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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 12, 1997
ITT CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
(State or other 1-13960 88-0340591
jurisdiction of (Commission File No.) (IRS Employer Identification No.)
incorporation)
1330 Avenue of the Americas
New York, NY 10019-5490
(Address of principal executive offices)
(212) 258-1000
(Registrant's telephone number, including area code)
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<PAGE>
Item 5. Other Information.
On November 12, 1997, ITT Corporation (the "Company") agreed to
amend the terms on which the Company will merge (the "Merger") with
an entity jointly owned by Starwood Lodging Corporation ("Starwood")
and Starwood Lodging Trust ("Starwood Trust"). The revised terms of
the Merger are set forth in an Amended and Restated Agreement and
Plan of Merger (the "Amended and Restated Merger Agreement") dated
as of November 12, 1997, among the Company, Starwood, Starwood Trust
and Chess Acquisition Corp. In the Merger, each share of the
Company's common stock, no par value (the "Common Stock"), will be
converted into the right to receive, at the holder's election, $85
in cash or Paired Shares (as defined below) with a value of $85,
subject to certain collar provisions, or a combination thereof,
subject to the limitation that the aggregate number of shares of
Common Stock to be converted into the right to receive cash shall
not exceed 30% nor be less that 18% of the total number of shares of
Common Stock outstanding immediately prior to the effective time of
the Merger. If the Merger closes after January 31, 1998, each holder
of Common Stock will also be entitled to receive for each share of
Common Stock converted in the Merger additional cash consideration
in an amount equal to the interest that would accrue (without
compounding) on $85 at an annual rate of 7% during the period from
and including January 31, 1998 to but excluding the date of closing.
The shares of common stock, par value $0.01 per share, of Starwood
and the trust shares, par value $0.01 per share, of Starwood Trust
trade as "paired shares" (the "Paired Shares") on the New York Stock
Exchange.
The Merger is subject to the approval of the stockholders of
the Company, Starwood and Starwood Trust and other customary
conditions.
The foregoing summary of the Amended and Restated Merger
Agreement is not complete and is qualified in its entirety by
reference to the text of the Amended and Restated Merger Agreement,
a copy of which is filed as Exhibit 2.1 hereto and which is
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) - (b) Not applicable.
(c) Exhibits.
2.1 Amended and Restated Agreement and Plan of Merger
dated as of November 12, 1997, among Starwood
Lodging Corporation, Chess Acquisition Corp.,
Starwood Lodging Trust and ITT Corporation.
99.1 Text of Press Release of ITT Corporation issued
November 12, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
ITT CORPORATION.
By: /s/ Patrick L. Donnelly
Date: November 14, 1997 -------------------------------
Name: Patrick L. Donnelly
Title: Vice President and Assistant
General Counsel
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Sequential Page No.
2.1 Amended and Restated Agreement and
Plan of Merger dated as of November
12, 1997, among Starwood Lodging
Corporation, Chess Acquisition Corp.,
Starwood Lodging Trust and ITT
Corporation.
99.1 Text of Press Release of ITT
Corporation issued November 12, 1997.
[Exhibit 2.1]
CONFORMED EXECUTION COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
STARWOOD LODGING CORPORATION,
CHESS ACQUISITION CORP.,
STARWOOD LODGING TRUST
AND
ITT CORPORATION
Dated as of November 12, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger.........................................2
Section 1.2 Effective Time.....................................2
Section 1.3 Effects of the Merger..............................2
Section 1.4 Charter and By-laws; Directors.....................2
Section 1.5 Conversion of Securities...........................3
Section 1.6 Election of Stock or Cash..........................5
Section 1.7 Proration..........................................7
Section 1.8 Parent Companies to Make Cash and Certificates
Available; Transfer Taxes; Withholding.............9
Section 1.9 Dividends.........................................10
Section 1.10 No Fractional Securities..........................11
Section 1.11 Return of Exchange Fund...........................11
Section 1.12 Adjustment of Exchange Ratio......................12
Section 1.13 No Further Ownership Rights in Company Common
Stock.............................................12
Section 1.14 Closing of Company Transfer Books.................12
Section 1.15 Lost Certificates.................................12
Section 1.16 Further Assurances................................13
Section 1.17 Closing...........................................13
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT COMPANIES AND SUB
Section 2.1 Organization, Standing and Power..................13
Section 2.2 Capital Structure.................................14
Section 2.3 Authority.........................................16
Section 2.4 Consents and Approvals; No Violation..............17
Section 2.5 SEC Documents and Other Reports...................19
Section 2.6 Registration Statement and Joint Proxy
Statement.........................................20
Section 2.7 Absence of Certain Changes or Events..............20
Section 2.8 Permits and Compliance............................21
Section 2.9 Tax Matters.......................................22
Section 2.10 Actions and Proceedings...........................23
Section 2.11 Compliance with Worker Safety and Environmental
Laws..............................................23
Section 2.12 Liabilities.......................................24
Section 2.13 Intellectual Property.............................24
Section 2.14 Opinion of Financial Advisor......................25
Section 2.15 Required Vote of Parent and Trust
Stockholders......................................25
Section 2.16 REIT Status.......................................25
Section 2.17 Brokers...........................................25
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<PAGE>
Page
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power..................26
Section 3.2 Capital Structure.................................26
Section 3.3 Authority.........................................28
Section 3.4 Consents and Approvals; No Violation..............28
Section 3.5 SEC Documents and Other Reports...................29
Section 3.6 Registration Statement and Joint Proxy
Statement.........................................30
Section 3.7 Absence of Certain Changes or Events..............30
Section 3.8 Permits and Compliance............................31
Section 3.9 Tax Matters.......................................32
Section 3.10 Actions and Proceedings...........................33
Section 3.11 Certain Agreements................................33
Section 3.12 ERISA.............................................33
Section 3.13 Compliance with Worker Safety and Environmental
Laws..............................................36
Section 3.14 Liabilities.......................................37
Section 3.15 Intellectual Property.............................37
Section 3.16 Rights Agreement..................................37
Section 3.17 Parachute Payments to Disqualified
Individuals.......................................37
Section 3.18 Opinion of Financial Advisor......................38
Section 3.19 State Takeover Statutes...........................38
Section 3.20 Required Vote of Company Stockholders.............38
Section 3.21 Brokers...........................................38
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending the
Merger............................................38
Section 4.2 Conduct of Business by the Parent Companies
Pending the Merger................................42
Section 4.3 No Solicitation...................................43
Section 4.4 Third Party Standstill Agreements.................45
Section 4.5 Pre-Merger Transactions...........................45
Section 4.6 Post-Merger Transactions..........................46
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholders Meetings.............................46
Section 5.2 Filings; Other Actions............................47
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<PAGE>
Page
Section 5.3 Comfort Letters...................................48
Section 5.4 Access to Information.............................48
Section 5.5 Compliance with the Securities Act................49
Section 5.6 Stock Exchange Listings...........................49
Section 5.7 Fees and Expenses.................................49
Section 5.8 Company Stock Options.............................51
Section 5.9 Reasonable Efforts................................52
Section 5.10 Public Announcements..............................53
Section 5.11 Transfer and Gains Tax............................53
Section 5.12 State Takeover Laws...............................53
Section 5.13 Indemnification; Directors and Officers
Insurance.........................................54
Section 5.14 Notification of Certain Matters...................54
Section 5.15 Employees.........................................55
Section 5.16 Rights Agreement..................................56
Section 5.17. Regulatory Matters................................56
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger........................................57
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger........................................59
Section 6.3 Conditions to Obligations of Parent, Sub and Trust
to Effect the Merger..............................60
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination.......................................62
Section 7.2 Effect of Termination.............................63
Section 7.3 Amendment.........................................64
Section 7.4 Waiver............................................64
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and
Warranties........................................64
Section 8.2 Notices...........................................64
Section 8.3 Interpretation....................................65
Section 8.4 Counterparts......................................65
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<PAGE>
Page
Section 8.5 Entire Agreement; No Third-Party
Beneficiaries.....................................66
Section 8.6 Governing Law.....................................66
Section 8.7 Assignment........................................66
Section 8.8 Severability......................................66
Section 8.9 Enforcement of this Agreement.....................66
Section 8.10 Trust.............................................67
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<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated
as of November 12, 1997 (this "Agreement"), among Starwood Lodging
Corporation, a Maryland corporation ("Parent"), Chess Acquisition
Corp., a Nevada corporation and a controlled subsidiary of Parent
("Sub"), Starwood Lodging Trust, a Maryland real estate investment
trust ("Trust" and, together with Parent, the "Parent Companies")
and ITT Corporation, a Nevada corporation (the "Company") (Sub and
the Company being hereinafter collectively referred to as the
"Constituent Corporations").
W I T N E S S E T H:
WHEREAS Parent, Sub, Trust and the Company are parties
to that certain Agreement and Plan of Merger dated as of October
19, 1997 (the "Original Merger Agreement");
WHEREAS Parent, Sub, Trust and the Company wish to amend
the Original Merger Agreement to increase the consideration to be
received by stockholders of ITT in the Merger (as defined below)
and to make certain other changes to the Original Merger
Agreement;
WHEREAS the respective Boards of Directors of Parent,
Sub, Trust and the Company have approved the merger of Sub with
and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth herein, whereby each issued and
outstanding share of Common Stock, no par value, of the Company
("Company Common Stock"), not owned by Parent, the Company or
their respective wholly owned subsidiaries will be converted into
shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock"), and trust shares, par value $.01 per
share, of Trust ("Trust Shares" and, when paired with shares of
Parent Common Stock pursuant to the Pairing Agreement dated as of
June 28, 1980, as amended from time to time, between Parent and
Trust, "Paired Shares"), and cash;
WHEREAS the respective Boards of Directors or Trustees,
as the case may be, of each of the Parent Companies and the
Company have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies and
is in the best interest of their respective stockholders or
shareholders, as the case may be; and
<PAGE>
WHEREAS the parties to this Agreement intend that the
Merger shall be treated as a taxable acquisition of all the
outstanding shares of Company Common Stock by Parent and the
Trust, respectively, in proportion to the relative percentages of
Sub capital stock they own immediately prior to the consummation
of the Merger.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the
parties agree as follows:
The Original Merger Agreement is hereby amended and
restated to read in its entirety as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to
the conditions hereof, and in accordance with the Nevada General
Corporation Law (the "NGCL"), Sub shall be merged with and into
the Company at the Effective Time (as defined in Section 1.2).
Following the Merger, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with
the NGCL.
Section 1.2 Effective Time. The Merger shall become
effective when Articles of Merger (the "Articles of Merger"),
executed in accordance with the relevant provisions of the NGCL,
are filed with the Secretary of State of the State of Nevada;
provided, however, that, upon mutual consent of the Constituent
Corporations, the Articles of Merger may provide for a later date
of effectiveness of the Merger not more than 30 days after the
date the Articles of Merger are filed. When used in this
Agreement, the term "Effective Time" shall mean the date and time
at which the Articles of Merger are accepted for record or such
later time established by the Articles of Merger. The filing of
the Articles of Merger shall be made on the date of the Closing
(as defined in Section 1.17).
Section 1.3 Effects of the Merger. The Merger shall have
the effects set forth in Section 92A.250 of the NGCL.
Section 1.4 Charter and By-laws; Directors. (a) At the
Effective Time, the Articles of Incorporation of Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until
<PAGE>
thereafter changed or amended as provided therein or by applicable
law; provided, however, that the Articles of Incorporation of Sub
shall include provisions substantially identical to ARTICLE
SEVENTH and ARTICLE NINTH of the Restated Articles of
Incorporation, as amended, of the Company existing as of the date
of this Agreement; and provided further that at the Effective Time
Article I of the Articles of Incorporation of Sub shall be amended
to read in its entirety as follows: "The name of the corporation
is ITT Corporation." At the Effective Time, the By-laws of Sub, as
in effect immediately prior to the Effective Time, shall be the
By-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or in the Articles of Incorporation;
provided, however, that the By-laws of Sub shall include
provisions substantially identical to Section 4 of the Amended and
Restated By-laws of the Company existing on the date of this
Agreement.
(b) The directors of Sub at the Effective Time shall be
the directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
Section 1.5 Conversion of Securities. As of the
Effective Time, by virtue of the Merger and without any action on
the part of Sub, the Company or the holders of any securities of
the Constituent Corporations:
(a) Each issued and outstanding share of common stock,
no par value, of Sub shall be converted into one validly
issued, fully paid and nonassessable share of common stock,
no par value, of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in
the treasury of the Company and shares of Company Common
Stock owned by Parent, Trust or Sub (together, in each case,
with the associated Right (as defined in Section 3.2)) shall
be cancelled and no cash, capital stock of Parent or Trust or
other consideration shall be delivered in exchange therefor.
All shares of Company Common Stock that are held by any
wholly owned Subsidiary (as defined in Section 2.1) of the
Company, Parent, Sub or the Trust (together, in each case,
with the associated Right) shall be converted into validly
issued, fully paid and nonassessable shares of common stock,
no par value, of the Surviving Corporation.
(c) Each share of Company Common Stock (including
restricted shares of Company Common Stock issued under
Company Plans (as defined in Section 3.12(d)) issued and
outstanding immediately prior to the Effective Time (other
<PAGE>
than shares to be cancelled or converted into shares of the
Surviving Corporation in accordance with Section 1.5(b)),
together with the associated Right, which share under the
terms of Section 1.7 is to be converted into cash, shall be
converted into the right to receive $85.00 in cash, without
interest (except to the extent specified in Section 1.5(f)).
(d) Except as otherwise provided in Section 1.7 and
subject to Sections 1.10 and 1.12, each share of Company
Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled or
converted into shares of the Surviving Corporation in
accordance with Section 1.5(b) or converted into the right to
receive cash pursuant to Sections 1.5(c) and 1.7), together
with the associated Right, shall be converted into the right
to receive the Exchange Ratio (as defined below) of validly
issued, fully paid and nonassessable Paired Shares. The
"Exchange Ratio" shall be a number equal to the quotient,
rounded to the nearest thousandth, or if there shall not be a
nearest thousandth, the next higher thousandth, of (x) $85.00
divided by (y) the Market Price (as defined below) of Paired
Shares on the fifth New York Stock Exchange, Inc. ("NYSE")
trading day prior to the date of the Company Stockholder
Meeting (as defined in Section 5.1); provided, however, that
in no event shall the Exchange Ratio be (A) greater than an
amount equal to $85.00 divided by $53.263 or (B) less than an
amount equal to $85.00 divided by $61.263. The "Market Price"
of a Paired Share on any date means the average of the
Average Prices (as defined below) for the 20 NYSE trading
days (the "Averaging Period") randomly selected by a neutral
independent accounting firm appointed by mutual agreement of
the Trust and the Company from the 30 consecutive NYSE
trading days immediately preceding such date. The "Average
Price" for any date means the average of the daily high and
low prices per Paired Share as reported on the NYSE Composite
Transactions reporting system (as published in The Wall
Street Journal or, if not published therein, in another
authoritative source mutually selected by the Company and
Parent).
(e) All such shares of Company Common Stock (other than
shares to be cancelled in accordance with Section 1.5(b)),
and the associated Rights, when so converted as provided in
Section 1.5(c) or (d), shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease
to exist and each holder of a Certificate (as defined in
Section 1.6(c)) theretofore representing any such shares (and
the associated Rights) shall cease to have any rights with
respect thereto, except the right to
<PAGE>
receive, upon the surrender of such Certificate in accordance
with Section 1.8, (A) any dividends and other distributions
in accordance with Section 1.9, (B) certificates representing
the Paired Shares into which such shares (and the associated
Rights) are converted pursuant to Section 1.5(d), (C) cash
into which such shares are converted pursuant to Section
1.5(c) and cash payable pursuant to Section 1.5(f) and (D)
any cash, without interest, in lieu of fractional Paired
Shares to be issued or paid in consideration therefor upon
the surrender of such certificate in accordance with Sections
1.8 and 1.10.
(f) If (but only if) the Closing occurs after January
31, 1998, then each holder of Company Common Stock issued and
outstanding immediately prior to the Effective Time that is
entitled under Section 1.5(c) and (d) to receive either cash
or Paired Shares shall in addition be entitled to receive
cash in an amount per share of Company Common Stock equal to
(i) $85.00 times (ii) 7% per annum accrued from and including
January 31, 1998, to but excluding the date of Closing
(without compounding).
Section 1.6 Election of Stock or Cash. Each holder of
shares of Company Common Stock (other than holders of shares to be
cancelled as set forth in Section 1.5(b)) shall have the right to
submit a request specifying the number of shares of Company Common
Stock which such holder desires to have converted into the right
to receive Paired Shares in the Merger and the number which such
holder desires to have converted into the right to receive cash in
accordance with the following procedures:
(a) Each holder of shares of Company Common Stock may
specify in a request made in accordance with the provisions
of this Section 1.6 (an "Election") (i) the number of such
shares which such holder desires to have converted into the
right to receive cash in the Merger (a "Cash Election") and
(ii) the number of such shares which such holder desires to
have converted into Paired Shares in the Merger (a "Stock
Election").
(b) The Parent Companies shall authorize such person or
persons as shall be acceptable to the Parent Companies and
the Company to receive Elections and to act as Exchange Agent
hereunder (the "Exchange Agent").
(c) The Parent Companies and the Company shall prepare,
for use by stockholders of the Company in surrendering
certificates (the "Certificates") representing shares of
Company Common Stock, a form (the "Form of
<PAGE>
Election") pursuant to which each holder of Company Common
Stock may make Elections. The Form of Election shall be
mailed to stockholders of record of the Company as of the
record date for the Company Stockholder Meeting and shall
accompany the Joint Proxy Statement (as defined in Section
2.6).
(d) The Company shall use all reasonable efforts to make
the Form of Election available to all persons who become
stockholders of record of the Company during the period
between such record date and the business day prior to the
date of the Company Stockholder Meeting.
(e) An Election shall have been properly made only if
the Exchange Agent shall have received, by 5:00 p.m., New
York City time, on the business day (such time on such day
being referred to herein as the "Election Date") preceding
the date of the Company Stockholder Meeting, a Form of
Election properly completed and signed and accompanied by the
Certificate or Certificates representing the shares of
Company Common Stock (and associated Rights) to which such
Form of Election relates (or by an appropriate guarantee of
delivery of such Certificate or Certificates as set forth in
such Form of Election from a member of any registered
national securities exchange or of the National Association
of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United
States, provided such Certificate or Certificates are in fact
delivered by the time set forth in such guarantee of
delivery).
(f) Any holder of record of shares of Company Common
Stock may at any time prior to the Election Date change such
holder's Election by written notice received by the Exchange
Agent at or prior to the Election Date accompanied by a
properly completed Form of Election. The Parent Companies and
the Company shall have the right in their sole discretion and
by mutual agreement to permit changes in Elections after the
Election Date.
(g) Any holder of record of shares of Company Common
Stock may at any time prior to the Election Date revoke such
holder's Election by written notice received by the Exchange
Agent at or prior to the Election Date or by withdrawal prior
to the Election Date of such holder's Certificates previously
deposited with the Exchange Agent. Any revocation of an
Election may be withdrawn by notice of such withdrawal
delivered at or prior to the Election Date. Any stockholder
of the Company who shall have deposited
<PAGE>
Certificates with the Exchange Agent shall have the right to
withdraw such Certificates by written notice received by the
Exchange Agent and thereby revoke such holder's Election as
of the Election Date at any time after the expiration of the
period of 60 days following the Election Date if the Merger
shall not have been consummated prior thereto. The Parent
Companies shall obtain from the Exchange Agent an agreement
to return all Forms of Election and accompanying Certificates
to the stockholders submitting the same in the event this
Agreement shall be terminated in accordance with its terms.
(h) The Parent Companies and the Company by mutual
agreement shall have the right to make rules, not
inconsistent with the terms of this Agreement, governing the
validity of Forms of Election, the manner and extent to which
Elections are to be taken into account in making the
determinations prescribed by Section 1.7, the issuance and
delivery of certificates for Paired Shares into which shares
of Company Common Stock are converted in the Merger and the
payment for shares of Company Common Stock converted into the
right to receive cash in the Merger.
Section 1.7 Proration. The determination of whether
shares of Company Common Stock (other than shares to be cancelled
or converted into shares of the Surviving Corporation as set forth
in Section 1.5(b)), and the associated Rights, shall be converted
in the Merger into the Exchange Ratio of Paired Shares or the
right to receive $85.00 in cash shall be made as set forth in this
Section 1.7.
(a) As is more fully set forth below, the aggregate
number of shares of Company Common Stock to be converted in
the Merger into the right to receive cash shall not (i)
exceed 30% or (ii) be less than 18%, in either case of all
shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time.
(b) If Cash Elections are received for a number of
shares of Company Common Stock which is more than 30% of the
total number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time, each
Non-Electing Share (as defined in Section 1.7(f)) and each
share of Company Common Stock for which a Stock Election has
been received (in each case, together with the associated
Right) shall be converted in the Merger into the Exchange
Ratio of Paired Shares and the shares of Company Common Stock
for which Cash Elections have been received (and the
associated Rights) shall be converted in the Merger into
<PAGE>
right to receive cash and the Exchange Ratio of Paired Shares
in the following manner: the largest whole number of shares
of Company Common Stock (and the associated Rights) covered
by each Cash Election which is not in excess of the number of
shares of Company Common Stock covered by such Cash Election
multiplied by a fraction the numerator of which shall be a
number equal to 30% of the number of shares of Company Common
Stock issued and outstanding immediately prior to the
Effective Time and the denominator shall be the aggregate
number of shares of Company Common Stock covered by all Cash
Elections, shall be converted into the right to receive
$85.00 per share in cash, without interest (except to the
extent specified in Section 1.5(f)). The balance of the
shares of Company Common Stock covered by Cash Elections
(together with the associated Rights) shall be converted into
the right to receive the Exchange Ratio of Paired Shares.
(c) If Stock Elections are received for a number of
shares of Company Common Stock which is more than 82% of the
total number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time, each
Non-Electing Share and each share of Company Common Stock for
which a Cash Election has been received (in each case,
together with the associated Right) shall be converted in the
Merger into the right to receive $85.00 in cash, without
interest (except to the extent specified in Section 1.5(f)),
and the shares of Company Common Stock for which Stock
Elections have been received shall be converted in the Merger
into the Exchange Ratio of Paired Shares and the right to
receive cash in the following manner: the largest whole
number of shares of Company Common Stock (and associated
Rights) covered by each Stock Election which is not in excess
of the number of shares of Company Common Stock covered by
such Stock Election multiplied by a fraction the numerator of
which shall be a number equal to 82% of the number of shares
of Company Common Stock issued and outstanding immediately
prior to the Effective Time and the denominator of which
shall be the aggregate number of shares of Company Common
Stock covered by all Stock Elections, shall be converted into
the right to receive the Exchange Ratio of Paired Shares. The
balance of the shares of Company Common Stock covered by
Stock Elections (together with the associated Rights) shall
be converted into the right to receive $85.00 per share in
cash, without interest (except to the extent specified in
Section 1.5(f)).
(d) If Cash Elections are received for a number of
shares of Company Common Stock which is greater than or
<PAGE>
equal to 18%, but less than or equal to 30%, the total number
of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, each share of
Company Common Stock covered by a Cash Election shall be
converted in the Merger into the right to receive $85.00 in
cash, without interest (except to the extent specified in
Section 1.5(f)), and each share of Company Common Stock
covered by a Stock Election shall be converted in the Merger
into the Exchange Ratio of Paired Shares.
(e) If Non-Electing Shares are not converted under
either Section 1.7(b) or Section 1.7(c), the Exchange Agent
shall determine by lot (or by such other method as is deemed
reasonable by the Parent Companies) which of such Non-
Electing Shares shall be converted in the Merger into the
right to receive $85.00 in cash per share, without interest
(except to the extent specified in Section 1.5(f)); provided,
however, that such selection by lot (or by such other method)
will cease when the sum of the shares converted in such
manner, plus the number of shares of Company Common Stock
covered by Cash Elections is equal to such percentage, not
less than 18% nor more than 30%, as shall be specified by the
Parent Companies in writing to the Exchange Agent prior to
the Effective Time, of the total number of shares of Company
Common Stock issued and outstanding immediately prior to the
Effective Time. Each Non-Electing Share not so converted into
cash shall be converted into the right to receive the
Exchange Ratio of Paired Shares.
(f) For the purpose of this Section 1.7, outstanding
shares of Company Common Stock (other than shares owned by
Parent, Sub, Trust or the Company or any of their respective
wholly owned Subsidiaries) as to which an Election is not in
effect at the Election Date and shares as to which an
Election has been withdrawn after the 60-day period following
the Election Date shall be called "Non-Electing Shares". If
the Parent Companies and the Company shall determine for any
reason that any Election was not properly made with respect
to shares of Company Common Stock, such Election shall be
deemed to be ineffective and shares of Company Common Stock
covered by such Election shall, for purposes hereof, be
deemed to be Non-Electing Shares.
Section 1.8 Parent Companies to Make Cash and
Certificates Available; Transfer Taxes; Withholding. (a) As soon
as practicable after the Effective Time, the Parent Companies
shall deposit with the Exchange Agent, in trust for the holders of
shares of Company Common Stock converted in the Merger,
<PAGE>
certificates representing the Paired Shares issuable and the cash
then payable pursuant to Sections 1.5, 1.7, 1.9 and 1.10 (such
cash and Paired Shares, together with any dividends or
distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall invest any cash
included in the Exchange Fund as directed by the Parent Companies,
on a daily basis. Any interest or other income resulting from such
investments shall be paid to the Parent Companies. As soon as
practicable after the Effective Time, the Exchange Agent shall
distribute to each holder of shares of Company Common Stock
converted into the right to receive cash or Paired Shares pursuant
to Section 1.5, 1.7, 1.9 and 1.10, upon surrender to the Exchange
Agent (to the extent not previously surrendered with a Form of
Election) of one or more Certificates for cancellation, a check
for the amount of cash to which such holder is entitled under such
sections and certificates representing Paired Shares to which such
holder is entitled under such sections. As soon as practicable
after the Effective Time, the Exchange Agent shall mail to each
holder of record of a Certificate or Certificates whose shares
were converted pursuant to this Article I (other than any holder
who previously surrendered all its Certificates with a Form of
Election or pursuant to a guarantee of delivery set forth in a
Form of Election) (A) a letter of transmittal in form reasonably
acceptable to the Company and the Parent Companies (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon actual delivery of
the Certificates to the Exchange Agent) and (B) instructions for
use in effecting the surrender of the Certificates.
(b) Upon surrender for cancellation to the Exchange
Agent of a Certificate, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that
number of whole Paired Shares issuable and the cash payable to
such holder pursuant to Sections 1.5, 1.7, 1.9 and 1.10 of this
Agreement. Each Paired Share into which a share of Company Common
Stock shall be converted shall be deemed to have been issued at
the Effective Time. All Paired Shares shall be issued directly by
the Trust and Parent and no Paired Shares shall at any time be
held by the Surviving Corporation. If any certificate representing
Paired Shares or cash or other property is to be issued or
delivered in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Certificate so surrendered
shall be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange shall pay to
the Exchange Agent any transfer or other taxes required by reason
of the issuance of certificates for such
<PAGE>
Paired Shares in a name other than that of the registered holder
of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not applicable. The Parent Companies or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as the Parent
Companies or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or under any
provision of state, local or foreign tax law. To the extent that
amounts are so withheld by the Parent Companies or the Exchange
Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and
withholding was made by the Parent Companies or the Exchange
Agent.
Section 1.9 Dividends. No dividends or other
distributions that are declared on or after the Effective Time on
the Paired Shares, or are payable to the holders of record thereof
on or after the Effective Time, will be paid to any person
entitled by reason of the Merger to receive a certificate
representing Paired Shares until such person surrenders the
related Certificate or Certificates, as provided in this Article
I. Subject to the effect of applicable law, there shall be paid to
each record holder of a new certificate representing such Paired
Shares: (i) at the time of such surrender or as promptly as
practicable thereafter, the amount, if any, of any dividends or
other distributions theretofore paid with respect to the Paired
Shares represented by such new certificate and having a record
date on or after the Effective Time and a payment date prior to
such surrender and (ii) at the appropriate payment date or as
promptly as practicable thereafter, the amount, if any, of any
dividends or other distributions payable with respect to such
Paired Shares and having a record date on or after the Effective
Time but prior to such surrender and a payment date on or
subsequent to such surrender. In no event shall the person
entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other
distributions.
Section 1.10 No Fractional Securities. No certificates
or scrip representing fractional Paired Shares shall be issued
upon the surrender for exchange of Certificates pursuant to this
Article I, and no Parent or Trust dividend or other distribution
or stock split shall relate to any fractional share, and no
fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent or
<PAGE>
Trust. In lieu of any such fractional share, each holder of
Company Common Stock who would otherwise have been entitled to a
fraction of a Paired Share upon surrender of Certificates for
exchange pursuant to this Article I will be paid an amount in cash
(without interest, except pursuant to Section 1.5(f)), rounded to
the nearest cent, determined by multiplying (i) the average of the
per share closing prices on the NYSE of a Paired Share (as
reported in the NYSE Composite Transactions) during the five
consecutive trading days ending on the trading day immediately
prior to the date of the Effective Time by (ii) the fractional
interest to which such holder would otherwise be entitled. As
promptly as practicable after the determination of the amount of
cash to be paid to holders of fractional share interests, the
Exchange Agent shall so notify the Parent Companies, and the
Parent Companies shall deposit such amount with the Exchange Agent
and shall cause the Exchange Agent to forward payments to such
holders of fractional share interests subject to and in accordance
with the terms of this Article I. For purposes of paying such cash
in lieu of fractional shares, all Certificates surrendered for
exchange by a Company stockholder shall be aggregated, and no such
Company stockholder will receive cash in lieu of fractional shares
in an amount equal to or greater than the value of one full Paired
Share with respect to such Certificates surrendered.
Section 1.11 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former
stockholders of the Company for one year after the Effective Time
shall be delivered to the Parent Companies and any such former
stockholders who have not theretofore complied with this Article I
shall thereafter look only to the Parent Companies for payment of
their claim for Paired Shares and/or cash into which such shares
of Company Common Stock are convertible, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or
distributions with respect to Paired Shares. None of Parent, Trust
or Surviving Corporation shall be liable to any former holder of
Company Common Stock for any such Paired Shares, cash and
dividends and distributions held in the Exchange Fund which is
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.12 Adjustment of Exchange Ratio. In the event
that, prior to the Effective Time, Parent or Trust effects any
reclassification, stock split or stock dividend with respect to
Parent Common Stock or Trust Shares, any change or conversion of
Parent Common Stock or Trust Shares into other securities or any
other dividend or distribution with respect to the Paired Shares,
other than (i) dividends contemplated by Sections 4.5(c) and (d)
and (ii) dividends in the aggregate not to exceed the
<PAGE>
greater of (a) the current rate of the Parent Companies' dividends
(together with any increases in such rate in the ordinary course)
and (b) the Trust's "real estate investment taxable income" (as
such term is defined for purposes of the Code) without regard to
any net capital gains or the deduction for dividends paid,
appropriate and proportionate adjustments, if any, shall be made
to the Exchange Ratio, and all references to the Exchange Ratio in
this Agreement shall be deemed to be to the Exchange Ratio as so
adjusted.
Section 1.13 No Further Ownership Rights in Company
Common Stock. All Paired Shares and cash issued or paid upon the
surrender for exchange of Certificates in accordance with the
terms hereof (including any cash or other property paid pursuant
to Sections 1.9 and 1.10) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of
Company Common Stock and associated Rights represented by such
Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been
declared or made by the Company on such shares of Company Common
Stock in accordance with the terms of this Agreement or prior to
the date of this Agreement and which remain unpaid at the
Effective Time.
Section 1.14 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be
closed and no transfer of shares of Company Common Stock shall
thereafter be made on the records of the Company. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation, the Exchange Agent or the Parent, such Certificates
shall be cancelled and exchanged as provided in this Article I.
Section 1.15 Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Parent
Companies or the Exchange Agent, the posting by such person of a
bond, in such reasonable amount as the Parent Companies or the
Exchange Agent may direct (but consistent with the practices the
Parent Companies apply to their own respective stockholders) as
indemnity against any claim that may be made against them with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Paired
Shares and/or cash or other property payable pursuant to this
Article I.
Section 1.16 Further Assurances. If at any time after
the Effective Time the Surviving Corporation shall consider
<PAGE>
or be advised that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable or
proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises,
properties or assets of either of the Constituent Corporations, or
(b) otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the
name and on behalf of either of the Constituent Corporations, all
such deeds, bills of sale, assignments and assurances and to do,
in the name and on behalf of either Constituent Corporation, all
such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes of
this Agreement.
Section 1.17 Closing. The closing of the Merger (the
"Closing") and all actions contemplated by this Agreement to occur
at the Closing shall take place at the offices of Sidley & Austin,
875 Third Avenue, New York, New York, at 10:00 a.m., local time,
on a date to be specified by the parties, which (subject to
fulfillment or waiver of the conditions set forth in Article VI)
shall be no later than the second business day following the day
on which the last of the conditions set forth in Article VI shall
have been fulfilled or waived, or at such other time and place as
Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT COMPANIES AND SUB
Each of the Parent Companies and Sub represents and
warrants to the Company as follows:
Section 2.1 Organization, Standing and Power. Each of
the Parent Companies and Sub is a real estate investment trust or
a corporation, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization and has the requisite power and authority to carry
on its business as now being conducted. Each Subsidiary of each of
the Parent Companies is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate (in the case of a
Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the
<PAGE>
failure to be so organized, existing or in good standing or to
have such power or authority, individually or in the aggregate,
has not had, and would not reasonably be expected to have, a
Material Adverse Effect (as hereinafter defined) on the Parent
Companies. The Parent Companies and each of their Subsidiaries are
duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held
under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so
qualified, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse
Effect on the Parent Companies.
For all purposes of this Agreement, any reference to any
state of facts, event, change or effect having a "Material Adverse
Effect" on or with respect to the Parent Companies or the Company,
as the case may be, means such state of facts, event, change or
effect which has had, or would reasonably be expected to have, a
material adverse effect on the business, properties, results of
operations, financial condition or prospects of the Parent
Companies and their Subsidiaries, taken as a whole, or the Company
and its Subsidiaries, taken as a whole, as the case may be. For
all purposes of this Agreement, "Subsidiary" means any
corporation, partnership, limited liability company, joint venture
or other legal entity of which the Parent Companies or the
Company, as the case may be (either alone or through or together
with any other Subsidiary), (i) owns, directly or indirectly, more
than 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation,
partnership, limited liability company, joint venture or other
legal entity or (ii) is a general partner, trustee or other entity
performing similar functions.
Section 2.2 Capital Structure. At the date hereof, the
authorized capital stock of Parent consists of 100,000,000 shares
of Parent Common Stock, and the authorized capital stock of Trust
consists of 100,000,000 Trust Shares, 20,000,000 excess trust
shares, par value $.01 per share ("Excess Trust Shares"), and
5,000,000 excess preferred shares, par value $.01 per share
("Excess Preferred Shares"). At the close of business on October
17, 1997, 51,302,015 shares of Parent Common Stock and 51,302,015
Trust Shares were issued and outstanding. As of October 17, 1997,
62,978,381 units of SLT Realty Limited Partnership ("SLT Units")
and 63,232,722 units of SLC Operating Limited Partnership ("SLC
Units") were outstanding. As of October 17, 1997, the Trust
beneficially owned 51,302,015 SLT Units and Parent and its
subsidiaries beneficially owned 51,302,015 SLC Units and the
remaining issued and outstanding SLT
<PAGE>
Units and SLC Units were owned by the persons and in the
quantities set forth in Section 2.2 of the Parent Letter. All the
outstanding SLT Units and SLC Units have been duly authorized and
are validly issued, fully paid and nonassessable. The capital
stock of Sub consists of 100,000 shares of Common Stock, no par
value, of which as of the date of this Agreement, 1,000 shares of
Common Stock were issued and outstanding, of which, as of the date
of the Agreement, 910 shares were owned directly by Parent and 90
shares were owned directly by Trust, and 10,000 shares of
Preferred Stock, no par value, of which as of the date of this
Agreement, no shares were issued and outstanding. Immediately
prior to the Effective Time, the Trust will acquire an appropriate
amount of Common Stock of the Sub. At the close of business on
October 17, 1997, none of the Parent Companies had any shares or
units reserved for issuance, except for Trust Shares and shares of
Parent Common Stock reserved for issuance upon the exchange of the
SLT Units and the SLC Units, respectively, and except that, as of
October 17, 1997, there were 5,908,313 shares of Parent Common
Stock and 5,908,313 Trust Shares reserved for issuance pursuant to
the Incentive and Non- Qualified Shares Option Plan (1986) of the
Trust, the Corporation Stock Non-Qualified Stock Option Plan
(1986) of the Trust, the Stock Option Plan (1986) of the
Corporation, the Trust Shares Option Plan (1986) of the
Corporation, the 1995 Share Option Plan of the Trust, and the 1995
Share Option Plan of the Corporation (collectively, the "Parent
Stock Plans"). Except as set forth above, at the close of business
on October 17, 1997, no shares of capital stock or other voting
securities of the Parent Companies were issued, reserved for
issuance or outstanding. All the outstanding shares of Parent
Common Stock and Trust Shares are validly issued, fully paid and
nonassessable and free of preemptive rights. All shares of Parent
Common Stock and Trust Shares issuable in exchange for Company
Common Stock at the Effective Time in accordance with this
Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights
and will be paired with each other in the same ratio as all other
shares of Parent Common Stock and Trust Shares are paired with
each other, as such ratio may change from time to time. As of the
date of this Agreement, except as set forth in Section 2.2 of the
letter dated the date hereof and delivered on the date hereof by
the Parent Companies to the Company, which letter relates to this
Agreement and is designated therein as the Parent Letter (the
"Parent Letter"), and except for (a) this Agreement, (b) stock
options issued pursuant to the Parent Stock Plans covering not in
excess of 5,908,313 Trust Shares and 5,908,313 shares of Parent
Common Stock (collectively, the "Parent Stock Options"), (c)
11,930,707 Trust Shares and 11,930,707 shares of Parent Common
Stock issuable upon the exchange of SLT Units and SLC Units,
<PAGE>
respectively, (d) the Transaction Agreement dated as of September
8, 1997 (the "Westin Transaction Agreement"), among the Parent
Companies, WHWE L.L.C., Woodstar Investor Partnership, Nomura
Asset Capital Corporation, Juergen Bartels, W&S Hotel L.L.C.,
Westin Hotels & Resorts Worldwide, Inc., W&S Lauderdale Corp., W&S
Seattle Corp., Westin St. John Hotel Company, Inc., W&S Denver
Corp., W&S Atlanta Corp., SLT Realty Limited Partnership and SLC
Operating Limited Partnership, and (e) Paired Shares issuable
pursuant to the Forward Purchase Contract dated as of October 13,
1997 (the "Forward Purchase Contract") with an affiliate of Union
Bank of Switzerland, there are no options, warrants, calls, rights
or agreements to which the Parent Companies or any of their
Subsidiaries is a party or by which any of them is bound
obligating the Parent Companies or any of their Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the Parent Companies or any
of their Subsidiaries or obligating the Parent Companies or any of
their Subsidiaries to grant, extend or enter into any such option,
warrant, call, right or agreement. Each outstanding share of
capital stock of each Subsidiary of the Parent Companies that is a
corporation is duly authorized, validly issued, fully paid and
nonassessable and, except as disclosed in the Parent SEC Documents
(as defined in Section 2.5) filed prior to the date of this
Agreement, each such share is owned by the Parent Companies or
another Subsidiary of the Parent Companies, free and clear of all
security interests, liens, claims, pledges, mortgages, options,
rights of first refusal, agreements, limitations on voting rights,
charges and other encumbrances of any nature whatsoever (each, a
"Lien"). As of the date of this Agreement, none of the Parent
Companies has outstanding any bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders or shareholders of the Parent
Companies may vote. As of the date of this Agreement, there are no
outstanding contractual obligations of the Parent Companies or any
of their Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Parent Companies or any of
their Subsidiaries. Except as set forth in Section 2.2 of the
Parent Letter, Exhibit 21 to the Annual Report on Form 10-K of the
Parent Companies for the year ended December 31, 1996 (the "Parent
Annual Report"), as filed with the Securities and Exchange
Commission (the "SEC"), is a true, accurate and correct statement
in all material respects of all the information required to be set
forth therein by the rules and regulations of the SEC.
Section 2.3 Authority. The Boards of Directors or
Trustees, as the case may be, of the Parent Companies and Sub
<PAGE>
have duly approved and adopted this Agreement. The Board of
Directors or Trustees, as the case may be, of each of the Parent
Companies has respectively declared advisable an amendment to
Parent's Articles of Incorporation and Trust's Declaration of
Trust to (i) increase the number of authorized shares of Parent
Common Stock to 1,000,000,000 and the number of authorized Trust
Shares to 1,000,000,000, respectively, and (ii) include any
provisions required by, or deemed advisable under, any Gaming Laws
(the "Charter Amendments"). The Board of Directors or Trustees, as
the case may be, of each of the Parent Companies has resolved to
recommend the approval by their respective stockholders or
shareholders, as applicable, of the respective Charter Amendments
and the respective issuance of Parent Common Stock and Trust
Shares, in connection with the Merger as contemplated by this
Agreement (the "Share Issuances"). Each of the Parent Companies
and Sub has all requisite power and authority to enter into this
Agreement and, subject to approval by the stockholders or
shareholders, as applicable, of Parent and Trust of the respective
Charter Amendments and Share Issuances, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by the Parent Companies and Sub and the
consummation by the Parent Companies and Sub of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of the Parent Companies and Sub, subject to
approval by the stockholders or shareholders, as applicable, of
Parent and Trust of the respective Charter Amendments and Share
Issuances. This Agreement has been duly executed and delivered by
each of the Parent Companies and Sub and (assuming the valid
authorization, execution and delivery of this Agreement by the
Company and the validity and binding effect of this Agreement on
the Company) constitutes the valid and binding obligation of the
Parent Companies and Sub enforceable against each of them in
accordance with its terms. The Charter Amendments, the Share
Issuances and the filing of a joint registration statement on Form
S-4 with the SEC by the Parent Companies under the Securities Act
of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), for the purpose of
registering the Paired Shares to be issued in connection with the
Merger as contemplated by this Agreement (together with any
amendments or supplements thereto, whether prior to or after the
effective date thereof, the "Registration Statement") have been
duly authorized by Parent's Board of Directors and Trust's Board
of Trustees.
Section 2.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other
actions described in this Section 2.4 have been obtained and all
filings and obligations described in this Section 2.4 have been
made, and except as set forth in Section 2.4 of the Parent
<PAGE>
Letter, the execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, result in any
violation of, or default or loss of a material benefit (with or
without notice or lapse of time, or both) under, or give to others
a right of termination, cancellation or acceleration of any
obligation under, or result in the creation of any Lien upon any
of the properties, assets or operations of the Parent Companies or
any of their Subsidiaries under, any provision of (i) the
Declaration of Trust, articles of incorporation, Trust Regulations
or by-laws, as applicable, of the Parent Companies, (ii) any
provision of the comparable charter or organization documents of
any Subsidiary of the Parent Companies, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the Parent Companies or any of their Subsidiaries or
(iv) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Parent Companies or any of their
Subsidiaries or any of their respective properties, assets or
operations, other than, in the case of clauses (ii), (iii) or
(iv), any such violations, defaults, losses, rights or Liens that,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Parent Companies,
materially impair the ability of the Parent Companies or Sub to
perform their respective obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval
of, any domestic (federal or state), foreign or supranational
court, commission, governmental body, regulatory agency, authority
or tribunal (a "Governmental Entity") is required by or with
respect to the Parent Companies or any of their Subsidiaries in
connection with the execution and delivery of this Agreement by
the Parent Companies or Sub or is necessary for the consummation
of the Merger and the other transactions contemplated by this
Agreement, except (i) in connection, or in compliance, with the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act and the
Securities Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the "Exchange Act"),
(ii) the filing of the Articles of Merger with the Secretary of
State of the State of Nevada and appropriate documents with the
relevant authorities of other states in which the Parent Companies
or any of their Subsidiaries are qualified to do business, (iii)
such filings and consents as may be required under any
environmental, health or public or worker safety law or regulation
specified in Section 2.4 of the Parent Letter pertaining to any
notification, disclosure or required approval triggered by the
Merger or by the transactions contemplated by this Agreement, (iv)
such filings as
<PAGE>
may be required in connection with the taxes described in Section
5.11, (v) applicable requirements, if any, of state securities or
"blue sky" laws ("Blue Sky Laws") and the NYSE, (vi) as may be
required under foreign laws, (vii) such filings as may be required
under the rules of the NYSE in connection with the Charter
Amendments, (viii) filings with and approvals by any regulatory
authority with jurisdiction over the Company's gaming operations
required under any Federal, state, local or foreign statute,
ordinance, rule, regulation, permit, consent, approval, license,
judgment, order, decree, injunction or other authorization
governing or relating to the current or contemplated casino and
gaming activities and operations of the Company, including the New
Jersey Casino Control Act and the rules and regulations
promulgated thereunder, the Nevada Gaming Control Act and the
rules and regulations promulgated thereunder, the Mississippi
Gaming Control Act and the rules and regulations promulgated
thereunder, the Clark County governmental authorities and the
rules and regulations promulgated thereby, the Indiana Gaming
Control Act and the rules and regulations promulgated thereunder,
the Nova Scotia Gaming Control Act and the rules and regulations
promulgated thereunder, and the Ontario-Gaming Control Act and the
rules and regulations promulgated thereunder (collectively, the
"Gaming Laws"), (ix) filings with and approvals of state
educational regulatory authorities, non governmental accrediting
commissions and the U.S. Department of Education and, if required,
with the Federal Communications Commission, (x) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings (a) as may be required under the laws of
any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any property or assets
or (b) as are set forth in Section 2.4 of the Parent Letter, and
(xi) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or
made, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Parent
Companies, materially impair the ability of the Parent Companies
or Sub to perform their respective obligations hereunder or
prevent the consummation of any of the transactions contemplated
hereby.
Section 2.5 SEC Documents and Other Reports. The Parent
Companies have filed all required documents with the SEC since
January 1, 1996 (the "Parent SEC Documents"). As of their
respective dates, the Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and, at the respective times
they were filed, none of the Parent SEC Documents contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make
<PAGE>
the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial
statements (including, in each case, any notes thereto) of the
Parent Companies included in the Parent SEC Documents complied as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto as of their respective dates of filing, were
prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the
consolidated financial position of Trust and Parent and their
consolidated Subsidiaries as of the respective dates thereof and
the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
Except as disclosed in the Parent SEC Documents or as required by
generally accepted accounting principles, the Parent Companies
have not, since December 31, 1996, made any change in the
accounting practices or policies applied in the preparation of
their financial statements.
Section 2.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by the Parent
Companies or Sub for inclusion or incorporation by reference in
the Registration Statement or the joint proxy statement/prospectus
included therein (together with any amendments or supplements
thereto, the "Joint Proxy Statement") relating to the Stockholder
Meetings (as defined in Section 5.1) will (i) in the case of the
Registration Statement, at the time it becomes effective and at
the Effective Time, 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 not
misleading or (ii) in the case of the Joint Proxy Statement, at
the time of the mailing of the Joint Proxy Statement and at the
time of each of the Stockholder Meetings, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not misleading. If at any time prior to the Effective
Time any event with respect to the Parent Companies, their
respective officers and directors or any of their Subsidiaries
shall occur that is required to be described in the Joint Proxy
Statement or the Registration Statement, such event shall be so
described, and an appropriate amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated
to the stockholders of Parent
<PAGE>
and the Company. The Registration Statement will comply as to form
in all material respects with the provisions of the Securities
Act, and the Joint Proxy Statement will comply (with respect to
the Parent Companies) as to form in all material respects with the
provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed prior to the date
of this Agreement, since December 31, 1996, (a) the Parent
Companies and their Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by
insurance) that, individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse Effect on
the Parent Companies, (b) there have not been any events, changes
or developments that, individually or in the aggregate, have had
or would reasonably be expected to have, a Material Adverse Effect
on the Parent Companies or (c) there has not been any split,
combination or reclassification of any of the capital stock of
Parent or Trust or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of such capital stock, except as
contemplated by this Agreement. The approximate aggregate amount
of indebtedness of the Parent Companies and their respective
Subsidiaries as of September 30, 1997, is set forth in Section 2.7
of the Parent Letter.
Section 2.8 Permits and Compliance. Each of the Parent
Companies and their respective Subsidiaries is in possession of
all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the
Parent Companies or any of their Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now
being conducted (the "Parent Permits"), except where the failure
to have any of the Parent Permits, individually or in the
aggregate, has not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Parent Companies, and, as
of the date of this Agreement, no suspension or cancellation of
any of the Parent Permits is pending or, to the Knowledge of the
Parent Companies (as hereinafter defined), threatened, except
where the suspension or cancellation of any of the Parent Permits,
individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Parent Companies. None of the Parent Companies or any of their
Subsidiaries is in violation of (A) their respective charter,
by-laws or other organizational documents, (B) any applicable law,
ordinance, administrative or governmental rule or regulation or
(C) any order, decree or
<PAGE>
judgment of any Governmental Entity having jurisdiction over the
Parent Companies or any of their Subsidiaries, except, in the case
of clauses (A), (B) and (C), for any violations that, individually
or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Parent
Companies. Except as disclosed in the Parent SEC Documents filed
prior to the date of this Agreement, as of the date hereof, there
is no contract or agreement that is material to the business,
properties, results of operations or financial condition of the
Parent Companies and their Subsidiaries, taken as a whole. Except
as set forth in the Parent SEC Documents or Section 2.8 of the
Parent Letter, prior to the date of this Agreement, no event of
default or event that, but for the giving of notice or the lapse
of time or both, would constitute an event of default exists or,
upon the consummation by the Parent Companies of the transactions
contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument
for borrowed money, any guarantee of any agreement or instrument
for borrowed money or any lease, license or other agreement or
instrument to which the Parent Companies or any of their
Subsidiaries is a party or by which the Parent Companies or any
such Subsidiary is bound or to which any of the properties, assets
or operations of the Parent Companies or any such Subsidiary is
subject, other than any defaults that, individually or in the
aggregate, have not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Parent Companies. For
purposes of this Agreement, the term "Knowledge" when used with
respect to the Parent Companies means the actual knowledge of the
individuals identified in Section 2.8 of the Parent Letter.
Section 2.9 Tax Matters. Except as otherwise set forth
in Section 2.9 of the Parent Letter, (i) the Parent Companies and
each of their respective Subsidiaries have timely filed all
federal, state, local, foreign and provincial income and Franchise
Tax Returns and all other material Tax Returns required to have
been filed or appropriate extensions therefor have been properly
obtained, and such Tax Returns are, true, correct and complete,
except to the extent that any failure to so file or any failure to
be true, correct and compete, individually or in the aggregate,
has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Parent Companies; (ii) all Taxes
required to have been paid by the Parent Companies and each of
their respective Subsidiaries have been timely paid or extensions
for payment have been properly obtained, except to the extent that
any failure to pay any such Taxes or to properly obtain an
extension for such payment, individually or in the aggregate, has
not had, and would not reasonably be expected to have, a Material
Adverse Effect on the
<PAGE>
Parent Companies; (iii) the Parent Companies and each of their
respective Subsidiaries have complied in all material respects
with all rules and regulations relating to the withholding of
Taxes except to the extent that any failure to comply with such
rules and regulations, individually in the aggregate, has not had,
and would not reasonably be expected to have, a Material Adverse
Effect on the Parent Companies; (iv) none of the Parent Companies
or any of their respective Subsidiaries has waived in writing any
statute of limitations in respect of its federal, state, local,
foreign or provincial income or franchise Taxes and no deficiency
with respect to any Taxes has been proposed, asserted or assessed
against any of the Parent Companies or any of their respective
Subsidiaries, except to the extent that any such waiver or
deficiency, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse
Effect on the Parent Companies; (v) all Federal income Tax Returns
referred to in clause (i) for all years through 1993 have been
examined by and settled with the Internal Revenue Service or the
period for assessment of Taxes in respect of which such Tax
returns were required to be filed has expired; (vi) no material
issues that have been raised in writing by the relevant taxing
authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; (vii) all
material deficiencies asserted or material assessments made as a
result of any examination of any Tax Returns referred to in clause
(i) by any taxing authority have been paid in full; (viii) the
most recent financial statements contained in the Parent SEC
Documents reflect an adequate reserve for all Taxes payable by the
Parent Companies and their respective Subsidiaries for all taxable
periods and portions thereof through the date of such financial
statements; and (ix) there are no material liens for Taxes (other
than for current Taxes not yet due and payable) on the assets of
the Parent Companies or any of their respective Subsidiaries. For
purposes of this Agreement: (i) "Taxes" means any federal, state,
local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, ad valorem,
value-added, transfer or excise tax, or other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any
Governmental Entity, and (ii) "Tax Return" means any return,
report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without
limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 2.10 Actions and Proceedings. Except as set
forth in the Parent SEC Documents filed prior to the date of this
Agreement, there are no outstanding orders, judgments,
<PAGE>
injunctions, awards or decrees of any Governmental Entity against
or involving the Parent Companies or any of their Subsidiaries, or
against or involving any of the directors, officers or employees
of the Parent Companies or any of their Subsidiaries, as such, any
of its or their properties, assets or business or any employee
benefit plan of the Parent Companies (a "Parent Plan") that,
individually or in the aggregate, have had, or would reasonably be
expected to have, a Material Adverse Effect on the Parent
Companies. As of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the Knowledge of the
Parent Companies, threatened against or involving the Parent
Companies or any of their Subsidiaries or any of their directors,
officers or employees, as such, or any of its or their properties,
assets or business or any Parent Plan that, individually or in the
aggregate, have had, or would reasonably be expected to have, a
Material Adverse Effect on the Parent Companies. As of the date
hereof, there are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of the Parent
Companies, threatened against or affecting the Parent Companies or
any of their Subsidiaries or any of their officers, directors or
employees, as such, or any of their properties, assets or business
relating to the transactions contemplated by this Agreement.
Section 2.11 Compliance with Worker Safety and
Environmental Laws. (a) Except as set forth in Section 2.11 of the
Parent Letter, the properties, assets and operations of the Parent
Companies and their respective Subsidiaries are in compliance with
all applicable federal, state, local, regional and foreign laws,
rules and regulations, orders, decrees, common law, judgments,
permits and licenses relating to public and worker health and
safety (collectively, "Worker Safety Laws") and the protection,
regulation and clean-up of the indoor and outdoor environment and
activities or conditions related thereto, including, without
limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous or toxic materials,
substances, wastes, pollutants and contaminants including, without
limitation, asbestos, petroleum, radon and polychlorinated
biphenyls (collectively, "Environmental Laws"), except for any
violations that, individually or in the aggregate, has not had, or
would not reasonably be expected to have, a Material Adverse
Effect on the Parent Companies. With respect to such properties,
assets and operations, including any previously owned, leased or
operated properties, assets or operations, there are no past,
present or reasonably anticipated future events, conditions,
circumstances, activities, practices, incidents, actions or plans
of the Parent Companies or any of their
<PAGE>
respective Subsidiaries that may interfere with or prevent
compliance or continued compliance with applicable Worker Safety
Laws and Environmental Laws, other than any such interference or
prevention that, individually or in the aggregate, has not had, or
would not reasonably be expected to have, a Material Adverse
Effect on the Parent Companies.
(b) The Parent Companies and their respective
Subsidiaries have not caused or permitted any property, asset,
operation, including any previously owned property, asset or
operation, to use, generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer or process hazardous or
toxic materials, substances, wastes, pollutants or contaminants,
except in material compliance with all Environmental Laws and
Worker Safety Laws, other than any such activity that,
individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Parent Companies. The Parent Companies and their respective
Subsidiaries have not reported to any Governmental Entity any
material violation of an Environmental Law or any release,
discharge or emission of any hazardous or toxic materials,
substances, wastes, pollutants or contaminants, other than any
such violation, release, discharge or emission that, individually
or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Parent
Companies. The Parent Companies have no Knowledge of any pending,
threatened or anticipated claims or liabilities under CERCLA, 42
U.S.C. ss. 9601 et seq., RCRA, 42 U.S.C. ss. 6901 et seq., or
equivalent state law provisions and no Knowledge that any current
or former property, asset or operation is identified or currently
proposed for the National Priorities List at 40 CFR ss. 300,
Appendix B, or the CERCLIS or equivalent state lists or hazardous
substances release sites.
Section 2.12 Liabilities. Except as set forth in the
Parent SEC Documents filed prior to the date hereof, the Parent
Companies and their Subsidiaries have no liabilities, absolute or
contingent, other than liabilities that, individually or in the
aggregate, have not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Parent Companies.
Section 2.13 Intellectual Property. The Parent Companies
and their Subsidiaries own or have the right to use all patents,
patent rights, trademarks, trade names, service marks, trade
secrets, copyrights and other proprietary intellectual property
rights (collectively, "Intellectual Property Rights") as are
necessary in connection with the business of the Parent Companies
and their Subsidiaries, taken as a whole, except where the failure
to have such Intellectual Property Rights,
<PAGE>
individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Parent Companies. Neither the Parent Companies nor any of their
respective Subsidiaries has infringed any Intellectual Property
Rights of any third party other than any infringements that,
individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Parent Companies.
Section 2.14 Opinion of Financial Advisor. The Parent
Companies have received the written opinion of Bear Stearns & Co.
Inc. dated November 12, 1997, to the effect that, as of dated
November 12, 1997, the consideration to be paid by the Parent
Companies in the Merger is fair to the Parent Companies from a
financial point of view.
Section 2.15 Required Vote of Parent and Trust
Stockholders. The affirmative votes of the holders of a majority
of the outstanding shares of Parent Common Stock and of the
outstanding Trust Shares are required to approve the respective
Charter Amendments of Trust and Parent. The affirmative vote of a
majority of the votes cast on each Share Issuance is required to
approve such Share Issuance; provided, that the total votes cast
on each such proposal represent a majority of the outstanding
shares of Parent Common Stock or Trust Shares, as applicable. No
other vote of the stockholders or shareholders of the Parent
Companies is required by law, the organization documents of the
Parent Companies or otherwise in order for the Parent Companies to
consummate the Merger and the transactions contemplated hereby.
Section 2.16 REIT Status. The Trust is a "real estate
investment trust" for federal income tax purposes and is not
subject to Section 269B(a)(3) of the Code by reason of Section
136(c) of the Deficit Reduction Act of 1984. The consummation of
the transactions contemplated by this Agreement will not cause the
Trust to cease to qualify as a "real estate investment trust" for
federal income tax purposes and will not cause the Trust to become
subject to Section 269B(a)(3) of the Code.
Section 2.17 Brokers. No broker, investment banker or
other person, other than Bear Stearns & Co. Inc., Starwood Capital
Group L.L.C. and Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, the fees and expenses of which will be paid by the
Parent Companies (subject to Section 5.7), is entitled to any
broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
<PAGE>
based upon arrangements made by or on behalf of the Parent
Companies.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the
Parent Companies and Sub as follows:
Section 3.1 Organization, Standing and Power. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has the
requisite corporate power and authority to carry on its business
as now being conducted. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or
other power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing
or in good standing or to have such power or authority,
individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held
under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so
qualified, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse
Effect on the Company.
Section 3.2 Capital Structure. At the date hereof, the
authorized capital stock of the Company consists of 200,000,000
shares of Company Common Stock and 50,000,000 shares of Preferred
Stock, no par value per share ("Company Preferred Stock"). At the
close of business on October 17, 1997, (i) 118,259,684 shares of
Company Common Stock were issued and outstanding, (ii) 1,123,526
shares of Company Common Stock were held in the treasury of the
Company or by its Subsidiaries, (iii) 133,399 shares of Company
Common Stock were reserved for issuance pursuant to the Company's
1996 Restricted Stock Plan for Non- Employee Directors, as
amended, and the Company's 1995 Incentive Stock Plan, as amended
(collectively, the "Company Stock Plans"), and (iv) no shares of
Company Common Stock were reserved in connection with the Rights
Agreement (as hereinafter defined). Except as set forth above, at
the close of business on October 17, 1997, no shares of capital
stock or other voting securities
<PAGE>
of the Company were issued, reserved for issuance or outstanding.
All the outstanding shares of Company Common Stock were validly
issued, fully paid and nonassessable and free of preemptive
rights. As of the date of this Agreement, except for (a) stock
options issued pursuant to the Company Stock Plans covering not in
excess of 8,718,231 shares of Company Common Stock (collectively,
the "Company Stock Options"),(b) the rights to purchase shares of
Series A Participating Cumulative Preferred Stock (the "Rights"),
issued pursuant to the Rights Agreement dated as of November 1,
1995 (the "Rights Agreement"), between the Company and The Bank of
New York, as Rights Agent, and (c) rights existing under an
Investment Agreement dated as of July 15, 1997 (the "CDRV
Investment Agreement"), between the Company and CDRV Acquisition,
L.L.C., there are no options, warrants, calls, rights or
agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
the Company or any of its Subsidiaries or obligating the Company
or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement. Except as set forth in
Section 3.2 of the letter dated the date hereof and delivered on
the date hereof by the Company to Parent, which letter relates to
this Agreement and is designated therein as the Company Letter
(the "Company Letter"), each outstanding share of capital stock of
each Subsidiary of the Company that is a corporation is duly
authorized, validly issued, fully paid and nonassessable and,
except as disclosed in the Company SEC Documents (as defined in
Section 3.5) filed prior to the date of this Agreement, each such
share is owned by the Company or another Subsidiary of the
Company, free and clear of all Liens. As of the date of this
Agreement, the Company does not have outstanding any bonds,
debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except (x) pursuant to an
agreement dated as of July 15, 1997 between the Company and
BellSouth Corporation, (y) to the extent that Article Ninth of the
Restated Articles of Incorporation of the Company or any
comparable provision of the articles of incorporation of any
Subsidiary of the Company required under any Gaming Laws could be
construed as a contractual obligation or (z) with respect to the
withholding of exercise price or withholding taxes under any stock
option plan, as of the date of this Agreement, there are no
outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries.
Exhibit 21 to the Company's Annual Report on Form
<PAGE>
10-K for the year ended December 31, 1996, as filed with the SEC
(the "Company Annual Report"), is a true, accurate and correct
statement in all material respects of all the information required
to be set forth therein by the rules and regulations of the SEC.
Section 3.3 Authority. The Board of Directors of the
Company has duly approved and adopted this Agreement, and has
resolved to recommend the approval of this Agreement by the
Company's stockholders and directed that this Agreement be
submitted to the Company's stockholders for approval. The Company
has all requisite corporate power and authority to enter into this
Agreement and, subject to approval by the stockholders of the
Company of this Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to
approval of this Agreement by the stockholders of the Company.
This Agreement has been duly executed and delivered by the Company
and (assuming the valid authorization, execution and delivery of
this Agreement by Parent, Trust and Sub and the validity and
binding effect of this Agreement on Parent, Trust and Sub)
constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The
filing of the Joint Proxy Statement with the SEC has been duly
authorized by the Company's Board of Directors.
Section 3.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other
actions described in this Section 3.4 have been obtained and all
filings and obligations described in this Section 3.4 have been
made, and except as set forth in Section 3.4 of the Company
Letter, the execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, result in any
violation of, or default or the loss of a material benefit (with
or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any
obligation under, or result in the creation of any Lien, upon any
of the properties, assets or operations of the Company or any of
its Subsidiaries under any provision of (i) the Restated Articles
of Incorporation, as amended, or the Amended and Restated By-Laws
of the Company, (ii) any provision of the comparable charter or
organization documents of any Subsidiary of the Company, (iii) any
loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its Subsidiaries or
(iv) any judgment, order,
<PAGE>
decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or any of their respective
properties, assets or operations, other than, in the case of
clauses (ii), (iii) or (iv), any such violations, defaults,
losses, rights or Liens that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect
on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of
any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or is necessary for the
consummation of the Merger and the other transactions contemplated
by this Agreement, except (i) in connection, or in compliance,
with the provisions of the HSR Act, the Securities Act and the
Exchange Act, (ii) the filing of the Articles of Merger with the
Secretary of State of the State of Nevada and appropriate
documents with the relevant authorities of other states in which
the Company or any of its Subsidiaries is qualified to do
business, (iii) such filings and consents as may be required under
any environmental, health or public or worker safety law or
regulation specified in Section 3.4 of the Company Letter
pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by
this Agreement, (iv) such filings as may be required in connection
with the taxes described in Section 5.11, (v) applicable
requirements, if any, of Blue Sky Laws and the NYSE, (vi) as may
be required under foreign laws, (vii) filings with and approvals
in respect of the Gaming Laws, (viii) filings with and approvals
of state educational regulatory authorities, non-governmental
accrediting commissions and the U.S. Department of Education and,
if required, with the Federal Communications Commission, (ix) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings as are set forth in Section 3.4 of the
Company Letter, and (x) such other consents, orders,
authorizations, registrations, declarations and filings the
failure of which to be obtained or made, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Company, materially impair the ability of
the Company to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company
has filed all required documents with the SEC since January 1,
1996 (the "Company SEC Documents"). As of their respective dates,
the Company SEC Documents complied in all material respects with
the requirements of the Securities Act or
<PAGE>
the Exchange Act, as the case may be, and, at the respective times
they were filed, none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Company
included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as
of their respective dates of filing, were prepared in accordance
with generally accepted accounting principles (except, in the case
of the unaudited statements, as permitted by Regulation S-X of the
SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and
fairly presented the consolidated financial position of the
Company and its consolidated Subsidiaries as of the respective
dates thereof and the consolidated results of operations and their
consolidated cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
Except as disclosed in the Company SEC Documents or as required by
generally accepted accounting principles, the Company has not,
since December 31, 1996, made any change in the accounting
practices or policies applied in the preparation of its financial
statements.
Section 3.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by the Company
for inclusion or incorporation by reference in the Registration
Statement or the Joint Proxy Statement will (i) in the case of the
Registration Statement, at the time it becomes effective and at
the Effective Time, 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 not
misleading or (ii) in the case of the Joint Proxy Statement, at
the time of the mailing of the Joint Proxy Statement and at the
time of each of the Stockholder Meetings, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not misleading. If at any time prior to the Effective
Time any event with respect to the Company, its officers and
directors or any of its Subsidiaries shall occur that is required
to be described in the Joint Proxy Statement or the Registration
Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the stockholders of Parent and
the Company. The Joint Proxy
<PAGE>
Statement will comply (with respect to the Company) as to form in
all material respects with the provisions of the Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except
as disclosed in the Company SEC Documents filed prior to the date
of this Agreement since December 31, 1996, (a) the Company and its
Subsidiaries have not sustained any loss or interference with
their business or properties from fire, flood, windstorm, accident
or other calamity (whether or not covered by insurance) that,
individually or in the aggregate, has had, or would reasonably be
expected to have, a Material Adverse Effect on the Company and
(b)(i) there has been no change in the capital stock of the
Company (except for the issuance of shares of the Company Common
Stock pursuant to Company Stock Plans) and no dividend or
distribution of any kind declared, paid or made by the Company on
any class of its stock and (ii) there have not been any events,
changes or developments that, individually or in the aggregate,
have had or would reasonably be expected to have a Material
Adverse Effect on the Company. The aggregate amount of
indebtedness of the Company and its Subsidiaries as of September
30, 1997, is set forth in Section 3.7 of the Company Letter.
Section 3.8 Permits and Compliance. Except as set forth
in Section 3.8 of the Company Letter, each of the Company and its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary for the Company or any of its
Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Company
Permits"), except where the failure to have any of the Company
Permits, individually or in the aggregate, has not had, and would
not reasonably be expected to have, a Material Adverse Effect on
the Company, and, as of the date of this Agreement, no suspension
or cancellation of any of the Company Permits is pending or, to
the Knowledge of the Company (as hereinafter defined), threatened,
except where the suspension or cancellation of any of the Company
Permits, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries is in
violation of (A) its charter, by-laws or other organizational
documents, (B) any applicable law, ordinance, administrative or
governmental rule or regulation or (C) any order, decree or
judgment of any Governmental Entity having jurisdiction over the
Company or any of its Subsidiaries, except, in the case of clauses
(A), (B) and (C), for any violations that, individually or in the
aggregate, has not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Company. Except as
disclosed in the Company SEC
<PAGE>
Documents filed prior to the date of this Agreement, as of the
date hereof, there is no contract or agreement that is material to
the business, properties, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole.
Except as set forth in the Company SEC Documents or Section 3.8 of
the Company Letter, prior to the date of this Agreement, no event
of default or event that, but for the giving of notice or the
lapse of time or both, would constitute an event of default exists
or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument
for borrowed money, any guarantee of any agreement or instrument
for borrowed money or any lease, license or other agreement or
instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any such Subsidiary is bound or
to which any of the properties, assets or operations of the
Company or any such Subsidiary is subject, other than any defaults
that, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect on
the Company. For purposes of this Agreement, the term "Knowledge"
when used with respect to the Company means the actual knowledge
of the individuals identified in Section 3.8 of the Company
Letter.
Section 3.9 Tax Matters. Except as otherwise set forth
in Section 3.9 of the Company Letter, (i) the Company and each of
its Subsidiaries have timely filed all federal, state, local,
foreign and provincial income and Franchise Tax Returns and all
other material Tax Returns required to have been filed or
appropriate extensions therefor have been properly obtained, and
such Tax Returns are true, correct and complete, except to the
extent that any failure to so file or any failure to be true,
correct and complete, individually or in the aggregate, has not
had, and would not reasonably be expected to have, a Material
Adverse Effect on the Company; (ii) all Taxes required to have
been paid by the Company and each of its Subsidiaries have been
timely paid or extensions for payment have been properly obtained,
except to the extent that any failure to pay any such Taxes or to
properly obtain an extension for such payment, individually or in
the aggregate, has not had, and would not reasonably be expected
to have, a Material Adverse Effect on the Company; (iii) the
Company and each of its Subsidiaries have complied in all material
respects with all rules and regulations relating to the
withholding of Taxes except to the extent that any failure to
comply with such rules and regulations, individually or in the
aggregate, has not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Company; (iv) neither the
Company nor any of its Subsidiaries has waived in writing any
statute of limitations in respect of its
<PAGE>
federal, state, local, foreign or provincial income or franchise
Taxes and no deficiency with respect to any Taxes has been
proposed, asserted or assessed against the Company or any of its
Subsidiaries, except the extent that any such waiver to
deficiency, individually or in the aggregate has not had, and
would not reasonably be expected to have, a Material Adverse
Effect on the Company; (v) all Federal income Tax Returns referred
to in clause (i) for all years through 1989 have been examined by
and settled with the Internal Revenue Service or the period for
assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (vi) no material issues that
have been raised in writing by the relevant taxing authority in
connection with the examination of the Tax Returns referred to in
clause (i) are currently pending; and (vii) all material
deficiencies asserted or material assessments made as a result of
any examination of any Tax Returns referred to in clause (i) by
any taxing authority have been paid in full; (viii) the most
recent financial statements contained in the Company SEC Documents
reflect an adequate reserve for all Taxes payable by the Company
and its Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements; and (ix) there are
no material liens for Taxes (other than for current Taxes not yet
due and payable) on the assets of the Company or any of its
Subsidiaries.
Section 3.10 Actions and Proceedings. Except as set
forth in the Company SEC Documents filed prior to the date of this
Agreement, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against
or involving the Company or any of its Subsidiaries, or against or
involving any of the directors, officers or employees of the
Company or any of its Subsidiaries, as such, any of its or their
properties, assets or business or any Company Plan (as hereinafter
defined) that, individually or in the aggregate, have had, or
would reasonably be expected to have, a Material Adverse Effect on
the Company. Except as set forth in Section 3.10 of the Company
Letter or in the Company SEC Documents filed prior to the date
hereof, as of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its
Subsidiaries or any of its or their directors, officers or
employees as such, or any of its or their properties, assets or
business or any Company Plan that, individually or in the
aggregate, have had, or would reasonably be expected to have, a
Material Adverse Effect on the Company. Except as set forth in
Section 3.10 of the Company Letter or in the Company SEC Documents
filed prior to the date hereof, as of the date hereof, there are
no actions, suits, labor disputes or other litigation,
<PAGE>
legal or administrative proceedings or governmental investigations
pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of its or
their officers, directors or employees, as such, or any of its or
their properties, assets or business relating to the transactions
contemplated by this Agreement.
Section 3.11 Certain Agreements. Except as set forth in
the Company SEC Documents filed prior to the date hereof or as
listed on Section 3.11 of the Company Letter, neither the Company
nor any of its Subsidiaries is a party to any oral or written
agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement. No holder of any option to purchase shares of
Company Common Stock, or shares of Company Common Stock granted in
connection with the performance of services for the Company or its
Subsidiaries, is or will be entitled to receive cash from the
Company or any Subsidiary in lieu of or in exchange for such
option or shares as a result of the transactions contemplated by
this Agreement (subject to Section 5.8).
Section 3.12 ERISA. (a) Section 3.12 (a) of the Company
Letter contains a list of each Company Plan (as hereinafter
defined) maintained by the Company and each material Company Plan
maintained by a Subsidiary of the Company. To the extent
applicable, with respect to each Company Plan, the Company has
made, or will as soon as practicable after the date hereof, make
available to Parent a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the IRS, (ii) such Company
Plan and all amendments thereto, (iii) each trust agreement,
insurance contract or administration agreement relating to such
Company Plan, (iv) the most recent summary plan description for
each Company Plan for which a summary plan description is
required, (v) the most recent actuarial report or valuation
relating to a Company Plan subject to Title IV of ERISA, (vi) the
most recent determination letter, if any, issued by the IRS with
respect to any Company Plan intended to be qualified under section
401(a) of the Code, (vii) any request for a determination
currently pending before the IRS and (viii) all correspondence
with the IRS, the Department of Labor or the Pension Benefit
Guaranty Corporation relating to any outstanding controversy.
Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on
<PAGE>
the Company, (i) each Company Plan complies with ERISA, the Code
and all other applicable statutes and governmental rules and
regulations, (ii) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred within the past three years
with respect to any Company Plan which is likely to result in
liability to the Company, (iii) neither the Company nor any of its
ERISA Affiliates (as hereinafter defined) has withdrawn from any
Company Multiemployer Plan (as hereinafter defined) at any time
within the past six years or instituted, or is currently
considering taking, any action to do so, and (iv) no action has
been taken, or is currently being considered, to terminate any
Company Plan subject to Title IV of ERISA.
(b) There has been no failure to make any contribution
or pay any amount due to any Company Plan as required by Section
412 of the Code, Section 302 of ERISA, or the terms of any such
Plan, and no Company Plan, nor any trust created thereunder, has
incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived.
(c) With respect to the Company Plans, no event has
occurred and, to the Knowledge of the Company, there exists no
condition or set of circumstances in connection with which the
Company or any ERISA Affiliate would be subject to any liability
under the terms of such Company Plans, ERISA, the Code or any
other applicable law which has had, or would reasonably be
expected to have, a Material Adverse Effect on the Company. Except
as listed on Section 3.12(c) of the Company Letter, all Company
Plans that are intended to be qualified under Section 401(a) of
the Code have been determined by the IRS to be so qualified, or a
timely application for such determination is now pending or will
be filed on a timely basis and, except as listed on Section
3.12(c) of the Company Letter, to the Knowledge of the Company
there is no reason why any Company Plan is not so qualified in
operation. Neither the Company nor any of its ERISA Affiliates has
been notified by any Company Multiemployer Plan that such Company
Multiemployer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or
that such Company Multiemployer Plan intends to terminate or has
been terminated under Section 4041A of ERISA. Neither the Company
nor any of its ERISA Affiliates has any liability or obligation
under any welfare plan to provide life insurance or medical
benefits after termination of employment to any employee or
dependent other than as required by (i) Part 6 of Title I of ERISA
or as disclosed in Section 3.12(c) of the Company Letter or (ii)
the laws of a jurisdiction outside the United States.
<PAGE>
(d) As used herein, (i) "Company Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA (other than a Company
Multiemployer Plan)), a "welfare plan" (as defined in Section 3(1)
of ERISA), or any material bonus, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, vacation, severance, death
benefit, insurance or other plan, arrangement or understanding, in
each case established or maintained or contributed to by the
Company or any of its ERISA Affiliates or as to which the Company
or any of its ERISA Affiliates or otherwise may have any
liability, (ii) "Company Multiemployer Plan" means a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its ERISA Affiliates is or has been
obligated to contribute or otherwise may have any liability, and
(iii) with respect to any person, "ERISA Affiliate" means any
trade or business (whether or not incorporated) which is under
common control or would be considered a single employer with such
person pursuant to Section 414(b), (c), (m) or (o) of the Code and
the regulations promulgated under those sections or pursuant to
Section 4001(b) of ERISA and the regulations promulgated
thereunder.
(e) Section 3.12(e) of the Company Letter contains a
list of each Company Ex-U.S. Pension Plan and the Company has
made, or as soon as practicable after the date hereof will make,
available to Parent a copy of any written plan document. Except as
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, each such
plan has been maintained in all material respects in compliance
with all applicable laws, orders and regulations, and the fair
market value of the assets of each such plan which is intended to
be a funded Company plan or arrangement equals or exceeds the
value of the accrued benefits. "Company Ex-U.S. Pension Plan"
shall mean any arrangement (other than a Company Plan) providing
retirement pension benefits that is established or maintained by
the Company or any Subsidiary exclusively for the benefit of
employees who are or were employed outside the United States.
(f) Section 3.12(f) of the Company Letter contains a
list, as of the date of this Agreement, of all (i) severance and
employment agreements with officers of the Company and each ERISA
Affiliate, (ii) severance programs and formal policies of the
Company with or relating to its employees and (iii) plans,
programs, agreements and other arrangements of the Company with or
relating to its employees which contain change of control or
similar provisions, in each case involving a severance or
employment agreement or arrangement with an individual officer or
employee, only to the extent such agreement or arrangement
<PAGE>
provides for minimum annual payments in excess of $150,000. The
Company has provided to the Parent a true and complete copy of
each of the foregoing or will provide such a copy as soon as
practical after the date hereof.
Section 3.13 Compliance with Worker Safety and
Environmental Laws. (a) Except as set forth in Section 3.13 of the
Company Letter, the properties, assets and operations of the
Company and its Subsidiaries are in compliance with all applicable
federal, state, local, regional and foreign laws, rules and
regulations, orders, decrees, common law, judgments, permits and
licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and the protection,
regulation and clean-up of the indoor and outdoor environment and
activities or conditions related thereto, including, without
limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous or toxic materials,
substances, wastes, pollutants and contaminants including, without
limitation, asbestos, petroleum, radon and polychlorinated
biphenyls (collectively, "Environmental Laws"), except for any
violations that, individually or in the aggregate, have not had,
and would not reasonably be expected to have, a Material Adverse
Effect on the Company. With respect to such properties, assets and
operations, including any previously owned, leased or operated
properties, assets or operations, there are no past, present or
reasonably anticipated future events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company
or any of its Subsidiaries that may interfere with or prevent
compliance or continued compliance with applicable Worker Safety
Laws and Environmental Laws, other than any such interference or
prevention that, individually or in the aggregate, has not had,
and would not reasonably be expected to have, a Material Adverse
Effect on the Company.
(b) The Company and its Subsidiaries have not caused or
permitted any property, asset, operation, including any previously
owned property, asset or operation, to use, generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer or
process hazardous or toxic materials, substances, wastes,
pollutants or contaminants, except in material compliance with all
Environmental Laws and Worker Safety Laws, other than any such
activity that, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse
Effect on the Company. The Company and its Subsidiaries have not
reported to any Governmental Entity any material violation of an
Environmental Law or any release, discharge or emission of any
hazardous or toxic materials, substances, wastes, pollutants or
contaminants, other than any such violation, release, discharge or
emission that, individually or in the
<PAGE>
aggregate, has not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Company. The Company has no
Knowledge of any pending, threatened or anticipated claims or
liabilities under CERCLA, 42 U.S.C. ss. 9601 et seq., RCRA, 42
U.S.C. ss. 6901 et seq., or equivalent state law provisions and no
Knowledge that any current or former property, asset or operation
is identified or currently proposed for the National Priorities
List at 40 CFR ss. 300, Appendix B, or the CERCLIS or equivalent
state lists or hazardous substances release sites.
Section 3.14 Liabilities. Except as set forth in Section
3.14 of the Company Letter or in the Company SEC Documents filed
prior to the date hereof, the Company and its Subsidiaries have no
liabilities, absolute or contingent, other than liabilities that,
individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Company.
Section 3.15 Intellectual Property. The Company and its
Subsidiaries own or have the right to use all Intellectual
Property Rights as are necessary in connection with the business
of the Company and its Subsidiaries, taken as a whole, except
where the failure to have such Intellectual Property Rights,
individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has
infringed any Intellectual Property Rights of any third party
other than any infringements that, individually or in the
aggregate, have not had, and would not reasonably be expected to
have, a Material Adverse Effect on the Company.
Section 3.16 Rights Agreement. The Company has taken all
necessary action to (i) render the Rights inapplicable to the
Merger and the other transactions contemplated by this Agreement
and (ii) ensure that (y) neither Parent nor any of its affiliates
is an Acquiring Person (as defined in the Rights Agreement) and
(z) a Distribution Date (as defined in the Rights Agreement) does
not occur by reason of the announcement or consummation of the
Merger or the consummation of any of the other transactions
contemplated by this Agreement.
Section 3.17 Parachute Payments to Disqualified
Individuals. The estimated "excess parachute payments" (as such
term is defined in Section 280G(a) of the Code) payable to all
employees of the Company and its Subsidiaries who (i) are
"disqualified individuals" under Section 280G of the Code and (ii)
are not covered in the report prepared by Towers Perrin as of
October 18, 1997 and delivered to the Parent Companies prior to or
on the date hereof will not exceed $5,000,000, assuming for
<PAGE>
this purpose that no such employee's employment is terminated in
connection with the transactions contemplated under this
Agreement.
Section 3.18 Opinion of Financial Advisor. The Company
has received the written opinion of Lazard Freres & Co. LLC, dated
November 12, 1997, to the effect that, as of November 12, 1997,
the consideration to be paid by the Parent Companies in the Merger
is fair to the Company's stockholders from a financial point of
view.
Section 3.19 State Takeover Statutes. The Board of
Directors of the Company has, to the extent such statutes are
applicable, taken (or, with respect to Sections 78.378 to 78.3793
of the NGCL, will take prior to the Effective Time) all action
necessary to exempt the Parent Companies, their respective
Subsidiaries and affiliates, the Merger, this Agreement and the
transactions contemplated hereby from Sections 78.378 to 78.3793
and Sections 78.411 to 78.444 of the NGCL or to satisfy the
requirements thereof. To the Knowledge of the Company, no other
state takeover statutes are applicable to the Merger, this
Agreement or the transactions contemplated hereby.
Section 3.20 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock is required to approve this
Agreement. No other vote of the stockholders of the Company is
required by law, the Restated Articles of Incorporation, as
amended, or the Amended and Restated By-laws of the Company or
otherwise in order for the Company to consummate the Merger and
the transactions contemplated hereby.
Section 3.21 Brokers. No broker, investment banker or
other person, other than Goldman, Sachs & Co., Lazard Freres & Co.
LLC and Gleacher NatWest Inc., the fees and expenses of which will
be paid by the Company (as reflected in agreements between such
firms and the Company, copies of which have been furnished to
Parent), is entitled to any broker's, finder's or other similar
fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of
the Company.
<PAGE>
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending
the Merger. Except as contemplated by Section 4.5 or as set forth
in Section 4.1 of the Company Letter, during the period from the
date of this Agreement to the Effective Time, the Company shall,
and shall cause each of its Subsidiaries to, carry on its business
in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and, to the extent consistent
therewith, use all reasonable efforts to keep available the
services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors, lessors and
others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective
Time. Except as otherwise expressly permitted by this Agreement
and as set forth in Section 4.2 of the Company Letter, the Company
shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of Parent:
(a) except as set forth in Section 4.5 ,(i) declare, set
aside or pay any dividends on, or make any other actual,
constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its
stockholders in their capacity as such (other than dividends
and other distributions by direct or indirect wholly owned
Subsidiaries), (ii) other than in the case of any direct or
indirect wholly owned Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock or (iii)
purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(b) except as set forth in Section 4.5, issue, deliver,
sell, pledge, dispose of or otherwise encumber any shares of
its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights,
warrants or options to acquire any such shares, voting
securities, equity equivalent or convertible securities,
other than the issuance of shares of Company Common Stock
(and associated Rights) upon the exercise of employee stock
options pursuant to the Company Stock Plans outstanding on
the date of this Agreement in accordance with their current
terms;
<PAGE>
(c) amend its articles or certificate of incorporation
or by-laws or other comparable organizational documents;
(d) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of
the assets of or equity in, or by any other manner, any
business or any corporation, partnership, association or
other business organization or division thereof or (ii) any
assets that are, individually or in the aggregate material to
the Company and its Subsidiaries taken as a whole, other than
transactions that are in the ordinary course of business
consistent with past practice and not material to the Company
and its Subsidiaries taken as a whole;
(e) except as set forth in Section 4.5, sell, lease,
license, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of, or agree to sell, lease,
license, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business
consistent with past practice and not material to the Company
and its Subsidiaries taken as a whole;
(f) except as set forth in Section 4.5, incur any
indebtedness for borrowed money, guarantee any such
indebtedness, issue or sell any debt securities or warrants
or other rights to acquire any debt securities, guarantee any
debt securities or make any loans, advances or capital
contributions to, or other investments in, any other person,
or enter into any arrangement having the economic effect of
any of the foregoing, other than (i) indebtedness incurred in
the ordinary course of business consistent with past practice
and (ii) indebtedness, loans, advances, capital contributions
and investments between the Company and any of its wholly
owned Subsidiaries or between any of such wholly owned
Subsidiaries;
(g) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate
structure or ownership of the Company or any Subsidiary;
(h) except as required under any collective bargaining
agreement or under Section 5.8, enter into or adopt any new,
or amend any existing, severance plan, agreement or
arrangement or enter into any new or amend any existing
Company Plan or employment or consulting agreement, other
than as required by law or as set forth in Section 4.1(h) of
the Company Letter, except that the Company or its
Subsidiaries may enter into (a) employment agreements if
<PAGE>
such agreements (i) are no longer than one year in duration
and (ii) provide for an annual base salary of less than
$150,000, and (b) consulting agreements in the ordinary
course of business that are terminable on no more than 90
days' notice without penalty, and the Company or its
Subsidiaries may amend any Company Plan or other plan,
program, policy or arrangement if such amendment will result
in not more than a de minimus additional cost to the Company
or its Subsidiaries;
(i) except (1) as permitted under Section 4.1(h), (2) as
permitted under Section 5.15 or (3) to the extent required by
written employment agreements existing on the date of this
Agreement, increase the compensation payable or to become
payable to its officers or employees, except for (i)
increases in the ordinary course of business consistent with
past practice in salaries or wages of employees of the
Company or any of its Subsidiaries and (ii) except to the
extent required under the terms of any applicable incentive
plan, the payment of annual incentive bonuses for 1997 which
are not in the aggregate in excess of two times the target
bonus for 1997 established for 1997 prior to the date of this
Agreement;
(j) grant or award any stock options, restricted stock,
performance shares, stock appreciation rights or other
equity-based incentive awards, other than an award which (i)
is made to a management employee or non-employee director who
would be eligible to receive such award under the terms of
the Company Stock Plans as applied consistently with past
practice and (ii) is made on terms substantially the same as
the terms of awards previously awarded under such plan;
(k) take any action, other than reasonable and usual
actions in the ordinary course of business consistent with
past practice, with respect to accounting policies or
procedures (other than actions required to be taken by
generally accepted accounting principles);
(l) except as disclosed in the Company's capital
expenditure plan which has been disclosed to Parent or for
maintenance capital expenditures in the ordinary course of
business consistent with past practice, make or agree to make
any new capital expenditure or expenditures which,
individually, is in excess of $5,000,000 or, in the
aggregate, are in excess of $50,000,000;
<PAGE>
(m) except as permitted by Section 4.5, pay, discharge
or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or
in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of
the Company included in the Company SEC Documents or incurred
in the ordinary course of business consistent with past
practice;
(n) settle or compromise any material federal, state,
local or foreign tax liability;
(o) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of
the foregoing.
Section 4.2 Conduct of Business by the Parent Companies
Pending the Merger. Except as contemplated by Section 4.5 or as
set forth in Section 4.2 of the Parent Letter, during the period
from the date of this Agreement to the Effective Time, the Parent
Companies shall, and shall cause each of their respective
Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent
therewith, use all reasonable efforts to keep available the
services of their respective current officers and employees and
preserve their respective relationships with customers, suppliers,
licensors, lessors and others having business dealings with them
to the end that their goodwill and ongoing business shall be
unimpaired at the Effective Time. Except as otherwise expressly
permitted by this Agreement and as set forth in Section 4.2 of the
Parent Letter, the Parent Companies shall not, and shall not
permit any of their respective Subsidiaries to, without the prior
written consent of the Company:
(a) except as contemplated by Section 4.5, (i) declare,
set aside or pay any dividends on, or make any other actual,
constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its
stockholders or shareholders, as applicable, in their
capacity as such (other than (A) dividends in the aggregate
amount not to exceed the greater of (a) the current rate of
the Parent Companies dividends and (b) the Trust's "real
estate investment taxable income" (as such term is defined
for purposes of the Code) without regard to
<PAGE>
any net capital gains or the deduction for dividends paid
(provided that this Section 4.2(a) shall not be deemed to
restrict any increases in the dividend rate of the Parent
Companies in the ordinary course consistent with past
practice) and (B) dividends and other distributions by
direct, indirect or wholly owned Subsidiaries) or (ii) other
than in the case of any Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or
in substitution for Paired Shares;
(b) in the case of the Parent Companies only, except as
set forth in Section 4.5, amend its articles or certificate
of incorporation or declaration of trust, other than in
connection with the respective Charter Amendments;
(c) take or omit any action that would reasonably be
expected to cause the Trust to cease to qualify as a "real
estate investment trust" for federal income tax purposes or
that would reasonably be expected to cause the Trust to
become subject to Section 269B(a)(3) of the Code; or
(d) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of
the foregoing.
Notwithstanding anything contained herein to the
contrary and except as permitted by Section 4.5(c), neither Trust
nor Parent shall declare, set aside or pay any cash dividend or
make any cash distribution or otherwise make any payments in cash
to its stockholders or shareholders, as applicable, having a
record date for the determination of the stockholders or
shareholders entitled to such dividend, distribution or other
payment occurring during the period from and including the first
day of the Averaging Period through and including the fourth
trading day after the last day of the Averaging Period.
Section 4.3 No Solicitation. (a) The Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any officer, director or employee of or any
investment banker, attorney, accountant, agent or other advisor or
representative of the Company or any of its Subsidiaries to, (i)
solicit, initiate, or encourage the submission of, any takeover
proposal, (ii) except to the extent permitted by paragraph (b),
enter into any agreement with respect to any takeover proposal or
(iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any
<PAGE>
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal;
provided, however, that prior to the Company Stockholders' Meeting
(as defined in Section 5.1), to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority of the disinterested
members thereof based on the advice of outside counsel, the
Company may, in response to unsolicited requests therefor,
participate in discussions or negotiations with, or furnish
information pursuant to an appropriate confidentiality agreement
to, any person. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding
sentence by any officer, director or employee of or any investment
banker, attorney, accountant, agent or other advisor or
representative of the Company or any of its Subsidiaries, whether
or not such person is purporting to act on behalf of the Company
or otherwise, shall be deemed to be a breach of this paragraph by
the Company. For all purposes of this Agreement, "takeover
proposal" means any proposal, other than a proposal by Parent or
Trust for a merger, consolidation, share exchange, business
combination or other similar transaction involving the Company or
any of its Significant Subsidiaries or any proposal or offer
(including, without limitation, any proposal or offer to
stockholders of the Company), other than a proposal or offer by
Parent or Trust to acquire in any manner, directly or indirectly,
an equity interest in, any voting securities of, or a substantial
portion of the assets of, the Company or any of its Significant
Subsidiaries. The Company immediately shall cease and cause to be
terminated all existing discussions or negotiations with any
persons conducted heretofore with respect to, or that could
reasonably be expected to lead to, any takeover proposal. As used
herein, a "Significant Subsidiary" means any Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule
1-02 of Regulation S-X of the SEC.
(b) Neither the Board of Directors of the Company nor
any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, Trust or Sub,
the approval or recommendation by the Board of Directors of the
Company or any such committee of this Agreement or the Merger or
(ii) approve or recommend, or propose to approve or recommend, any
takeover proposal. Notwithstanding the foregoing, the Board of
Directors of the Company, to the extent required by the fiduciary
obligations thereof, as determined in good faith by a majority of
the disinterested members thereof based on the advice of outside
counsel, may approve or recommend (and, in connection therewith,
withdraw or modify its approval or recommendation of this
Agreement or the Merger) a superior proposal. For all
<PAGE>
purposes of this Agreement, "superior proposal" means a bona fide
written proposal made by a third party to acquire the Company
pursuant to a tender or exchange offer, a merger, a share
exchange, a sale of all or substantially all its assets or
otherwise on terms which a majority of the disinterested members
of the Board of Directors of the Company determines in their good
faith judgment (based on the opinion, with only customary
qualifications, of independent financial advisors that the value
of the consideration provided for in such proposal exceeds the
value of the consideration provided for in the Merger) to be more
favorable to the Company and its stockholders than the Merger and
for which financing, to the extent required, is then fully
committed or which, in the good faith judgment of a majority of
such disinterested members (based on the advice of independent
financial advisors), is reasonably capable of being financed by
such third party. If, to the extent permitted by this Section
4.2(b), the Board of Directors of the Company approves or
recommends a superior proposal, the Company may take appropriate
action to render the Rights inapplicable to such superior
proposal.
(c) The Company shall immediately advise Parent orally
and in writing of any takeover proposal or any inquiry with
respect to or which could reasonably be expected to lead to any
takeover proposal, the material terms and conditions of such
takeover proposal or inquiry and the identity of the person making
any such takeover proposal or inquiry. The Company will keep
Parent fully informed of the status and details of any such
takeover proposal or inquiry. The Parent Companies shall waive any
applicable confidentiality provisions to the extent necessary to
allow the Company solely to explain the terms of this transaction
to persons making takeover proposals.
Section 4.4 Third Party Standstill Agreements. Except to
the extent reasonably required in connection with the Company's
obligations under Section 4.5(a) and permitted pursuant to that
letter agreement dated as of November 6, 1997, among the Company,
the Parent Companies and Sub, during the period from the date of
this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the
Company or any of its Subsidiaries is a party (other than any
involving Parent or Trust) unless a majority of the disinterested
members of the Board of Directors of the Company determines in
their good faith judgment based on the advice of outside counsel
that failure to take such action would violate the fiduciary
obligations of such Board under applicable law. Subject to the
foregoing, during such period, the Company agrees to enforce, to
the fullest extent permitted under applicable law, the provisions
<PAGE>
of any such agreements, including, but not limited to, obtaining
injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court
of the United States or any state thereof having jurisdiction.
Section 4.5 Pre-Merger Transactions.
(a) The Company shall use reasonable efforts to enter
into agreements to sell assets of the Company as agreed from time
to time between the Company and Parent on terms acceptable to the
Company and shall permit the Parent Companies and their financial
and legal advisors to participate in such process; provided,
however, that such agreements may provide at the Company's
election that any such sale or disposition shall not be
consummated until after the Effective Time and may provide at the
Company's election that such agreements are terminable by the
Company if this Agreement is terminated for any reason; provided
further, however, that neither the Company nor any of its
Subsidiaries shall enter into a definitive agreement with respect
to any such sale without the prior approval of both Parent
Companies and the Board of Directors of the Company.
(b) The Company shall not implement the Comprehensive
Plan (as such term is defined in the Definitive Proxy Statement on
Schedule 14A filed with the SEC on October 9, 1997 (the "Proxy
Statement")), including, without limitation, consummating the
Tender Offers (as such term is defined in the Proxy Statement);
provided, however, that the Company shall be permitted to pay the
Termination Fee and Purchaser's Expenses (each as defined in the
CDRV Investment Agreement) and any other payments pursuant to the
CDRV Investment Agreement.
(c) Prior to the Effective Time, Trust may declare a
dividend not to exceed $1.5 billion, payable to its shareholders
of record as of such time and payable in property other than cash
which property may subsequent to such payment (but in any event
not later than one day after the Effective Time) be acquired by
Parent in exchange for shares of Parent's capital stock, and
Parent may acquire all or any portion of such property in such
manner. In connection with the foregoing, the Pairing Agreement
dated as of June 28, 1980 between Parent and Trust may be amended
to permit and facilitate such transactions. In the event that
Parent fails to exercise its right, in whole or in part, to
acquire such property prior to the Effective Time or within one
day thereafter, the Exchange Ratio shall be equitably adjusted.
The Parent Companies agree that in effecting transactions
contemplated by this Section 4.5(c), the stockholders of the
<PAGE>
Company shall be treated on a fair and equitable basis (including
in respect of the consideration payable in the Merger).
(d) The Company acknowledges and agrees that, prior to
the Effective Time, the Parent Companies and their Subsidiaries
are obligated under the Westin Transaction Agreement to use all
reasonable efforts to consummate the transactions contemplated
thereby, including debt and equity financings and certain
restructurings and share issuances related thereto, the payment of
dividends on such share issuances, increases in stock option and
similar employee benefit plans and the increases in authorized
capital of the Parent Companies, all of which shall be deemed to
be consistent with the Parent Companies' obligations under Section
4.2. The Company and the Parent Companies further acknowledge and
agree that, prior to the Effective Time, the Parent Companies
shall have paid a fee to certain investment banks in connection
with the transactions contemplated by the Westin Transaction
Agreement, and such fee shall have been paid in the type and
amount of consideration previously discussed by and among the
parties to this Agreement.
Section 4.6 Post-Merger Transactions. Promptly after the
consummation of the Merger, the Trust shall dispose of any shares
of common stock of the Surviving Corporation received by the Trust
in connection with the Merger.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholders Meetings. The Company, Parent
and Trust each shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold, a
meeting of its stockholders or shareholders (respectively, the
"Company Stockholder Meeting", the "Parent Stockholder Meeting",
the "Trust Shareholder Meeting" and, collectively, the
"Stockholder Meetings") for the purpose of considering the
approval of this Agreement (in the case of the Company) and the
respective Charter Amendments and the Share Issuances (in the case
of Parent and Trust). The Company, Parent and Trust will, through
their respective Boards of Directors or Trustees, as the case may
be, recommend to their respective stockholders or shareholders, as
applicable, approval of such matters and shall not withdraw such
recommendation except to the extent that the Board of Directors of
the Company shall have withdrawn or modified its approval or
recommendation of this Agreement of the Merger as permitted by
Section 4.3(b). Without
<PAGE>
limiting the generality of the foregoing, the Company agrees that
its obligations pursuant to the first sentence of this Section 5.1
shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any takeover
proposal. The Company, Parent and Trust shall coordinate and
cooperate with respect to the timing of such meetings and shall
use all reasonable efforts to hold such meetings on the same day.
At the Parent Stockholder Meeting and the Trust Shareholder
Meeting, the Parent Companies shall cause to be submitted to their
respective shareholders or stockholders, as applicable, a proposal
to amend Parent's Articles of Incorporation and Trust's
Declaration of Trust to include a provision substantially similar
to ARTICLE NINTH of Restated Articles of Incorporation, as
amended, of the Company.
Section 5.2 Filings; Other Actions. (a) The Company,
Parent and Trust shall promptly prepare and file with the SEC the
Joint Proxy Statement and the Parent Companies shall prepare and
file with the SEC the Registration Statement, in which the Joint
Proxy Statement will be included as a prospectus. Each of Parent,
Trust and the Company shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing. As promptly as
practicable after the Registration Statement shall have become
effective, each of Parent, Trust and the Company shall mail the
Joint Proxy Statement to its respective stockholders or
shareholders. Parent and Trust shall also take any action (other
than qualifying to do business in any jurisdiction in which they
are currently not so qualified) required to be taken under any
applicable state securities laws in connection with the issuance
of Paired Shares in the Merger and upon the exercise of the
Substitute Options (as defined in Section 5.8), and the Company
shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in
connection with any such action, including information relating to
the number of Paired Shares required to be registered.
(b) Each party hereto agrees, subject to applicable laws
relating to the exchange of information, promptly to furnish the
other parties hereto with copies of written communications (and
memoranda setting forth the substance of all oral communications)
received by such party, or any of its subsidiaries, affiliates or
associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date hereof), from, or delivered
by any of the foregoing to, any Governmental Entity in respect of
the transactions contemplated hereby.
<PAGE>
(c) Each of the Company, Parent and Trust will promptly,
and in any event within fifteen business days after execution and
delivery of this Agreement, make all filings or submissions as are
required under the HSR Act. Each of the Company, Parent and Trust
will promptly furnish to the other such necessary information and
reasonable assistance as the other may request in connection with
its preparation of any filing or submissions necessary under the
HSR Act. Without limiting the generality of the foregoing, each of
the Company, Parent and Trust will promptly notify the other of
the receipt and content of any inquiries or requests for
additional information made by any Governmental Entity in
connection therewith and will promptly (i) comply with any such
inquiry or request and (ii) provide the other with a description
of the information provided to any Governmental Entity with
respect to any such inquiry or request. In addition, each of the
Company, Parent and Trust will keep the other apprised of the
status of any such inquiry or request.
Section 5.3 Comfort Letters. (a) The Company shall use
all reasonable efforts to cause to be delivered to Parent
"comfort" letters of Arthur Andersen LLP, the Company's
independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the
Effective Time, and addressed to Parent, Trust and the Company, in
form and substance reasonably satisfactory to Parent and
reasonably customary in scope and substance for letters delivered
by independent public accountants in connection with transactions
such as those contemplated by this Agreement.
(b) Parent and Trust shall use all reasonable efforts to
cause to be delivered to the Company "comfort" letters of Coopers
& Lybrand L.L.P., Parent's and Trust's independent public
accountants, dated the date on which the Registration Statement
shall become effective and as of the Effective Time, and addressed
to the Company, Parent and Trust, in form and substance reasonably
satisfactory to the Company and reasonably customary in scope and
substance for letters delivered by independent public accountants
in connection with transactions such as those contemplated by this
Agreement.
Section 5.4 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to the
Parent Companies or to the Company or any of their Subsidiaries,
each of the Parent Companies and the Company shall, and shall
cause each of its Subsidiaries to, afford to the accountants,
counsel, financial advisors and other representatives of the other
party hereto reasonable access to, and permit them to make such
inspections as they may reasonably require of, during normal
business hours during the period from
<PAGE>
the date of this Agreement through the Effective Time, all their
respective properties, books, Tax Returns, contracts, commitments
and records (including, without limitation, the work papers of
independent accountants, if available and subject to the consent
of such independent accountants) and, during such period, each of
the Parent Companies and the Company shall, and shall cause each
of its Subsidiaries to, furnish promptly to the other (i) a copy
of each report, schedule, registration statement and other
document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all
other information concerning its business, properties and
personnel as the other may reasonably request. Notwithstanding the
first sentence of this Section 5.4, neither the Company nor any of
its accountants, counsel, financial advisors or other
representatives shall have access to any information relating to
the matters described in Section 5.4 of the Parent Letter.
Notwithstanding the first sentence of this Section 5.4, neither
the Parent Companies nor any of their respective accountants,
counsel, financial advisors or other representatives shall have
access to any information relating to the matters described in
Section 5.4 of the Company Letter. No investigation pursuant to
this Section 5.4 shall affect any representation or warranty in
this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained by
Parent or the Company pursuant to this Section 5.4 shall be kept
confidential in accordance with the Confidentiality Agreement
dated October 6, 1997 among the Parent Companies and the Company.
Section 5.5 Compliance with the Securities Act. Within
30 days following the date of this Agreement, the Company shall
cause to be prepared and delivered to Parent a list (reasonably
satisfactory to counsel for Parent) identifying all persons who,
at the time of the Company Stockholder Meeting, in the Company's
reasonable judgment may be deemed to be "affiliates" of the
Company as that term is used in paragraphs (c) and (d) of Rule 145
under the Securities Act (the "Rule 145 Affiliates"). The Company
shall use all reasonable efforts to cause each person who is
identified as a Rule 145 Affiliate in such list to deliver to
Parent on or prior to the Effective Time a written agreement in
substantially the form of Exhibit 5.5 hereto, executed by such
person.
Section 5.6 Stock Exchange Listings. Parent shall use
all reasonable efforts to list on the NYSE, upon official notice
of issuance, the Paired Shares to be issued in connection with the
Merger.
Section 5.7 Fees and Expenses. (a) Except as provided in
Section 5.7(b) and (c), whether or not the Merger is
<PAGE>
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby including
the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and
expenses, except that expenses incurred in connection with
printing and mailing the Joint Proxy Statement and the
Registration Statement shall be borne equally by Parent and the
Company.
(b) Provided that none of Parent, Sub or Trust is in
material breach of their representations, warranties and
agreements under this Agreement, (i) if this Agreement is
terminated by the Board of Directors of the Company pursuant to
Section 7.1(g), (ii) if this Agreement is terminated by the Parent
Companies pursuant to Section 7.1(b), (iii) if this Agreement is
terminated by the Parent Companies pursuant to Section 7.1(f) or
(iv) if (A) after the date of this Agreement, (x) any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange
Act) shall have made or indicated an intention to make or amend or
modify (whether or not subject to conditions) a takeover proposal
or (y) it shall have been publicly disclosed or Parent shall have
otherwise learned that any person or "group" has beneficial
ownership (determined for the purpose of this paragraph as set
forth in Rule 13d-3 promulgated under the Exchange Act) of more
than 15% of the outstanding shares of Company Common Stock or (z)
Parent has the right to terminate this Agreement under Section
7.1(f) because the Board of Directors of the Company shall or
shall resolve to take an action referred to therein and (B) the
stockholders of the Company do not approve the Merger at the
Company Stockholders Meeting called for such purpose pursuant to
Section 5.1 or this Agreement is terminated pursuant to Section
7.1(d) prior to the Company Stockholders Meeting being held, then
the Company shall pay to Parent $225,000,000 (the "Termination
Fee") in same-day funds, plus (notwithstanding paragraph (a) of
this Section 5.7) all the Expenses (as defined below), on the date
of such termination, in the case of clause (i), (ii) or (iii), or
on the date of the Company Stockholders Meeting or such
termination, as the case may be, in the case of clause (iv);
provided, however, that in the event the date of such termination,
in the case of clause (i), (ii), (iii) or (iv), is prior to
November 21, 1997, then the amount of the Termination Fee shall be
deemed to be $195,000,000.
(c) If this Agreement is terminated for any reason
(other than by the Company pursuant to Section 7.1(b)), then the
Company shall (notwithstanding paragraph (a) of this Section 5.7),
on the date of such termination, pay to Parent the cash amount
necessary to permit Parent fully to reimburse itself, Sub and
Trust and their affiliates for all out-of-pocket fees and
<PAGE>
expenses incurred at any time prior to such termination by any of
them or on their behalf in connection with the Merger, the
preparation of this Agreement and the transactions contemplated by
this Agreement (including any currency or interest rate hedging
activities in connection with the transactions contemplated
hereby), including (x) all fees and expenses of counsel,
investment banking firms, financial advisors (regardless of
whether such financial advisors are affiliates of the Parent
Companies), accountants, experts and consultants to Parent, Sub
and Trust or any of their affiliates and (y) all fees and expenses
payable to banks, investment banking firms and other financial
institutions and their respective counsel, accountants and agents
in connection with arranging or providing financing ) (fees and
expenses under clause (y) collectively, "Financing Fees", and the
fees and expenses contemplated by this paragraph (c),
collectively, but subject to the next succeeding proviso, the
"Expenses"); provided, however, that the aggregate amount of
Expenses, other than Financing Fees and all fees and expenses of
counsel in connection with any litigation, shall not exceed
$25,000,000.
(d) The Company acknowledges that the agreements
contained in paragraphs (b) and (c) of this Section 5.7 are an
integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent, Sub and Trust would
not enter into this Agreement; accordingly, if the Company fails
to pay promptly any amount due pursuant to this Section 5.7 and,
in order to obtain such payment, Parent, Sub or Trust commences a
suit that results in a judgment against the Company for any such
amount, the Company shall pay to Parent, Sub or Trust its cost and
expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the prime or
base rate of Citibank, N.A. from the date such payment was due
under this Agreement.
Section 5.8 Company Stock Options. (a) As of the
Effective Time, each Company Stock Option (and related stock
appreciation right ("SAR")) that is outstanding immediately prior
to the Effective Time pursuant to the Company's stock option plans
(other than any "stock purchase plan" within the meaning of
Section 423 of the Code) in effect on the date hereof (the "Stock
Plans") shall be assumed by Parent and become and represent a
fully exercisable option (and related SAR) to purchase the number
of Paired Shares (a "Substitute Option") (decreased to the nearest
full share) determined by multiplying (i) the number of shares of
Company Common Stock subject to such Company Stock Option
immediately prior to the Effective Time by (ii) the Exchange
Ratio, at an exercise price per Paired Share (rounded up to the
nearest tenth of a cent) equal to the difference between
<PAGE>
(A) the exercise price per share of Company Common Stock
immediately prior to the Effective Time divided by the Exchange
Ratio and (B) the amount, if any, payable per share of Company
Common Stock pursuant to Section 1.5(f) divided by the Exchange
Ratio. Parent shall pay cash to holders of Company Stock Options
in lieu of issuing fractional Paired Shares upon the exercise of
Substitute Options. As of the Effective Time, each Substitute
Option shall be subject to the same terms and conditions as were
applicable immediately prior to the Effective Time under the
related Company Stock Option and Stock Plan under which it was
granted, including those providing for the accelerated
exercisability and other special rights arising upon an
"Acceleration Event" in accordance with the terms of such Stock
Plan. The Company agrees to use all reasonable efforts to obtain
any necessary consents of holders of Company Stock Options and
take such other actions as may be necessary to effect this Section
5.8. The accelerated lapse of restrictions and other special
rights with respect to shares of restricted Company Common Stock
issued under the Stock Plans shall also be preserved following the
Effective Time in accordance with the terms of the Stock Plans.
(b) In respect of each Company Stock Option (and related
SAR) as converted into a Substitute Option pursuant to Section
5.8(a) and assumed by Parent, and the shares of Parent Common
Stock underlying such option, Parent shall file and keep current a
registration statement on Form S-8 (or a post-effective amendment
to a Registration Statement on Form S-8) or other appropriate form
for as long as such options remain outstanding.
(c) The provisions of this Section 5.8 are intended to
be for the benefit of, and shall be enforceable by, each person
who is or has been an employee of the Company or any of its
subsidiaries and is a holder of Employee Stock Options or SARS,
and such employee's heirs and personal representatives and shall
be binding on all successors and assigns of the Parent Companies.
Section 5.9 Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, unless, to
the extent permitted by Section 4.3, the Board of Directors of the
Company approves or recommends a superior proposal, each of the
parties agrees to use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including, but
not limited to: (i) the obtaining of all necessary actions or
non-actions, waivers,
<PAGE>
consents and approvals from all Governmental Entities and the
making of all necessary registrations and filings (including
filings with Governmental Entities) and the taking of all
reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any
Governmental Entity (including those in connection with the HSR
Act, state takeover statutes and Gaming Laws), (ii) the obtaining
of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Entity with respect to the Merger or this Agreement vacated or
reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated
by this Agreement.
(b) The Company shall use all reasonable efforts not to
take any action that, in any such case, might reasonably be
expected to (i) cause any of its representations or warranties
contained in this Agreement that is qualified as to materiality to
be untrue, (ii) cause any of its representations or warranties
contained in this Agreement that is not so qualified to be untrue
in any material respect, (iii) result in a breach of any covenant
made by it in this Agreement, (iv) result directly or indirectly
in any of the conditions to the Merger set forth in Article VI not
being satisfied or (v) impair the ability of the parties to
consummate the Merger at the earliest practicable time (regardless
of whether such action would otherwise be permitted or not
prohibited hereunder).
Section 5.10 Public Announcements. The Parent Companies
and the Company will not issue any press release with respect to
the transactions contemplated by this Agreement or otherwise issue
any written public statements with respect to such transactions
without prior consultation with each other party, except as may be
required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange.
Section 5.11 Transfer and Gains Tax. The Parent
Companies will pay any Federal, state, local, foreign or
provincial tax which is attributable to the transfer of the
beneficial ownership of the Company's or its Subsidiaries' real
property, if any (collectively, the "Gains Taxes"), any penalties
or interest with respect to the Gains Taxes, payable in connection
with the consummation of the Merger, (except as otherwise provided
in Section 1.8) any Federal, state, local,
<PAGE>
foreign or provincial tax which is attributable to the transfer of
Company Common Stock or Paired Shares pursuant to the terms of
this Agreement (collectively, "Stock Transfer Taxes") and any
penalties or interest with respect to any such Stock Transfer
Taxes. The Company and the Parent Companies agree to cooperate
with the other in the filing of any returns with respect to the
Gains Taxes, including supplying in a timely manner a complete
list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property
that is reasonably necessary to complete such returns. The portion
of the consideration allocable to the real property of the Company
and its Subsidiaries shall be agreed to between Parent and the
Company. The stockholders of the Company shall be deemed to have
agreed to be bound by the allocation established pursuant to this
Section 5.11 in the preparation of any return with respect to the
Gains Taxes.
Section 5.12 State Takeover Laws. If any "fair price",
"business combination" or "control share acquisition" statute or
other similar statute or regulation shall become applicable to the
transactions contemplated hereby, Parent, Trust and the Company
and their respective Boards of Directors or Trustees, as the case
may be, shall use all reasonable efforts to grant such approvals
and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and shall otherwise act to
minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
Section 5.13 Indemnification; Directors and Officers
Insurance. (a) The Parent Companies agree that all rights to
indemnification and exculpation from liabilities for acts or
omissions occurring prior to the Effective Time now existing in
favor of the current or former directors or officers of the
Company and its subsidiaries as provided in their respective
articles or certificates of incorporation or by-laws (or
comparable organizational documents) and any indemnification
agreements of the Company shall survive the Merger and shall
continue in full force and effect in accordance with their terms
for a period of not less than six years from the Effective Time
and the obligations of the Company in connection therewith shall
be assumed by the Parent Companies. Parent shall provide, or shall
cause the Surviving Corporation to provide, the Company's current
directors and officers an insurance and indemnification policy
(including any fiduciary liability policy) that provides coverage
with respect to any claims made during the six-year period
following the Effective Time for events occurring prior to the
Effective Time (the "D&O Insurance") that is substantially similar
to the Company's existing policies or, if substantially
<PAGE>
equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that the Surviving Corporation shall
not be required to pay an annual premium for the D&O Insurance in
excess of 150 percent of the last annual premium paid prior to the
date hereof (which premium the Company represents and warrants to
be approximately $1.4 million in the aggregate), but if such
annual premium would but for this proviso exceed such amount, then
Parent shall purchase as much coverage as possible for such
amount.
(b) The provisions of this Section 5.13 are intended to
be for the benefit of, and shall be enforceable by, each person
who is or has been a director or officer of the Company or a
subsidiary of the Company, and such director's or officer's heirs
and personal representatives and shall be binding on all
successors and assigns of the Parent Companies.
Section 5.14 Notification of Certain Matters. The Parent
Companies shall use all reasonable efforts to give prompt notice
to the Company, and the Company shall use all reasonable efforts
to give prompt notice to the Parent Companies, of: (i) the
occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which it is aware and which would be reasonably
likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect
or (y) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in all material
respects, (ii) any failure of any of the Parent Companies or the
Company, as the case may be, to comply in a timely manner with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder or (iii) any event, change or
development that, individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse Effect on
the Parent Companies or the Company, as the case may be; provided,
however, that the delivery of any notice pursuant to this Section
5.14 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.15 Employees. (a) Comparable Benefits. Except
as provided in Section 5.8, for not less than one year following
the Effective Time, the Parent Companies shall maintain, or shall
cause the Company and its Subsidiaries to maintain, compensation
and employee benefits plans and arrangements for employees of the
Company and its Subsidiaries ("Affected Employees") that are, in
the aggregate, no less favorable than as provided under the
compensation arrangements and Company Plans as in effect on the
date hereof. Without limiting the generality of the foregoing, for
not less than one
<PAGE>
year following the Effective Time (or such longer period as may be
required under the applicable Company Plan), the Parent Companies
shall provide, or cause the Company and its Subsidiaries to
provide, severance pay and benefits to each Affected Employee as
of the Effective Time that are no less favorable than under the
Company Plans and current practices of the Company as in effect as
of the date of this Agreement. Notwithstanding the foregoing, the
Parent Companies shall have the right (i) following the Effective
Time to transfer to one or more employee benefit plans maintained
by the Parent Companies any employee of the Company or any
Subsidiary who becomes an employee of the Parent Companies or any
of their respective Subsidiaries and (ii) in the good faith
exercise of it managerial discretion, to terminate the employment
of any employee. Nothing in this Agreement shall be construed as
granting to any employee any rights of continuing employment.
(b) Honoring Company Plans and Accrued Vacation. Parent
Companies shall, or shall cause the Company to, honor all Company
Plans and other contractual commitments in effect immediately
prior to the Effective Time between the Company or its
Subsidiaries and Affected Employees or former employees of the
Company or its Subsidiaries. Without limiting the generality or
the foregoing, Parent Companies shall honor all vacation, holiday,
sickness and personal days accrued by Affected Employees and, to
the extent applicable, former employees of the Company and its
Subsidiaries ("Former Employees") as of the Effective Time.
(c) Participation in Benefit Plans. Employees and, to
the extent applicable, Former Employees shall be given credit for
all service with the Company and its Subsidiaries (or service
credited by the Company or such Subsidiaries) under all employee
benefit plans and arrangements currently maintained by the Parent
Companies or any of their respective Subsidiaries in which they
are or become participants for purposes of eligibility, vesting,
level of participant contributions and benefit accruals (but
subject to an offset, if necessary, to avoid duplication of
benefits) to the same extent as if rendered to the Parent
Companies or any of their respective Subsidiaries. The Parent
Companies shall cause to be waived any pre-existing condition
limitation under their welfare plans that might otherwise apply to
an Affected Employee or, to the extent applicable, a Former
Employee. The Parent Companies agree to recognize (or cause to be
recognized) the dollar amount of all expenses incurred by Affected
Employees or, to the extent applicable, Former Employees, during
the calendar year in which the Effective Time occurs for purposes
of satisfying the calendar year deductions and co-payment
limitations for such year under the relevant
<PAGE>
benefit plans of the Parent Companies and their respective
Subsidiaries.
Section 5.16 Rights Agreement. (a) The Board of
Directors of the Company shall take all further action (in
addition to that referred to in Section 3.16) requested in writing
by Parent (including redeeming the Rights immediately prior to the
Effective Time of the Merger or amending the Rights Agreement) in
order to render the Rights inapplicable to the Merger and the
other transactions contemplated by this Agreement. Except as
requested in writing by Parent or as permitted by Section 5.16(b),
prior to the Company Stockholders Meeting, the Board of Directors
of the Company shall not (i) amend the Rights Agreement or (ii)
take any action with respect to, or, except as specifically
permitted by Section 5.16(b), make any determination under, the
Rights Agreement (including a redemption of the Rights).
(b) If, to the extent permitted by Section 4.3(b), the
Board of Directors of the Company approves or recommends a
superior proposal, the Company may take appropriate action under
the Rights Agreement solely in order to render the Rights
inapplicable to such superior proposal; provided, however, that
the foregoing shall not permit the Company to make any
determination under, or take any action with respect to, the
Rights Agreement in order to render the Rights applicable to the
Merger or any of the other transaction contemplated by this
Agreement or to redeem the Rights.
Section 5.17. Regulatory Matters. In connection with
subsection (i) of the first sentence of Section 5.9(a) and without
limiting the generality of Section 5.9, the Parent Companies
shall, and shall cause their respective subsidiaries to (and shall
use all reasonable efforts to cause their respective affiliates
other than subsidiaries to), if it is necessary to obtain any
regulatory approval for this Agreement or the transactions
contemplated hereby, disassociate themselves from any person or
persons deemed, or reasonably likely to be deemed, unacceptable by
a Governmental Entity with authority to administer Gaming Laws
and, in the case of any such person who is a nominee to serve as a
director or trustee of a Parent Company or any subsidiary of a
Parent Company, the Parent Companies shall, and shall cause the
relevant subsidiary or subsidiaries to, replace any such director
nominee with a suitable substitute nominee. In connection with
subsection (i) of the first sentence of Section 5.9(a), the Parent
Companies agree that they shall use all reasonable efforts to
cause the trust arrangements described in either clause (x) or (y)
of Section 6.1(c)(iii) to be in full force and effect and further
agree that, if the requisite
<PAGE>
approvals are obtained from the New Jersey Casino Control
Commission, they will place shares of Company Common Stock or
shares of common stock of the Surviving Corporation, as
applicable, in trust as contemplated by such clauses.
Section 5.18. New Jersey Trust. In connection with the
application for qualification and licensing by the Parent
Companies with the New Jersey Casino Control Commission pursuant
to the New Jersey Casino Control Act and the rules and regulations
promulgated thereunder, if requested by the Parent Companies (for
the purpose of permitting the Parent Companies to hold directly
(and not in trust) the shares of Company Common Stock to be
acquired pursuant to the Merger while the Parent Companies'
application for qualification and licensing is pending with the
New Jersey Casino Control Commission), the Company shall execute
and deliver a trust agreement prepared by the Parent Companies and
reasonably acceptable to the Company and the New Jersey Casino
Control Commission and complying with the requirements of the New
Jersey Casino Control Act and the rules and regulations
promulgated thereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of the parties to
effect the Merger shall be subject to the fulfillment (or waiver
by such party) at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been
duly approved by the requisite vote of share holders of the
Company in accordance with applicable law and the Restated
Articles of Incorporation, as amended, and Amended and Restated
By-laws of the Company, and the respective Charter Amendments and
Share Issuances shall have been duly approved by the requisite
vote of the stockholders or shareholders, as applicable, of each
of Parent and Trust in accordance with applicable rules of the
NYSE, applicable law and the Articles of Incorporation and By-laws
of Parent and Declaration of Trust and Trust Regulations of the
Trust.
(b) Stock Exchange Listings. The Paired Shares issuable
in the Merger and pursuant to the Substitute Options shall have
been authorized for listing on the NYSE, subject to official
notice of issuance.
<PAGE>
(c) HSR and Other Approvals. (i) The waiting period (and
any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(ii) All consents, approvals, orders or authorizations
of or registrations, declarations or filings with any Governmental
Entity, which the failure to obtain, make or occur would
reasonably be expected to have a Material Adverse Effect on the
Company (assuming the Merger had taken place), shall have been
obtained, shall have been made or shall have occurred, and shall
be in full force and effect.
(iii) All consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, (A) any
Governmental Entity with jurisdiction in respect of Gaming Laws
(other than New Jersey), (B) the Federal Communications Commission
and (C) state educational authorities, non-governmental
educational accrediting commissions and the U.S. Department of
Education (in the case of this clause (C) required to be made or
obtained prior to consummation of the Merger), in each case,
required or necessary in connection with the Merger and this
Agreement and the transactions contemplated by this Agreement
(including the changes in the composition of the Board of
Directors of the Company) shall have been obtained and shall be in
full force and effect, and in the case of the New Jersey Casino
Control Act and the rules and regulations promulgated thereunder,
either, at the option of the Parent Companies, (x) as contemplated
by Section 5.17, all shares of the common stock of Sub shall have
been deposited in trust with a trustee qualified and otherwise
acceptable to the New Jersey Casino Control Commission and the
transactions and arrangements contemplated by Section 5.17 shall
be in full force and effect or (y) (1) the New Jersey Casino
Control Commission shall have approved a form of trust agreement
in form and substance reasonably satisfactory to the Parent
Companies (including in respect of control by the Parent Companies
of the Company and its subsidiaries) in respect of a trust
arrangement for the shares of Company Common Stock to be acquired
pursuant to the Merger or shares of the common stock of the
Surviving Corporation pending final qualification of the Parent
Companies to hold a casino license under the New Jersey Casino
Control Act and the rules and regulations thereunder, (2) a
trustee qualified and otherwise acceptable to the New Jersey
Casino Control Commission and the Parent Companies in respect of
such trust arrangement for the shares of Company Common Stock to
be acquired pursuant to the Merger or shares of the common stock
of the Surviving Corporation shall have been appointed or
designated and (3) the directors of Sub shall have been qualified
on a permanent or temporary basis to serve as directors of a
company (including the Company) that either directly, or through
<PAGE>
its subsidiaries, holds a casino license under the New Jersey
Casino Control Act and the rules and regulations thereunder.
(d) Registration Statement. The Registration Statement
shall have become effective in accordance with the provisions of
the Securities Act. No stop order suspending the effectiveness of
the Registration Statement shall have been issued by the SEC and
no proceedings for that purpose shall have been initiated or, to
the Knowledge of the Parent Companies or the Company, threatened
by the SEC. All necessary state securities or blue sky
authorizations shall have been received.
(e) No Order. No court or other Governmental Entity
having jurisdiction over the Company, Parent or Trust, or any of
their respective Subsidiaries, shall (after the date of this
Agreement) have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is
then in effect and has the effect of making the Merger or any of
the transactions contemplated hereby illegal; provided, however,
that each of the parties shall have used all reasonable efforts to
prevent and to appeal as promptly as possible any such law, rule,
regulation, executive order, decree, injunction or other order
(f) Change in Tax Laws. There shall not have been any
Federal legislative or regulatory change that would cause the
Trust to cease to qualify as a "real estate investment trust" for
federal income tax purposes or that would cause the Trust to
become subject to Section 269B(a)(3) of the Code.
Section 6.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the
Merger shall be subject to the fulfillment (or waiver by the
Company) at or prior to the Effective Time of the following
additional condition:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent, Sub and Trust shall have performed in
all material respects each of its agreements contained in this
Agreement required to be performed at or prior to the Effective
Time, each of the representations and warranties of Parent, Sub
and Trust contained in this Agreement that is qualified as to
materiality shall be true and correct at and as of the Effective
Time as if made at and as of such time (other than representations
and warranties which address matters only as of a certain date,
which shall be true and correct as of such certain date) and each
of the representations and warranties that is not so qualified
shall be true and correct in all material respects
<PAGE>
at and as of the Effective Time as if made on and as of such date
(other than representations and warranties which address matters
only as of a certain date, which shall be true and correct in all
material respects as of such certain date), in each case except as
contemplated or permitted by this Agreement, and the Company shall
have received certificates signed on behalf of each of Parent, Sub
and Trust by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(b) No Litigation. There shall not be pending or
threatened any suit, action or proceeding by any Governmental
Entity or any other person, or before any court or governmental
authority, agency or tribunal, domestic or foreign, in each case
that has a significant likelihood of success challenging the
acquisition by any of the Parent Companies of any shares of
Company Common Stock, seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from Parent,
Trust or Sub any damages that are material in relation to the
Company, the Parent Companies and their Subsidiaries taken as a
whole.
(c) Tax Opinion. On the Closing Date, the opinion of
Sidley & Austin, counsel to the Parent Companies, shall have been
delivered to the Company in form and substance reasonably
satisfactory to the Company stating that (i) the Trust is a "real
estate investment trust" for federal income tax purposes and the
Trust is not subject to Section 269B(a)(3) of the Code by reason
of Section 136(c) of the Deficit Reduction Act of 1984 and (ii)
consummation of the transactions contemplated by this Agreement
will not cause the Trust to cease to qualify as a "real estate
investment trust" for federal income tax purposes and will not
cause the Trust to become subject to Section 269B(a)(3) of the
Code. In rendering such opinion, such counsel shall be entitled to
rely upon customary representations reasonably requested by such
counsel and made by the Parent Companies.
Section 6.3 Conditions to Obligations of Parent, Sub and
Trust to Effect the Merger. The obligations of Parent, Sub and
Trust to effect the Merger shall be subject to the fulfillment (or
waiver by the Parent Companies) at or prior to the Effective Time
of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material
respects each of its agreements contained in this Agreement
required to be performed at or prior to the Effective Time, each
of the representations and warranties of the Company contained in
this Agreement that is qualified as to materiality shall be true
<PAGE>
and correct at and as of the Effective Time as if made at and as
of such time (other than representations and warranties which
address matters only as of a certain date, which shall be true and
correct as of such certain date) and each of the representations
and warranties that is not so qualified shall be true and correct
in all material respects at and as of the Effective Time as if
made on and as of such date (other than representations and
warranties which address matters only as of a certain date, which
shall be true and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by
this Agreement, and the Parent Companies shall have received a
certificate signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(b) Consents Under Agreements. Except for the consents
listed in Section 6.3(b) of the Company Letter, the Company shall
have obtained the consent or approval of each person that is not a
Governmental Entity whose consent or approval shall be required in
connection with the transactions contemplated hereby under any
loan or credit agreement, note, mortgage, indenture, lease, hotel
management agreement or other agreement or instrument, except as
to which the failure to obtain such consents and approvals,
individually or in the aggregate, would not be expected, in the
reasonable opinion of the Parent Companies, to have a Material
Adverse Effect on the Company or upon the consummation of the
transactions contemplated in this Agreement.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in
Section 5.5 an executed copy of an agreement substantially in the
form of Exhibit 5.5 hereto.
(d) No Litigation. There shall not be pending or
threatened any suit, action or proceeding by any Governmental
Entity or any other person, or before any court or governmental
authority, agency or tribunal, domestic or foreign, in each case
that has a significant likelihood of success (i) challenging the
acquisition by any of the Parent Companies of any shares of
Company Common Stock, seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from the
Company any damages that are material in relation to the Company,
the Parent Companies and their Subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their respective Subsidiaries of any
material portion of the combined business or assets of the
Company, Parent, Trust and their respective Subsidiaries, or to
<PAGE>
compel the Company, Parent, Trust and their respective
subsidiaries to dispose of or hold separate any material portion
of the combined business or assets of the Company, Parent, the
Trust and their respective Subsidiaries, as a result of the Merger
or any of the other transactions contemplated by this Agreement,
(iii) seeking to impose limitations on the ability of Parent, the
Trust or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including,
without limitation, the right to vote any Company Common Stock
purchased by it on all matters properly presented to the
shareholders of the Company, (iv) seeking to prohibit Parent, the
Trust or any of their respective Subsidiaries from effectively
controlling in any material respect the business or operations of
the Company or its Subsidiaries or (v) which otherwise would
reasonably be expected to have a Material Adverse Effect on the
Company.
(e) Rights Agreement. The Rights shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to
the terms of the Rights Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether before
or after approval of any matters presented in connection with the
Merger by the stockholders or shareholders, as applicable, of the
Company or of the Parent Companies:
(a) by mutual written consent of the Parent Companies
and the Company;
(b) by either the Parent Companies or the Company if
there has been a material breach of the representations,
warranties, covenants and agreements on the part of the other set
forth in this Agreement, which breach has not been cured within
ten business days following receipt by the breaching party of
notice of such breach from the nonbreaching party;
(c) by either the Parent Companies or the Company if any
permanent order, decree, ruling or other action of a court or
other competent authority restraining, enjoining or otherwise
preventing the consummation of the Merger shall have become final
and non-appealable;
<PAGE>
(d) by either the Parent Companies or the Company if the
Merger shall not have been consummated before December 31, 1998,
unless the failure to consummate the Merger is the result of a
material breach of this Agreement by the party seeking to
terminate this Agreement; provided, however, that the passage of
such period shall be tolled for any part thereof during which any
party shall be subject to a nonfinal order, decree, ruling or
other action restraining, enjoining or otherwise preventing the
consummation of Merger;
(e) by either the Parent Companies or (if the Company
has paid to Parent an amount in cash equal to the sum of the
Termination Fee plus all Expenses if required by Section 5.7 (b)
and (c)) the Board of Directors of the Company if any required
approval of the Merger by the stockholders of the Company shall
not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of such
stockholders or at any adjournment thereof;
(f) by the Parent Companies if the Board of Directors of
the Company shall or shall resolve to (i) not recommend, or
withdraw its approval or recommendation of, the Merger, this
Agreement or any of the transactions contemplated hereby (other
than transactions contemplated by Section 4.5(a)), (ii) modify
such approval or recommendation in a manner adverse to Parent, Sub
or Trust or (iii) approve or recommend a superior proposal
pursuant to Section 4.3(b);
(g) by the Board of Directors of the Company if (i) (x)
to the extent permitted by Section 4.3(b), the Board of Directors
of the Company approves or recommends a superior proposal or (y)
nominees of Hilton Hotels Corporation are elected as a majority of
the members of the Board of Directors of the Company at the
Company's 1997 annual meeting of stockholders and (ii) the Company
has paid to Parent an amount in cash equal to the sum of the
Termination Fee plus all Expenses as provided by Section 5.7(b);
or
(h) by either the Parent Companies or the Board of
Directors of the Company if the approval of the Charter Amendments
and the Share Issuances by the shareholders of Trust or the
stockholders of Parent shall not have been obtained by reason of
the failure to obtain the required vote upon a vote held at a duly
held meeting of such shareholders or stockholders, as the case may
be, or at any adjournment thereof.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either the Parent Companies or
the Company, as provided in Section 7.1, this Agreement shall
<PAGE>
forthwith become void and there shall be no liability hereunder on
the part of the Company, Parent, Trust, Sub or their respective
officers or directors (except for the last sentence of Section 5.4
and the entirety of Sections 2.14, 3.21, 5.7 and 5.16, this
Section 7.2 and Article VIII, which shall survive the
termination); provided, however, that nothing contained in this
Section 7.2 shall relieve any party hereto from any liability for
any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this
Agreement.
Section 7.3 Amendment. This Agreement may be amended by
the parties hereto, by or pursuant to action taken by their
respective Boards of Directors or Trustees, as the case may be, at
any time before or after approval of the matters presented in
connection with the Merger by the respective stockholders or
shareholders of Parent, Trust and the Company, but, after any such
approval, no amendment shall be made which by law requires further
approval by such stockholders or shareholders without such further
approval. This Agreement may not be amended except by an
instrument in writing duly executed by each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective
Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be
waived. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an
instrument in writing duly executed by such party. The failure of
any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such
rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and
Warranties. The representations and warranties in this Agreement
or in any instrument delivered pursuant to this Agreement shall
terminate at the Effective Time.
Section 8.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
<PAGE>
given when delivered personally, one day after being delivered to
a nationally recognized overnight courier or when telecopied (with
a confirmatory copy sent by such overnight courier) to the parties
at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent, Sub or Trust, to
Starwood Lodging Corporation
Starwood Lodging Trust
c/o Starwood Capital Group
3 Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Barry Sternlicht
Chief Executive Officer
Facsimile No.:
with copies to:
Sherwin L. Samuels
Sidley & Austin
555 W. Fifth Street
Los Angeles, California 90013
Facsimile No.:
Scott M. Freeman
Sidley & Austin
875 Third Avenue
New York, New York 10022
Facsimile No.:
(b) if to the Company, to
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019
Attention: Rand V. Araskog
Chairman and Chief
Executive
Facsimile No.:
with a copy to:
Philip A. Gelston
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile No.:
<PAGE>
Section 8.3 Interpretation. When a reference is made in
this Agreement to a Section or Article, such reference shall be to
a Section or Article of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without
limitation". The phrase "the date hereof" in this Agreement means
the date of the Original Merger Agreement and this Agreement shall
be deemed to have been entered into as of the date of the Original
Merger Agreement.
Section 8.4 Counterparts. This Agreement may be executed
in counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered
to the other parties.
Section 8.5 Entire Agreement; No Third-Party
Beneficiaries. This Agreement, except as provided in the last
sentence of Section 5.4 and the first sentence of Section 4.4,
constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral (including
the Original Merger Agreement), among the parties with respect to
the subject matter hereof. This Agreement, except for the
provisions of Section 5.8 and Section 5.13, is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.6 Governing Law. Except to the extent that the
laws of the State of Nevada are mandatorily applicable to the
Merger, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 8.7 Assignment. 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, except that Sub may assign, in its sole discretion, any
of or all its rights, interests and obligations under this
Agreement to Parent, Trust or to any direct or indirect wholly
owned Subsidiary of Parent or Trust, but no such assignment shall
relieve Sub of any of its obligations under this Agreement.
Subject to the preceding sentence, this Agreement will be binding
<PAGE>
upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
Section 8.8 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other terms,
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected
in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by
this Agreement may be consummated as originally contemplated to
the fullest extent possible.
Section 8.9 Enforcement of this 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 their specific wording or were otherwise breached.
It is accordingly agreed that the parties hereto 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 court of the United States or any state having
jurisdiction, such remedy being in addition to any other remedy to
which any party is entitled at law or in equity.
Section 8.10 Trust. The name "Starwood Trust" is the
designation of Trust and its Trustees (as Trustees but not
personally) under a Declaration of Trust dated August 25, 1969 as
amended and restated, and all persons dealing with Trust must look
solely to Trust's property for the enforcement of any claims
against Trust, as the Trustees, officers, agents and security
holders of Trust assume no personal obligations of Trust, and
their respective properties shall not be subject to claims of any
person relating to such obligation.
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized all as of the date first written above.
STARWOOD LODGING CORPORATION
By: /s/ BARRY S. STERNLICHT
---------------------------
Name: Barry S. Sternlicht
Title: Authorized Signatory
CHESS ACQUISITION CORP.
By: /s/ BARRY S. STERNLICHT
---------------------------
Name: Barry S. Sternlicht
Title: Authorized Signatory
STARWOOD LODGING TRUST
By: /s/ BARRY S. STERNLICHT
----------------------------
Name: Barry S. Sternlicht
Title: Chairman and Chief
Executive Officer
ITT CORPORATION
By: /s/ RAND V. ARASKOG
----------------------------
Name: Rand V. Araskog
Title: Chairman and Chief
Executive
[Exhibit 99.1]
[ITT Letterhead]
DATE: November 12, 1997
CONTACTS: Jim Gallagher George Sard/David Reno
TELEPHONE: 212-258-1261 Sard Verbinnen & Co.
212-687-8080
FOR IMMEDIATE RELEASE
ITT SIGNS REVISED MERGER AGREEMENT WITH STARWOOD LODGING
NEW YORK, November 12, 1997 -- ITT Corporation (NYSE:ITT)
announced today that the ITT Board of Directors, based on the
unanimous recommendation of the Special Committee of the Board,
unanimously approved a revised merger agreement with Starwood
Lodging.
The revised merger agreement provides for ITT shareholders to
receive Starwood's $85.00 per share offer, which is expected to
close no later than January 31, 1998.
- ITT -
