other geographically and
operationally. At New World, we are confident that our alliance with Marriott
will enhance substantially the value of our current hotel holdings, and provide
even more exciting hotel development opportunities going forward," said Dr.
Cheng.
On a combined basis, Marriott and Renaissance Hotel Group already have over 350
hotels with 50,000 rooms in their development pipelines, to open over the next
three years. Approximately 20,000 of these hotel rooms will be outside of the
United States.
(MORE)
<PAGE>
PAGE THREE
MARRIOTT AND RENAISSANCE
Marriott International's acquisition of Renaissance Hotel Group is expected to
be completed by the second quarter of 1997. Marriott estimates that the
acquisition will increase its EBITDA (earnings before interest expense, income
taxes, depreciation and amortization) by $75 to $85 million in the first 12
months. Marriott's 1997 fiscal year earnings are expected to be reduced by 10
to 14 cents per share, primarily due to intangibles amortization. Strong growth
in future years is expected through aggressive hotel expansion across each of
the acquired brands, integration of Renaissance into Marriott's marketing,
reservations, operating and administrative systems, and other cost savings.
After a transition period, Marriott expects to achieve annual cost savings of at
least $15 to $20 million. Marriott International reported net income of $306
million ($2.24 per share) on sales of $10.2 billion for its fiscal year ended
January 3, 1997
MARRIOTT INTERNATIONAL INC. is the world's leading hospitality company, with
approximately 4,700 operating units in the United States and 29 other countries.
Major businesses include hotels operated and franchised under the Marriott,
Ritz-Carlton, Courtyard, Fairfield, Residence Inn, TownePlace Suites and
Marriott Executive Residences brands; vacation ownership resorts; food service
and facilities management for clients in business, education, and health care;
senior living communities and services; and food service distribution. The
company has nearly 200,000 employees and is headquartered in Washington, D.C.
###
Marriott International Media Contacts: Tom Marder or Nick Hill at (301) 380-
2553.
Note: This press release contains "forward-looking statements" within the
meaning of federal securities law. These forward-looking statements include,
among others, statements concerning the company's outlook for 1997 and beyond;
the number of new hotel rooms expected to be added; business strategies and
their anticipated results; cost savings expectations; and similar statements
concerning anticipated future events and expectations that are not historical
facts. The forward-looking statements in this press release are subject to
numerous risks and uncertainties which could cause actual results to differ
materially from those expressed in or implied by those statements.
