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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 16, 1997
____________________
EXTENDED STAY AMERICA, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 0-27360 36-3996573
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
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450 E. LAS OLAS BOULEVARD
FT. LAUDERDALE, FLORIDA 33301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 713-1600
____________________
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Item 5. Other Events.
On January 16, 1997, Extended Stay America, Inc. (the "Company"), ESA
Merger Sub, Inc., a wholly-owned subsidiary of the Company ("Merger Sub"), and
Studio Plus Hotels, Inc. ("Studio Plus") entered into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Studio Plus will be merged
with and into Merger Sub (the "Merger"). The Merger Agreement provides that
Merger Sub will be the surviving corporation and that upon consummation of the
merger, each share of Studio Plus common stock will be converted into the right
to receive 1.2272 shares of common stock of the Company, and Studio Plus will
become a wholly-owned subsidiary of the Company. Consummation of the Merger is
subject to a number of conditions, including the approval of the stockholders of
both Studio Plus and the Company.
As of December 31, 1996, Studio Plus owned and operated 35 mid-priced
extended-stay lodging facilities and had approximately 11 facilities under
construction and contracts to purchase approximately 28 additional sites for
development (collectively, the "Studio Plus Facilities"). The Company intends
to operate the Studio Plus Facilities in substantially their present form. The
terms of the merger, including the exchange ratio, were determined through
arm's-length negotiations, based on past and projected levels of revenue and
profitability of Studio Plus, the market price of Studio Plus' common stock, and
the value of the assets acquired. The Company expects to account for the Merger
as a "pooling of interests." A copy of the Merger Agreement is filed herewith
as Exhibit 2.1 and is incorporated herein by this reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
--------
The exhibits to this report are listed in the Exhibit Index set forth
elsewhere herein.
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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.
EXTENDED STAY AMERICA, INC.
By: /s/ Robert A. Brannon
---------------------------
Robert A. Brannon
Senior Vice President and
Chief Financial Officer
Dated: January 21, 1997
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EXTENDED STAY AMERICA, INC.
---------------------------
Exhibit Index
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Exhibit
Number Description of Exhibit
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2.1 Agreement and Plan of Merger dated as of January 16, 1997 by and among
Extended Stay America, Inc., ESA Merger Sub, Inc., and Studio Plus
Hotels, Inc.
2.2 Agreement dated January 21, 1997 by the Company to furnish
supplementally copies of omitted schedules.
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EXTENDED STAY AMERICA, INC.,
ESA MERGER SUB, INC.
AND
STUDIO PLUS HOTELS, INC.
DATED AS OF JANUARY 16, 1997
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1 THE MERGER..........................................................2
1.1 The Merger................................................................2
1.2 Effective Time............................................................2
1.3 Effects of the Merger.....................................................2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers...........2
1.5. The Closing...............................................................3
ARTICLE 2 EFFECT OF THE MERGER ON SECURITIES OF THE COMPANY AND NEWCO.........3
2.1. NEWCO Stock...............................................................3
2.2. Conversion of Company Common Stock........................................3
2.3 Exchange of Shares........................................................5
2.4. Dividends, Fractional Shares, Etc.........................................6
2.5 Tax-Free Reorganization...................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................7
3.1 Organization, Standing and Power..........................................7
3.2 Capital Structure.........................................................8
3.3 Subsidiaries..............................................................8
3.4 Other Interests...........................................................9
3.5 Authority; Non-Contravention..............................................9
3.6 SEC Documents............................................................10
3.7 Absence of Certain Events................................................11
3.8 Litigation...............................................................11
3.9 Material Contracts.......................................................12
3.10 Employee Plans...........................................................12
3.11 Employment Relations and Agreements......................................14
3.12 Real Property............................................................14
3.13 Limitation on Business Conduct; Condition of Assets......................15
3.14 Environmental Laws and Regulations.......................................16
3.15 Trademarks, Copyrights...................................................17
3.16 Compliance with Laws.....................................................17
3.17 Takeover Statutes........................................................17
3.18 Taxes....................................................................17
3.19 Brokers..................................................................18
3.20 Opinion of Financial Advisor.............................................18
3.21 Pooling of Interests.....................................................18
3.22 Ownership of Purchaser Shares............................................18
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3.23 Amendment to Rights Plan................................................18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................19
4.1 Organization, Standing and Power........................................19
4.2 Capital Structure.......................................................19
4.3 Authority; Non-Contravention............................................19
4.4 SEC Documents...........................................................20
4.5 Absence of Certain Events...............................................21
4.6 Purchaser Material Contracts............................................22
4.7 Employee Plans..........................................................22
4.8 Taxes...................................................................24
4.9 Compliance with Laws....................................................24
4.10 Litigation..............................................................24
4.11 Employment Relations and Agreements.....................................24
4.12 Environmental Laws and Regulations......................................25
4.13 Trademarks, Copyrights..................................................25
4.14 Brokers.................................................................25
4.15 Takeover Statute........................................................25
ARTICLE 5 COVENANTS..........................................................26
5.1. Alternative Proposals...................................................26
5.2. Interim Operations......................................................26
5.3. Meetings of Stockholders................................................30
5.4. Filings, Other Action...................................................31
5.5. Inspection of Records...................................................31
5.6. Publicity...............................................................31
5.7. Registration Statement..................................................32
5.8. Listing Application.....................................................32
5.9. Affiliate Letters.......................................................33
5.10. Expenses...............................................................33
5.11. Takeover Statute.......................................................33
5.12. Conduct of Business by NEWCO Pending the Merger........................33
5.13. Conveyance Taxes.......................................................34
5.14. Further Amendments to Rights Plan......................................34
5.15. Indemnification of Officers and Directors..............................34
5.16. Tax Treatment..........................................................34
5.17. Employee Benefits......................................................35
5.18 Stock Options...........................................................35
5.19 Purchaser Board of Directors............................................36
5.20 Employment Contract.....................................................36
ARTICLE 6 CONDITIONS.........................................................36
6.1. Conditions to Each Party's Obligation to Effect the Merger..............36
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6.2. Conditions to Obligation of Company to Effect the Merger................37
6.3. Conditions to Obligation of the Purchaser to Effect the Merger..........38
ARTICLE 7 TERMINATION........................................................39
7.1. Termination by Mutual Consent...........................................39
7.2. Termination by Either the Purchaser or Company..........................39
7.3. Termination by Company..................................................39
7.4. Termination by the Purchaser............................................40
7.5. Effect of Termination and Abandonment...................................40
7.6. Extension, Waiver.......................................................40
ARTICLE 8 GENERAL PROVISIONS.................................................41
8.1. Nonsurvival of Representations, Warranties and Agreements...............41
8.2. Notices.................................................................41
8.3. Assignment; Binding Effect..............................................41
8.4. Entire Agreement........................................................42
8.5. Amendment...............................................................42
8.6. Governing Law...........................................................42
8.7. Counterparts............................................................42
8.8. Headings................................................................42
8.9. Interpretation..........................................................42
8.10. Waivers................................................................42
8.11. Incorporation of Exhibits..............................................42
8.12. Severability...........................................................43
8.13. Enforcement of Agreement...............................................43
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and
entered into as of this 16th day of January 1997, by and among Extended Stay
America, Inc., a Delaware corporation (the "Purchaser"), ESA Merger Sub, Inc., a
Delaware corporation and wholly-owned subsidiary of the Purchaser ("NEWCO"), and
Studio Plus Hotels, Inc., a Virginia corporation (the "Company").
RECITALS
A. The Boards of Directors of the Purchaser, NEWCO, and the Company have
approved, and deem it advisable and in the best interests of their respective
companies and stockholders to consummate, the acquisition of the Company by the
Purchaser by means of a merger of the Company with and into NEWCO;
B. For federal income tax purposes, it is intended that the Merger, as
defined herein, qualify as a reorganization under the provisions of Sections
368(a)(1)(A) and (a)(2)(D) of the United States Internal Revenue Code of 1986,
as amended (the "Code");
C. For accounting purposes, it is intended that the Purchaser's
acquisition of the Company be treated as a pooling of interests pursuant to
Accounting Principles Board Opinion No. 16, and each of the parties hereto have
made certain representations and warranties and have undertaken certain
obligations relating to the preservation of such treatment.
D. Concurrently with the execution hereof, in order to induce the parties
hereto to enter into this Agreement, Norwood Cowgill, Jr. has granted to the
Purchaser an irrevocable proxy ("Proxy") with respect to his Company Common
Stock (as defined herein) in the form of the proxy set forth in the Stockholder
Agreement attached as Exhibit A hereto (the "Stockholder Agreement") and George
D. Johnson, Jr. has entered into an agreement to vote his Purchaser Stock (as
defined herein) in the form set forth in the Voting Agreement attached hereto as
Exhibit B (the "Voting Agreement");
E. The Merger described herein is subject to approval of the stockholders
of the Purchaser and the Company, respectively, and satisfaction of certain
other conditions described in this Agreement; and
F. The Purchaser and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
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ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof, and
in accordance with the General Corporation Law of the State of Delaware, as
amended (the "DGCL"), and the Virginia Stock Corporation Act, as amended (the
"VSCA"), the Company shall be merged with and into NEWCO at the Effective Time,
as defined herein (the "Merger"). Following the Merger, the separate corporate
existence of the Company shall cease and NEWCO shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL and the
VSCA. The name of NEWCO as the Surviving Corporation, shall be changed, by
virtue of the Merger, to Studio Plus Hotels, Inc.
1.2 Effective Time. The Merger shall become effective when a certificate
or articles of merger, as applicable, (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL and the VSCA, is accepted
for filing by the Secretary of State of the State of Delaware (the "Delaware
Secretary of State") and the Virginia State Corporation Commission (the
"Virginia Commission"). When used in this Agreement, the term "Effective Time"
shall mean the later of (i) the date and time at which the Certificate of Merger
has been accepted for filing by both the Delaware Secretary of State and the
Virginia Commission, or (ii) such later time established by the Certificate of
Merger. The filing of the Certificate of Merger with both the Delaware Secretary
of State and the Virginia Commission shall be made as soon as reasonably
practicable (but not later than the third business day) after the satisfaction
or waiver of the conditions to the Merger set forth herein.
1.3 Effects of the Merger. The Merger shall have the effects set forth in
the DGCL and VSCA.
1.4 Certificate of Incorporation and Bylaws; Directors and Officers. (a)
The Certificate of Incorporation of NEWCO, as in effect immediately prior to the
Effective Time, shall be amended by the Certificate of Merger to change the name
of NEWCO to "Studio Plus Hotels, Inc." and, as so amended, the Certificate of
Incorporation and the Bylaws of NEWCO shall be the Certificate of Incorporation
and the Bylaws of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The directors of NEWCO at the Effective Time shall, from and after
the Effective Time, be the initial directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal, in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The officers of NEWCO at the Effective Time and such other persons
as designated by the Purchaser shall, from and after the Effective Time, be the
initial officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or
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until their earlier death, resignation or removal, in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
1.5. The Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place (a) at the offices of Bell, Boyd & Lloyd, 70 West Madison
Street, Chicago, Illinois, at 10:00 a.m., local time, on the first business day
following the day on which the last to be fulfilled or waived of the conditions
set forth in Article 6 shall be fulfilled or waived in accordance herewith or
(b) at such other time, date or place as the Purchaser and the Company may
agree. The date on which the Closing occurs is referred to herein as the
"Closing Date."
ARTICLE 2
EFFECT OF THE MERGER ON SECURITIES
OF THE COMPANY AND NEWCO
2.1. NEWCO Stock. At the Effective Time, each share of the common stock of
NEWCO outstanding immediately prior to the Effective Time shall remain
outstanding and shall continue as one share of common stock of the Surviving
Corporation, and each certificate theretofore representing any such shares
shall, without any action on the part of the holder thereof, be deemed to
represent the same number of shares of the Surviving Corporation.
2.2. Conversion of Company Common Stock. (a) Except as otherwise provided
in Section 2.4 and subject to Sections 2.2(c) and 2.2(d), at the Effective Time
each issued and outstanding share of common stock, par value $.01 per share, of
the Company (the "Company Common Stock"), shall be converted into the right to
receive 1.2272 shares (the "Exchange Ratio") of common stock, par value $.01 per
share, of the Purchaser ("Purchaser Stock"). The number of shares of Purchaser
Stock received as determined as aforesaid is referred to herein as the "Stock
Consideration." In the event of any change in Purchaser Stock or Company Common
Stock between the date of this Agreement and the Effective Time by reason of any
stock dividend, stock split, subdivision, reclassification, recapitalization,
combination, exchange of shares or the like ("Adjustment Event"), the Exchange
Ratio shall be appropriately adjusted so that each holder of Company Common
Stock will receive in the Merger the same proportionate amount of Purchaser
Stock such holder would have been entitled to receive if the Effective Time had
been immediately prior to such Adjustment Event.
(b) As a result of the Merger and without any action on the part of
the holder thereof, at the Effective Time, all shares of Company Common Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of shares of Company Common Stock shall thereafter
cease to have any rights with respect to such shares of Company Common Stock,
except the right to receive, without interest, the Stock Consideration and cash
for fractional shares of Purchaser Stock in accordance with Section 2.4 upon the
surrender of a certificate representing such shares of Company Common Stock (a
"Company Certificate").
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(c) Notwithstanding anything contained in this Section 2.2 to the
contrary, each share of Company Common Stock held of record by the Purchaser and
each share of Company Common Stock issued and held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, cease to
be outstanding and shall be canceled and retired without payment of any
consideration therefor.
(d) Notwithstanding any provision of this Agreement to the contrary,
if required by the DGCL or the VSCA (but only to the extent required thereby),
shares of Company Common Stock which are issued and outstanding immediately
prior to the Effective Time and which are held by holders of such shares of
Company Common Stock who have properly exercised dissenter rights with respect
thereto in accordance with Article 15 of the VSCA (the "Dissenting Company
Common Shares") will not be exchangeable for the right to receive the Stock
Consideration, and holders of such shares of Company Common Stock will be
entitled to receive payment of the appraised value of such shares of Company
Common Stock in accordance with the provisions of such Article 15 unless and
until such holders fail to perfect or effectively withdraw or shall have lost
their rights to appraisal and payment under the VSCA. If, after the Effective
Time, any such holder fails to perfect or effectively withdraws or loses such
right, such shares of Company Common Stock will thereupon be treated as if they
had been converted into and have become exchangeable for, at the Effective Time,
the right to receive the Stock Consideration, without any interest thereon. The
Company will give the Purchaser prompt notice of any demands received by the
Company for appraisals of shares of Company Common Stock. The Company shall
not, except with the prior written consent of the Purchaser, voluntarily make
any payment with respect to any demands for appraisal or offer to settle or
settle any such demands. Payment for the Dissenting Company Common Shares shall
be made as required by the VSCA.
(e) At the Effective Time, each outstanding option or right to
purchase from the Company shares of Company Common Stock (a "Company Option")
under any of the Stock Plans (as defined in Section 3.2) or otherwise shall, to
the extent agreed to by the holder of such Company Option in an Option
Assumption Agreement (as hereinafter defined) (which agreement the Company will
use its best efforts to obtain), be assumed by the Purchaser in such manner that
each such Company Option (whether or not such option is then exercisable) shall
be converted into an option to purchase shares of Purchaser Stock, as provided
below. Following the Effective Time, each such Company Option shall be subject
to the same terms and conditions as are applicable to such Company Option at the
Effective Time, except that (i) all references in the Company Options to Company
and Company Common Stock shall be deemed to be references to Purchaser and
Purchaser Stock, respectively, (ii) all actions to be taken thereunder by the
Board of Directors of the Company or a committee thereof shall be taken by the
Board of Directors of the Purchaser or a committee thereof, (iii) each such
Company Option shall be immediately and fully exercisable for that number of
whole shares (with fractions rounded up to the next whole number) of Purchaser
Stock equal to the product of (x) the number of shares of Company Common Stock
covered by such Company Option immediately prior to the Effective Time and (y)
the Exchange Ratio as defined in Section 2.2(a) and (iv) the exercise price of
such Company Option shall be equal to the exercise price of such option
immediately prior to the Effective Time divided by the Exchange Ratio. It is
the intention of the parties that, to the extent
4
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that any such Company Option constituted an "incentive stock option" (within the
meaning of Section 422 of the Code) immediately prior to the Effective Time,
such Company Option shall continue to qualify as an incentive stock option to
the maximum extent permitted by Section 422 of the Code, and that the assumption
of the Company Options provided by this Section 2.2(e) satisfy the conditions of
Section 424(a) of the Code. Except as set forth in the Company Disclosure
Letter, from and after the date of this Agreement, no additional options to
purchase shares of Company Common Stock shall be granted under the Stock Plans
or otherwise. Approval by the stockholders of the Company and the Purchaser of
this Agreement shall constitute authorization and approval of any and all of the
actions described in this Section 2.2(e).
2.3 Exchange of Shares. (a) Approval of the Merger as contemplated by
Section 6.1(a) hereof shall constitute appointment by the stockholders of the
Company of Harris Trust and Savings Bank as the Exchange Agent in the Merger
(the "Exchange Agent"). Promptly after the Effective Time, the Purchaser shall
deposit (or cause to be deposited) with the Exchange Agent, for the benefit of
the holders of shares of Company Common Stock, for exchange in accordance with
this Article 2, certificates ("Purchaser Certificates") representing the
aggregate number of shares of Purchaser Stock constituting Stock Consideration
for exchange in accordance with this Article 2 and cash to be paid in lieu of
fractional shares (the shares deposited pursuant hereto and such cash being
referred to herein as the "Exchange Fund"). Purchaser Stock into which Company
Common Stock shall be converted pursuant to the Merger shall be deemed to have
been issued at the Effective Time.
(b) As soon as practicable after the Effective Time, Purchaser and
NEWCO shall cause the Exchange Agent to mail to each holder of record of Company
Common Stock immediately prior to the Effective Time (excluding any shares of
Company Common Stock which will be canceled pursuant to Section 2.2(c) or
Dissenting Company Common Shares) (i) a letter of transmittal (the "Company
Letter of Transmittal") (which shall specify that delivery shall be effected,
and risk of loss and title to the Company Certificates shall pass, only upon
delivery of such Company Certificates to the Exchange Agent and shall be in such
form and have such other provisions as the Purchaser and the Company may
reasonably specify), and (ii) instructions for use in effecting the surrender of
the Company Certificates in exchange for the Stock Consideration with respect to
the shares of Company Common Stock formerly represented thereby.
(c) Upon surrender of a Company Certificate for cancellation to the
Exchange Agent, together with the Company Letter of Transmittal, duly executed,
and such other documents as the Exchange Agent shall reasonably request, the
holder of such Company Certificate shall be entitled to receive promptly in
exchange therefor a Purchaser Certificate representing that number of shares of
Purchaser Stock which such holder has the right to receive pursuant to this
Article 2 and the Company Certificate so surrendered shall forthwith be
canceled. Until surrendered as contemplated by this Section 2.3, each Company
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Stock Consideration with respect to the shares of
Company Common Stock formerly represented thereby.
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2.4. Dividends, Fractional Shares, Etc. (a) Notwithstanding any other
provisions of this Agreement, no dividends or other distributions declared after
the Effective Time on Purchaser Stock shall be paid with respect to any shares
of Company Common Stock represented by a Company Certificate, until such Company
Certificate is surrendered for exchange as provided herein. Subject to the
effect of applicable laws, following surrender of any such Company Certificate,
there shall be paid to the holder of the Purchaser Certificates issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of
Purchaser Stock and not paid, less the amount of any withholding taxes which may
be required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Purchaser Stock, less the amount of any
withholding taxes which may be required thereon.
(b) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing any such shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for certificates for
the consideration deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 2. Company
Certificates surrendered for exchange by any person constituting an "affiliate"
of the Company for purposes of Rule 145(c) under the Securities Act of 1933, as
amended (including the rules and regulations promulgated thereunder, the
"Securities Act"), shall not be exchanged until the Purchaser has received a
written agreement from such person as provided in Section 5.9.
(c) No fractional shares of Purchaser Stock shall be issued pursuant
to the Merger, and such fractional interests shall not entitle the owners
thereof to vote, to receive dividends or to exercise any other right of a
stockholder with respect to such fractional interest. In lieu of the issuance
of any fractional share of Purchaser Stock pursuant to the Merger, each holder
of Company Common Stock who would otherwise have been entitled to a fraction of
a share of Purchaser Stock upon surrender of Company Certificates pursuant to
Section 2.3(c) hereof shall be paid cash (rounded to the nearest cent, $.005 to
be rounded to $.01) upon surrender in an amount equal to such fraction times the
closing sale price of the Purchaser Stock on the Nasdaq National Market
("Nasdaq") on the day of the Effective Time, or, if the Purchaser Stock is not
traded on such day, such closing price on the next preceding day on which such
stock was traded on Nasdaq.
(d) Any portion of the Exchange Fund that remains unclaimed by the
former stockholders of the Company six months after the Effective Time shall be
delivered to the Purchaser. Any former stockholder of the Company who has not
theretofore complied with this Article 2 shall thereafter look only to the
Purchaser for payment of the Stock Consideration, cash in lieu of fractional
shares and unpaid dividends and distributions on the Purchaser Stock deliverable
in respect of each share of Company Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case without any interest
thereon.
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(e) None of the Purchaser, the Company, NEWCO, the Surviving
Corporation, the Exchange Agent or any other person shall be liable to any
former holder of shares of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) In the event that any Company Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed and, if
required by the Purchaser, the posting by such person of a bond in such
reasonable amount as the Purchaser may direct as indemnity against any claim
that may be made against it with respect to such Company Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Company
Certificate the applicable Stock Consideration, cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Purchaser Stock as
provided in this Section 2.4, deliverable in respect thereof pursuant to this
Agreement.
2.5 Tax-Free Reorganization. The Merger is intended to be a reorganization
within the meaning of Sections 368(a)(1)(A) and (a)(2)(D) of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368 of the Code.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
3.1 Organization, Standing and Power. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. The Company and each of its Subsidiaries is duly qualified to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. For purposes of this Agreement, (a)
"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to the Purchaser, NEWCO, or the Company, as the case may be, any change
or effect, either individually or in the aggregate, that is materially adverse
to (i) the business, assets, financial condition or results of operations of the
Purchaser and its Subsidiaries taken as a whole, or the Company and its
Subsidiaries taken as a whole, as the case may be, or (ii) the ability of
Purchaser, NEWCO, or the Company, as the case may be, to consummate the
transactions contemplated by this Agreement, and (b) "Subsidiary" means any
corporation, partnership, joint venture or other legal entity of which the
Purchaser or the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, 50% or more
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 or other legal entity.
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3.2 Capital Structure. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 10,000,000 shares of
Preferred Stock, par value $.01 per share ("Preferred Stock"). At the close of
business on January 15, 1997, (i) 12,528,845 shares of Company Common Stock were
issued and outstanding, (ii) 1,071,514 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding Company Options and
130,000 shares of Company Common Stock have been reserved for issuance for
satisfaction of contractual obligations of the Company to grant options to
current and future employees of the Company and (iii) no shares of Company
Common Stock were held by the Company in its treasury. As of the date hereof,
there are no shares of Preferred Stock outstanding. All outstanding shares of
capital stock of the Company are validly issued, fully paid and nonassessable
and not subject to preemptive rights. As of January 15, 1997, there were (i) 45
Company Options outstanding under the Company's 1995 Stock Incentive Plan (the
"Employee Plan") to acquire 1,011,514 shares of Company Common Stock, and (ii) 4
Company Options outstanding under the Company's 1995 Non-Employee Directors'
Stock Incentive Plan (the "Directors' Plan") to acquire 60,000 shares of Company
Common Stock. The foregoing stock option plans of the Company are referred to
herein as the "Stock Plans." Except for such Company Options, rights under the
Company Rights Agreement (as defined below), and contractual obligations of the
Company to grant options on a total of 130,000 shares of Company Common Stock to
current and future employees of the Company, there are no options, warrants,
rights, commitments, agreements, arrangements or undertakings of any kind 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 or other voting securities of the Company or of any of its Subsidiaries.
The Company Disclosure Letter (as defined below) sets forth a schedule of the
exercise prices for all outstanding Company Options as of January 15, 1997.
Since January 15, 1997, no shares of the Company's capital stock have been
issued other than pursuant to the exercise of Company Options already in
existence on such date and the Company has not granted any stock options for any
capital stock or other voting securities of the Company.
3.3 Subsidiaries. Except as set forth in the letter from the Company to
the Purchaser dated the date hereof, which letter relates to this Agreement and
is designated therein as the Company Disclosure Letter (the "Company Disclosure
Letter"), all of the outstanding capital stock of, or ownership interests in,
each Subsidiary of the Company is owned by the Company, directly or indirectly,
free and clear of any security interests, liens, claims, pledges, options,
rights of first refusal, agreements, charges or other encumbrances of any nature
("Liens") or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
law). Except as set forth in the Company Disclosure Letter, there are no (i)
securities of the Company or any of its Subsidiaries convertible into or
exchangeable for, (ii) options or other rights to acquire from the Company or
any of its Subsidiaries, or (iii) other contracts, understandings, arrangements
or obligations (whether or not contingent) providing for the issuance or sale,
directly or indirectly, in each case, with respect to any capital stock or other
ownership interests in, or any other securities of, any Subsidiary of the
Company. There are no outstanding contractual obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any Subsidiary of the
Company nor are there any irrevocable
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proxies with respect to any shares of the capital stock of any of the Company's
Subsidiaries. All of the shares of capital stock of each Subsidiary of the
Company are validly issued, fully paid and nonassessable. Other than
restrictions imposed by applicable law or as set forth in the Company Disclosure
Letter, there are no restrictions which prevent or limit the payment of
dividends by any of the Company's Subsidiaries.
3.4 Other Interests. Except for the Company's interest in its Subsidiaries
or as set forth in the Company Disclosure Letter, neither the Company nor its
Subsidiaries owns directly or indirectly any equity interest or equity
investment in, nor is the Company or any of its Subsidiaries subject to any
obligation or requirement to provide for or to make any equity investment in,
any corporation, limited liability company, partnership, joint venture,
business, trust or entity.
3.5 Authority; Non-Contravention. The Board of Directors of the Company
has unanimously approved this Agreement and determined that the Merger is fair
to and in the best interests of the Company and its stockholders, and the
Company has all requisite corporate power and authority to enter into this
Agreement and, subject to approval of the Merger by the stockholders of the
Company, 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 such approval of the
Merger 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 the Purchaser and NEWCO) constitutes a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms; (i) except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally; and (ii) subject to general
principles of equity. Except as set forth in the Company Disclosure 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, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation, contractually require any offer
to purchase or any prepayment of any debt, contractually require the payment of
(or result in the vesting of) any severance, golden parachute, change of control
or similar type of payment, or give rise to the loss of a material benefit
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries under, any provision of (i) the Articles of Incorporation or Bylaws
of the Company (true and complete copies of which as of the date hereof have
been delivered to the Purchaser) or the comparable charter or organization
documents of any of its Subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, concession,
franchise or license applicable to the Company or any of its Subsidiaries or
(iii) subject to the governmental filings and other matters referred to in the
following sentence and approval of this Agreement by the Company's stockholders,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, offers,
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prepayments, payments, losses, liens, security interests, charges or
encumbrances that would not have a Material Adverse Effect on the Company.
Copies of all contracts, agreements, instruments or other documents referred to
in the Company Disclosure Letter pursuant to this Section 3.5 have been
furnished or made available to the Purchaser. The Company Disclosure Letter
lists the amounts payable or that will or may become payable to directors,
officers or employees or former directors, officers or employees of the Company
and its Subsidiaries as a result of the execution and delivery by the Company of
this Agreement or the consummation of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
domestic (federal and state), foreign or supranational court, commission,
governmental body, regulatory or administrative agency, authority or tribunal (a
"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 the consummation by the Company of the transactions
contemplated hereby, except for (i) in connection or in compliance with the
provisions of the Securities Exchange Act of 1934, as amended (including the
rules and regulations promulgated thereunder, the "Exchange Act"), (ii) the
filing of the Certificate of Merger with the Delaware Secretary of State and the
Virginia Commission, and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (iii) such
filings and approvals as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (iv) such filings and
approvals as may be required by any applicable state securities or "blue sky"
laws or state takeover laws, and (v) such other consents, orders,
authorizations, registrations, approvals, declarations and filings the failure
of which to be obtained or made would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
3.6 SEC Documents. (a) Since June 20, 1995, the Company has filed all
documents with the Securities and Exchange Commission ("SEC") required to be
filed under the Securities Act or the Exchange Act (such documents filed with
the SEC on or before January 15, 1997 referred to herein as the "Company SEC
Documents"). Except as set forth in the Company Disclosure Letter, as of their
respective dates, (i) the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) 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 in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q 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 present the consolidated financial
position of the Company and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and changes in
financial position 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).
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(b) Except as set forth in the Company SEC Documents or the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) which would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with generally accepted accounting
principles, except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since September 30, 1996 which
would not have a Material Adverse Effect on the Company.
(c) The Company has heretofore made available to the Purchaser a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously have been filed with the SEC pursuant to the Securities Act or the
Exchange Act.
3.7 Absence of Certain Events. Since December 31, 1995, the Company and
its Subsidiaries have operated their respective businesses only in the ordinary
course consistent with past practice and, except as contemplated by this
Agreement or disclosed in the Company SEC Documents or the Company Disclosure
Letter, there has not occurred (i) any Material Adverse Change in the Company;
(ii) any change by the Company or any of its Subsidiaries in its accounting
methods, principles or practices; (iii) any amendments or changes in the
Articles of Incorporation or Bylaws of the Company; (iv) any revaluation by the
Company or any of its Subsidiaries of any of their respective assets, including,
without limitation, write-offs of accounts receivable or write-offs or write-
downs of inventory, other than in the ordinary course of the Company's and its
Subsidiaries' businesses consistent with past practices; (v) any damage,
destruction or loss with respect to the property or assets of the Company or its
Subsidiaries which resulted in, or is reasonably likely to result in, a Material
Adverse Effect on the Company; (vi) any declaration, setting aside or payment of
any dividend or other distribution with respect to any shares of capital stock
of the Company, or any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company; (vii) any
grant of any severance or termination pay to any director, executive officer or
key employee of the Company or any of its Subsidiaries, except as required under
any severance agreements disclosed in the Company Disclosure Letter; (viii) any
entry into any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director, executive
officer or key employee of the Company or any of its Subsidiaries; (ix) any
increase in benefits payable under any existing severance or termination pay
policies or employment agreements with any director, executive officer or key
employee of the Company or any of its Subsidiaries except in the ordinary course
of business consistent with past practice; or (x) any increase in compensation,
bonus or other benefits payable to directors, executive officers or key
employees of the Company or any of its Subsidiaries except in the ordinary
course of business consistent with past practice. Notwithstanding the foregoing,
the representations contained in this Section 3.7 shall not apply to any change
or development, or combination of changes or developments, to the extent such
changes and developments are the result of stock market fluctuations.
3.8 Litigation. Except as set forth in the Company SEC Documents or the
Company Disclosure Letter, there are no actions, suits, proceedings,
investigations or reviews pending
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against the Company or its Subsidiaries or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries, at law or in equity, or
before or by any federal or state commission, board, bureau, agency, regulatory
or administrative instrumentality or other Governmental Entity or any arbitrator
or arbitration tribunal, that are reasonably likely to have a Material Adverse
Effect on the Company.
3.9 Material Contracts. Except for (a) agreements, commitments,
arrangements, leases or other instruments disclosed in the Company Disclosure
Letter, (b) agreements, commitments, arrangements, leases or other instruments
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, or in any Company SEC Documents filed thereafter, and (c)
other agreements, commitments, arrangements, leases or other instruments entered
into in the ordinary course of business (collectively the "Material Contracts"),
neither the Company nor any of its Subsidiaries is a party to any material
agreements, commitments, arrangements, leases or other instruments. Assuming due
authorization and execution by the other parties thereto, to the knowledge of
the Company, each of the Material Contracts is valid, binding, and in full force
and effect in all material respects and enforceable by the Company or such
Subsidiary, as the case may be, in accordance with its respective terms. The
Company or such Subsidiary, as the case may be, has materially performed its
obligations under such Material Contracts in accordance with the terms thereof
and, to the knowledge of the Company, the other parties to such Material
Contracts are not in default under any Material Contract as to which it is
reasonably foreseeable that an adverse determination would result in a Material
Adverse Effect on the Company. Except as set forth in the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has received notice from
any person alleging that the Company or any of its Subsidiaries is in default
under any Material Contract as to which it is reasonably foreseeable that an
adverse determination would result in a Material Adverse Effect on the Company.
3.10 Employee Plans. (a) To the knowledge of the Company, except as set
forth in the Company Disclosure Letter, the Company and each Subsidiary has
complied with and performed all contractual obligations and all obligations
under applicable federal, state and local laws, rules and regulations required
to be performed by it under or with respect to any of the Company Benefit Plans
(as defined below) or any related trust agreement or insurance contract, other
than where the failure to so comply or perform does not have, nor is reasonably
likely to have, a Material Adverse Effect on the Company. Except as set forth in
the Company Disclosure Letter, all contributions and other payments required to
be made by the Company and its Subsidiaries to any Company Benefit Plan prior to
the date hereof have been made, other than where the failure to so contribute or
make payments will not have a Material Adverse Effect on the Company, and all
accruals required to be made under any Company Benefit Plan through December 31,
1996 have been made. Except as set forth in the Company Disclosure Letter, there
is no claim, dispute, grievance, charge, complaint, restraining or injunctive
order, litigation or proceeding pending, or, to the best knowledge of the
Company and its Subsidiaries, threatened or anticipated (other than routine
claims for benefits) against or relating to any Company Benefit Plan or against
the assets of any Company Benefit Plan, which is reasonably likely to have a
Material Adverse Effect on the Company. To the knowledge of the Company, neither
the Company nor any of its Subsidiaries has communicated generally to employees
or specifically to any employee
12
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regarding any future increase of benefit levels (or future creations of new
benefits) with respect to any Company Benefit Plan beyond those reflected in the
Company Benefit Plans, which benefit increases or creations, either individually
or in the aggregate, will have or are reasonably likely to have, a Material
Adverse Effect on the Company. Except as set forth in the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries presently sponsors,
maintains, contributes to, nor is the Company or its Subsidiaries required to
contribute to, nor has the Company or any of its Subsidiaries ever sponsored,
maintained, contributed to, or been required to contribute to, any employee
pension benefit plan within the meaning of section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) With respect to each Company Benefit Plan subject to Title IV of
ERISA, (i) no termination of any Company Benefit Plan has occurred pursuant to
which all liabilities have not been satisfied in full, and no event has occurred
and no condition exists that could reasonably be expected to result in the
Company or Subsidiary incurring a material liability under Title IV of ERISA;
(ii) each such Company Benefit Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code, has been maintained in compliance
with the minimum funding standards of ERISA and the Code and no such Company
Benefit Plan has incurred any "accumulated funding deficiency," as defined in
Section 412 of the Code and Section 302 of ERISA, whether or not waived; (iii)
neither the Company nor any Subsidiary has sought or received a waiver of its
funding requirements with respect to any Company Benefit Plan; (iv) no
reportable event, within the meaning of Section 4043 of ERISA, and no event
described in Section 4062 or 4063 of ERISA, has occurred with respect to any
Company Benefit Plan; and (v) no Company Benefit Plan would have an amount of
Unfunded Benefit Liabilities (as defined in Section 4001(a)(18) of ERISA) if
such plan were terminated as of the Effective Time.
(c) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has incurred, nor has any event occurred
which has imposed or is reasonably likely to impose upon the Company or any of
its Subsidiaries, any withdrawal liability (complete or partial within the
meanings of sections 4203 or 4205 of ERISA, respectively) in respect of any
multiemployer plan (within the meaning of section 3(37) or 4001(a)(3) of ERISA)
(a "Multiemployer Plan"), which withdrawal liability has not been satisfied or
discharged in full or which, either individually or in the aggregate, will
cause, or is reasonably likely to cause, a Material Adverse Effect on the
Company.
(d) Except as set forth in the Company Disclosure Letter, neither the
Company nor any Subsidiary maintains or contributes to (or has maintained or
contributed to) any Company Benefit Plan which provides, or has a liability to
provide, life insurance, medical, severance, or other employee welfare benefits
to any employee upon such employee's retirement or termination of employment,
except as may be required by Section 4980B of the Code.
(e) (i) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workers' compensation or other
13
<PAGE>
insurance, severance, separation or other employee benefit plan, practice,
policy or arrangement of any kind, including, but not limited to, any "employee
benefit plan" within the meaning of section 3(3) of ERISA and (ii) "Company
Benefit Plan" means any Plan, other than a Multiemployer Plan, established by
the Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries contributes or has contributed (including any such Plans not now
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries does not now contribute, but with respect to which the
Company or any of its Subsidiaries has or may have any liability). Copies of all
written Plans (and, if applicable, related trust agreements and ERISA summary
plan descriptions) and all amendments thereto, and the most recent Forms 5500
required to be filed with respect thereto have been made available to the
Purchaser. The Company Disclosure Letter sets forth each Plan with respect to
which benefits will be accelerated, vested, increased or paid as a result of the
transactions contemplated by this Agreement.
3.11 Employment Relations and Agreements. (a) Except as would not
constitute a Material Adverse Effect on the Company, (i) each of the Company and
its Subsidiaries is in compliance in all material respects with all federal,
state or other applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours; (ii) as of the date of
this Agreement, there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the best knowledge of the Company or its Subsidiaries, threatened
against or involving the Company or any of its Subsidiaries; (iii) no collective
bargaining agreement is being negotiated as of the date of this Agreement by the
Company or any of its Subsidiaries; and (iv) the Company and its Subsidiaries
taken as a whole have not experienced any material labor difficulty during the
last three years.
(b) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any written, or to the knowledge of the
Company, any binding oral, employment, severance, "change of control",
collective bargaining or similar agreements ("Employment Agreements"). Copies of
all Employment Agreements and all amendments thereto have been previously made
available to the Purchaser.
3.12 Real Property. (a) The Company Disclosure Letter accurately and
completely sets forth, with respect to every parcel of real estate owned by the
Company or any of its Subsidiaries (the "Real Estate"): (i) the owner; (ii) the
location, including address, thereof; (iii) the legal description and
approximate size thereof; (iv) a brief description (including size, approximate
year of completion, and function) of the principal improvements and buildings
thereon, all of which are within the property, set-back and building lines; (v)
the nature and amount of any mortgages, tax liens or other liens thereon
(including without limitation any environmental liens).
(b) The Company Disclosure Letter accurately and completely sets
forth, with respect to every parcel of real estate leased by the Company or any
of its Subsidiaries (the "Leasehold Premises"): (i) the lessor and lessee
thereof and the date and term of the lease governing such property; (ii) the
location, including address, thereof; (iii) the legal description and the
approximate size thereof; (iv) a brief description (including size, approximate
year of
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completion, and function) of the principal improvements and buildings thereon,
all of which are within the property, set-back and building lines of the
Leasehold Premises; and (v) the nature and amount of any mortgages, tax liens or
other liens thereon (including without limitation any environmental liens). The
Company has previously delivered to the Purchaser accurate and complete copies
of each of the leases covering the Leasehold Premises, and none of such leases
has been amended or modified except to the extent that such amendments or
modifications are disclosed in such copies or in the Company Disclosure Letter.
The Company or the respective Subsidiary is not in default or breach under any
such lease. No event has occurred which with the passage of time or the giving
of notice or both would cause a material breach of or default by the Company or
the respective Subsidiary under any such lease. The Company has no knowledge of
any breach or anticipated breach by the other parties to such lease.
(c) Except as reflected in the Company Disclosure Letter, the Company
or the respective Subsidiary has good and marketable title to each parcel of the
Real Estate and a valid leasehold interest in each of the Leasehold Premises,
free and clear of all liens, mortgages, pledges, charges, encumbrances,
assessments, restrictions, covenants and easements or title defects of any
nature whatsoever, except for liens for real estate taxes not yet due and
payable, and such imperfections of title and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially interfere with
the present use, of such properties or otherwise impair business operations in
any material respect.
(d) Except as set forth in the Company Disclosure Letter, the
buildings located on the Real Estate and the Leasehold Premises are each in good
operating condition, sufficient for the use for which such buildings are
intended, normal wear and tear excepted.
(e) Each parcel of the Real Estate and the Leasehold Premises: (i)
has direct access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy the current
normal transportation requirements of the Company's business as presently
conducted at such parcel; and (ii) is served by utilities in such quantity and
quality as are sufficient to satisfy the current normal occupancy levels and
business activities of the Company's business as conducted at such parcel.
(f) None of the Company or its Subsidiaries has received notice of:
(i) any condemnation proceeding with respect to any portion of the Real Estate
or the Leasehold Premises, and to the best of the knowledge of the Company and
its Subsidiaries no such proceeding is contemplated by any governmental
authority; or (ii) except as reflected in the Company Disclosure Letter, any
special assessment which may materially affect the Real Estate or the Leasehold
Premises, and to the best of the knowledge of the Company and its Subsidiaries
no such special assessment is contemplated by any governmental authority.
3.13 Limitation on Business Conduct; Condition of Assets. Except as set
forth in the Company Disclosure Letter, neither the Company nor its Subsidiaries
is a party to, or has any obligation under, any contract or agreement, written
or oral, which contains any covenants currently or prospectively limiting in any
material respect the freedom of the Company or any of its Subsidiaries to engage
in any line of business or to compete with any entity. Except as set
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forth in the Company Disclosure Letter, the Company and its Subsidiaries have
good and marketable title to all of their respective assets and properties,
other than the Real Estate and Leasehold Premises, including the assets
reflected on the Company's balance sheet included in the Company's Form 10-Q for
the quarter end September 30, 1996 (the "Company Balance Sheet") and all of the
assets thereafter acquired by them (except to the extent that such assets have
thereafter been disposed of for fair value in the ordinary course of business),
and good title to all their leasehold interests, in each case subject to no
liens, mortgages, pledges, encumbrances or charges of any kind except as noted
on the Company Balance Sheet or the Company Disclosure Letter and except for
liens, encumbrances or charges which are not material in character, amount or
extent with respect to the related asset and which do not in the aggregate have
a Material Adverse Effect.
3.14 Environmental Laws and Regulations. (a) The Company and its
Subsidiaries are in compliance with all applicable Environmental Laws, except as
otherwise disclosed in the Company SEC Documents or the Company Disclosure
Letter and except for non-compliance which would not have a Material Adverse
Effect on the Company. The term "Environmental Laws" means any federal, state,
local or foreign statute, ordinance, rule, regulation, policy, permit, consent,
approval, license, judgment, order, decree, injunction or other authorization
applicable to the Company and its Subsidiaries and relating to: (i) pollution or
protection of human health or safety, health or safety of employees, sanitation,
or the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), (ii) Releases (as defined in
42 U.S.C. Sections 9601 et seq.) or threatened Releases of Hazardous Material
(as hereinafter defined) into the environment or (iii) the generation,
treatment, storage, disposal, use, handling, manufacturing, transportation or
shipment of Hazardous Material.
(b) There has not occurred, nor is there presently occurring, a
Release of any Hazardous Material in, on, under or affecting any of the
Company's or its Subsidiaries' respective current or previously owned or leased
properties or any surrounding site, and none of the Company or its Subsidiaries
has disposed of any Hazardous Material or any other substance in a manner that
has led, or could reasonably be anticipated to lead, to a Release, except as
otherwise disclosed in the Company SEC Documents or the Company Disclosure
Letter and except in each case for those Releases and disposals which
individually or in the aggregate are not reasonably likely to have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC Documents
or the Company Disclosure Letter, neither the Company nor its Subsidiaries has
received any notice that it is a "potentially responsible person" under any
Environmental Laws. The term "Hazardous Material" means any pollutants,
contaminants, hazardous substances, hazardous chemicals, toxic substances,
hazardous wastes, infectious and medical wastes, radioactive materials,
petroleum (including crude oil or any fraction thereof), natural gas, synthetic
gas and mixtures thereof, PCBs, or materials containing PCBs in excess of 50
ppm, asbestos and/or asbestos-containing materials or solid wastes, including
but not limited to those defined in any Environmental Law and all regulations
promulgated under each and all amendments thereto.
(c) None of the Company or any of the Subsidiaries use, and has not
used, any Underground Storage Tanks, and there are not now nor have there ever
been Underground
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Storage Tanks on the Real Estate or the Leasehold Premises. For purposes of this
Section, the term "Underground Storage Tanks" shall have the meaning given it in
the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.).
(d) There are no laws, regulations, ordinances, licenses, permits or
orders relating to environmental, worker safety or other matters that require
any work, repairs, construction, alteration or capital expenditures with respect
to the assets or properties of the Company and its Subsidiaries except for such
as would not have a Material Adverse Effect on the Company.
3.15 Trademarks, Copyrights. Except as set forth in the Company
Disclosure Letter, the Company or its Subsidiaries own or possess adequate
licenses or other valid rights to use all material trademarks, trademark rights,
trade names, trade name rights, copyrights, know-how and other proprietary
information used or held for use in connection with the business of the Company
or any of its Subsidiaries as currently being conducted and, to the knowledge of
the Company, there are no assertions or claims challenging the validity of any
of the foregoing, except where the failure to own or possess, or where such
assertions or claims, would not have a Material Adverse Effect on the Company.
3.16 Compliance with Laws. To the knowledge of the Company, except as set
forth in the Company Disclosure Letter, each of the Company and its Subsidiaries
is in compliance with all laws, regulations and orders applicable to it, its
assets, properties and business, except where such noncompliance would not have
a Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has received notification of any asserted past or present failure
to comply with any laws which has not been remedied, and to the best of their
knowledge, no proceeding with respect to any such violation is contemplated.
Neither the Company nor any of its Subsidiaries, nor, to the best knowledge of
the Company and each of its Subsidiaries, any employee of the Company or any of
its Subsidiaries, has made any payment of funds in connection with the business
of the Company or any of its Subsidiaries prohibited by law, and no funds have
been set aside to be used in connection with the business of the Company or any
of its Subsidiaries for any payment prohibited by law.
3.17 Takeover Statutes. The Board of Directors of the Company has
unanimously approved the transactions contemplated by this Agreement and,
assuming the accuracy of the Purchaser's representations and warranties
contained in Section 4.15, has taken all appropriate action so that the
transactions contemplated by this Agreement will not be subject to the
Affiliated Transactions provisions of Sections 13.1-725 through 13.1-727.1 of
the VSCA. The Company has taken all appropriate action so that the transactions
contemplated by this Agreement will not be subject to the "Control Share
Acquisition" provisions of Section 13.1-728.1 through 13.1-728.9 of the VSCA.
3.18 Taxes. Except as set forth in the Company Disclosure Letter, (i)
the Company and each Subsidiary have filed all material Tax Returns required to
have been filed on or before the date hereof, which returns are true and
complete in all material respects and all Taxes shown due thereon have been
paid; (ii) no issues that have been raised in writing by the relevant taxing
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authority in connection with the examination of the Tax Returns referred to in
clause (i) are currently pending; and (iii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) by a taxing authority have been paid in full or are being
contested in good faith by the Company or such Subsidiary. For purposes of this
Agreement, (a) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, transfer or excise tax,
or any 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 authority, and (b) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
3.19 Brokers. No broker, investment banker or other person, other than
Smith Barney Inc. ("Smith Barney"), the fees and expenses of which will be paid
by the Company, 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. A copy of the
engagement letter between Smith Barney and the Company, as amended, setting
forth the fees and expenses to be paid by the Company in connection with the
transactions contemplated by this Agreement has been provided to the Purchaser.
3.20 Opinion of Financial Advisor. The Board of Directors of the Company
has received the opinion of Smith Barney to the effect that, as of the date of
this Agreement, the Exchange Ratio is fair to the holders of Company Common
Stock from a financial point of view.
3.21 Pooling of Interests. To the knowledge of the Company, the Company
has not had, nor does it plan to have any transaction or condition which would
preclude the transactions contemplated by this Agreement from being accounted
for as a "pooling of interests."
3.22 Ownership of Purchaser Shares. Neither the Company nor any of its
Subsidiaries or, to the knowledge of the Company, any affiliate owns directly or
indirectly any Purchaser Stock or has any rights to purchase such shares, and
will not purchase any such shares in a fashion that would prevent the accounting
treatment of the transactions contemplated by this Agreement as a pooling of
interests, unless the Purchaser waives the condition in Section 6.3 hereof.
3.23 Amendment to Rights Plan. The Company has amended, and the Board of
Directors of the Company has authorized such amendment, the Rights Agreement,
dated as of June 6, 1995, and amended as of February 27, 1996, among the
Company, Bank One, Indianapolis, N.A., and Fifth Third Bank, Cincinnati, Ohio
("the Company Rights Agreement"), so that (i) the Purchaser will not become an
"Acquiring Person" as a result of the consummation of the transactions
contemplated by this Agreement, (ii) no "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Company Rights Agreement)
will occur as a result of the consummation of the transactions contemplated by
this Agreement, and (iii) all
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Rights (as defined in the Company Rights Agreement) issued and outstanding under
the Company Rights Agreement will expire immediately prior to the Effective
Time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 Organization, Standing and Power. Each of the Purchaser and NEWCO is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of the Purchaser and NEWCO is duly qualified to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, have a Material Adverse Effect on
the Purchaser.
4.2 Capital Structure. The authorized capital stock of the Purchaser
consists of 200,000,000 shares of Purchaser Stock and 10,000,000 shares of
Preferred Stock, par value $.01 per share ("Purchaser Preferred Stock"). At the
close of business on December 31, 1996, (i) 68,290,984 shares of Purchaser Stock
were issued and outstanding, (ii) no shares of Purchaser Preferred Stock were
issued and outstanding, (iii) 8,813,520 shares of Purchaser Stock were reserved
for issuance upon the exercise of stock options of the Purchaser, and (iv) no
shares of Purchaser Stock were held by the Purchaser in its treasury. All
outstanding shares of capital stock of the Purchaser are validly issued, fully
paid and nonassessable and not subject to preemptive rights. As of December 31,
1996, there were options ("Purchaser Stock Options") outstanding, in the
aggregate, under the Purchaser's Amended and Restated 1995 Employee Stock Option
Plan, Amended and Restated 1996 Employee Stock Option Plan, and 1995 Stock
Option Plan for Non-Employee Directors (collectively, the "Purchaser Option
Plans") to acquire 5,811,868 shares of Common Stock. Except for such Purchaser
Stock Options, as of December 31, 1996, there were no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Purchaser or any of its Subsidiaries is a party or by which any of them is bound
obligating the Purchaser or any of its Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Purchaser or of any of its Subsidiaries. Since
December 31, 1996, no shares of Purchaser's capital stock have been issued other
than pursuant to the exercise of Purchaser Stock Options already in existence on
such date, and the Purchaser has not granted any stock options on any capital
stock or other voting securities of the Purchaser, except as may be consistent
with past practice or as otherwise may be contemplated by this Agreement, in
each case in a manner as would not preclude the Merger from being accounted for
as a "pooling of interests." All of the shares of capital stock of NEWCO are
owned by the Purchaser.
4.3 Authority; Non-Contravention. The Board of Directors of the Purchaser
has unanimously approved this Agreement and determined that the Merger is fair
and in the best interests of the Purchaser and its stockholders and the
Purchaser has all requisite corporate power
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and authority to enter into this Agreement to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Purchaser. This Agreement has been duly executed and delivered by the
Purchaser and (assuming the valid authorization, execution and delivery of this
Agreement by the Company) constitutes a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms; (i)
except as may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally; and
(ii) subject to general principles of equity. Except as set forth in the letter
from the Purchaser to the Company dated the date hereof, which letter relates to
this Agreement and is designated as the Purchaser Disclosure Letter (the
"Purchaser Disclosure 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, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation,
contractually require any offer to purchase or any prepayment of any debt,
contractually require the payment of (or result in the vesting of) any
severance, golden parachute, change of control or similar type of payment, or
give rise to the loss of a material benefit under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Purchaser or any of its Subsidiaries under, any provision of (i)
the Certificate of Incorporation or Bylaws of the Purchaser or the comparable
charter or organization documents of any of its Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Purchaser
or any of its Subsidiaries or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Purchaser
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, offers, prepayments, payments, losses, liens,
security interests, charges or encumbrances that would not have a Material
Adverse Effect on the Purchaser. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Purchaser or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Purchaser or the consummation by
the Purchaser or NEWCO of the transactions contemplated hereby, except for (i)
in connection or in compliance with the provisions of the Securities Act and
Exchange Act, (ii) the filing of the Certificate of Merger with the Delaware
Secretary of State and the Virginia Commission, and appropriate documents with
the relevant authorities of other states in which the Purchaser or NEWCO is
qualified to do business, (iii) such filings and approvals as may be required
under the HSR Act, (iv) such filings and approvals as may be required by any
applicable state securities or "blue sky" laws or state takeover laws, and (v)
such other consents, orders, authorizations, registrations, approvals,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the
Purchaser or NEWCO.
4.4 SEC Documents. (a) Since December 13, 1995, the Purchaser has filed
all documents with the SEC required to be filed under the Securities Act or the
Exchange Act (such documents filed with the SEC on or before January 15, 1997
referred to herein as the "Purchaser
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SEC Documents"). As of their respective dates, (i) the Purchaser SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) none of the Purchaser SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Purchaser included in the
Purchaser SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q 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 present the consolidated financial position of the Purchaser and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and changes in financial position 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).
(b) Except as set forth in the Purchaser SEC Documents or the
Purchaser Disclosure Letter, neither the Purchaser nor any of its Subsidiaries
has any liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet, or in the notes thereto, prepared in accordance with generally accepted
accounting principles, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since September 30,
1996 which would not have a Material Adverse Effect on the Purchaser.
(c) The Purchaser has heretofore made available to Company a complete
and correct copy of any amendments or modifications which have not yet been
filed with the SEC to agreements, documents or other instruments which
previously have been filed with the SEC pursuant to the Exchange Act.
4.5 Absence of Certain Events. Since December 31, 1995, the Purchaser and
its Subsidiaries have operated their respective lodging facilities only in the
ordinary course consistent with past practice and, except as contemplated by
this Agreement or disclosed in the Purchaser SEC Documents or the Purchaser
Disclosure Letter, there has not occurred (i) any Material Adverse Change in the
Purchaser; (ii) any change by the Purchaser or any of its Subsidiaries in its
accounting methods, principles or practices; (iii) any amendments or changes in
the Certificate of Incorporation or Bylaws of the Purchaser; (iv) any
revaluation by the Purchaser or any of its Subsidiaries of any of their
respective assets, including, without limitation, write-offs of accounts
receivable or write-offs or write-downs of inventory, other than in the ordinary
course of the Purchaser's and its Subsidiaries' businesses consistent with past
practices; (v) any damage, destruction or loss with respect to the property or
assets of the Purchaser or its Subsidiaries which resulted in, or is reasonably
likely to result in, a Material Adverse Effect on the Purchaser; or (vi) any
declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of the Purchaser, or any repurchase,
redemption or other acquisition by the Purchaser or any of its Subsidiaries of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the
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Purchaser. Notwithstanding the foregoing, the representations contained in
this Section 4.5 shall not apply to any change or development, or combination of
changes or developments, to the extent such changes and developments are the
result of stock market fluctuations.
4.6 Purchaser Material Contracts. Except for (a) agreements, commitments,
arrangements, leases or other instruments disclosed in the Purchaser Disclosure
Letter, (b) agreements, commitments, arrangements, leases or other instruments
disclosed in the Purchaser's Annual Report on Form 10-K for the year ended
December 31, 1995, or in any Purchaser SEC Documents filed thereafter, and (c)
other agreements, commitments, arrangements, leases or other instruments entered
into in the ordinary course of business (collectively the "Purchaser Material
Contracts"), neither the Purchaser nor any of its Subsidiaries is a party to any
material agreements, commitments, arrangements, leases or other instruments.
Assuming due authorization and execution by the other parties thereto, to the
knowledge of the Purchaser, each of the Purchaser Material Contracts is valid,
binding, and in full force and effect in all material respects and enforceable
by the Purchaser or such Subsidiary, as the case may be, in accordance with its
respective terms. The Purchaser or such Subsidiary, as the case may be, has
materially performed its obligations under such Purchaser Material Contracts in
accordance with the terms thereof and, to the knowledge of the Purchaser, the
other parties to such Purchaser Material Contracts are not in default under any
Purchaser Material Contract as to which it is reasonably foreseeable that an
adverse determination would result in a Material Adverse Effect on the
Purchaser. Except as set forth in the Purchaser Disclosure Letter, neither the
Purchaser nor any of its Subsidiaries has received notice from any person
alleging that the Purchaser or any of its Subsidiaries is in default under any
Purchaser Material Contract as to which it is reasonably foreseeable that an
adverse determination would result in a Material Adverse Effect on the
Purchaser.
4.7 Employee Plans. (a) To the knowledge of the Purchaser, except as set
forth in the Purchaser Disclosure Letter, the Purchaser and each of its
Subsidiaries has complied with and performed all contractual obligations and all
obligations under applicable federal, state and local laws, rules and
regulations required to be performed by it under or with respect to any of the
Purchaser Benefit Plans (as defined below) or any related trust agreement or
insurance contract, other than where the failure to so comply or perform does
not have, nor is reasonably likely to have, a Material Adverse Effect on the
Purchaser. Except as set forth in the Purchaser Disclosure Letter, all
contributions and other payments required to be made by the Purchaser and its
Subsidiaries to any Purchaser Benefit Plan prior to the date hereof have been
made, other than where the failure to so contribute or make payments will not
have a Material Adverse Effect on the Purchaser, and all accruals required to be
made under any Purchaser Benefit Plan have been made. Except as set forth in the
Purchaser Disclosure Letter, there is no claim, dispute, grievance, charge,
complaint, restraining or injunctive order, litigation or proceeding pending,
or, to the best knowledge of the Purchaser and its Subsidiaries, threatened or
anticipated (other than routine claims for benefits) against or relating to any
Purchaser Benefit Plan or against the assets of any Purchaser Benefit Plan,
which is reasonably likely to have a Material Adverse Effect on the Purchaser.
To the knowledge of the Purchaser, neither the Purchaser nor any of its
Subsidiaries has communicated generally to employees or specifically to any
employee regarding any future increase of benefit levels (or future creations of
new benefits) with respect to any
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Purchaser Benefit Plan beyond those reflected in the Purchaser Benefit Plans,
which benefit increases or creations, either individually or in the aggregate,
will have or are reasonably likely to have, a Material Adverse Effect on the
Purchaser. Except as set forth in the Purchaser Disclosure Letter, neither the
Purchaser nor any of its Subsidiaries presently sponsors, maintains, contributes
to, nor is the Purchaser or its Subsidiaries required to contribute to, nor has
the Purchaser or any of its Subsidiaries ever sponsored, maintained, contributed
to, or been required to contribute to, any employee pension benefit plan within
the meaning of section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(b) With respect to each Purchaser Benefit Plan subject to Title IV of
ERISA, (i) no termination of any Purchaser Benefit Plan has occurred pursuant
to which all liabilities have not been satisfied in full, and no event has
occurred and no condition exists that could reasonably be expected to result in
the Purchaser or Subsidiary incurring a liability under Title IV of ERISA; (ii)
each such Purchaser Benefit Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code, has been maintained in compliance
with the minimum funding standards of ERISA and the Code and no such Purchaser
Benefit Plan has incurred any "accumulated funding deficiency," as defined in
Section 412 of the Code and Section 302 of ERISA, whether or not waived; (iii)
neither the Purchaser nor any Subsidiary has sought or received a waiver of its
funding requirements with respect to any Purchaser Benefit Plan; (iv) no
reportable event, within the meaning of Section 4043 of ERISA, and no event
described in Section 4062 or 4063 of ERISA, has occurred with respect to any
Purchaser Benefit Plan; and (v) no Purchaser Benefit Plan would have an amount
of Unfunded Benefit Liabilities (as defined in Section 4001(a)(18) of ERISA) if
such plan were terminated as of the Effective Time.
(c) Except as set forth in the Purchaser Disclosure Letter, neither
the Purchaser nor any of its Subsidiaries has incurred, nor has any event
occurred which has imposed or is reasonably likely to impose upon the Purchaser
or any of its Subsidiaries, any withdrawal liability (complete or partial within
the meanings of sections 4203 or 4205 of ERISA, respectively) in respect of any
Multiemployer Plan, which withdrawal liability has not been satisfied or
discharged in full or which, either individually or in the aggregate, will
cause, or is reasonably likely to cause, a Material Adverse Effect on the
Purchaser.
(d) Except as set forth in the Purchaser Disclosure Letter, neither
the Purchaser nor any of its Subsidiaries maintains or contributes to (or has
maintained or contributed to) any Purchaser Benefit Plan which provides, or has
a liability to provide, life insurance, medical, severance, or other employee
welfare benefits to any employee upon such employee's retirement or termination
of employment, except as may be required by Section 4980B of the Code.
(e) (i) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workers' compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement
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of any kind, including, but not limited to, any "employee benefit plan" within
the meaning of section 3(3) of ERISA and (ii) "Purchaser Benefit Plan" means any
Plan, other than a Multiemployer Plan, established by the Purchaser or any of
its Subsidiaries or to which the Purchaser or any of its Subsidiaries
contributes or has contributed (including any such Plans not now maintained by
the Purchaser or any of its Subsidiaries or to which the Purchaser or any of its
Subsidiaries does not now contribute, but with respect to which the Purchaser or
any of its Subsidiaries has or may have any liability). Copies of all written
Purchaser Plans (and, if applicable, related trust agreements and ERISA summary
plan descriptions) and all amendments thereto, and the most recent Forms 5500
required to be filed with respect thereto have been made available to the
Purchaser. The Purchaser Disclosure Letter sets forth each Purchaser Plan with
respect to which benefits will be accelerated, vested, increased or paid as a
result of the transactions contemplated by this Agreement.
4.8 Taxes. Except as set forth in the Purchaser Disclosure Letter, (i)
the Purchaser and each of its Subsidiaries has filed all material Tax Returns
required to have been filed on or before the date hereof, which returns are true
and complete in all material respects and all Taxes shown due thereon have been
paid; (ii) no 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 (iii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) by a taxing authority have been paid in full or are being
contested in good faith by the Purchaser or such Subsidiary.
4.9 Compliance with Laws. To the knowledge of the Purchaser, except as
set forth in the Purchaser Disclosure Letter, each of the Purchaser and its
Subsidiaries is in compliance with all laws, regulations and orders applicable
to it, its assets, properties and business, except where such noncompliance
would not have a Material Adverse Effect on the Purchaser. Neither the Purchaser
nor any of its Subsidiaries has received notification of any asserted past or
present failure to comply with any laws which has not been remedied, and to the
best of their knowledge, no proceeding with respect to any such violation is
contemplated. Neither the Purchaser nor any of its Subsidiaries, nor, to the
best knowledge of the Purchaser and each of its Subsidiaries, any employee of
the Purchaser or any of its Subsidiaries, has made any payment of funds in
connection with the business of the Purchaser or any of its Subsidiaries
prohibited by law, and no funds have been set aside to be used in connection
with the business of the Purchaser or any of its Subsidiaries for any payment
prohibited by law.
4.10 Litigation. Except as set forth in the Purchaser SEC Documents or
the Purchaser Disclosure Letter, there are no actions, suits, proceedings,
investigations or reviews pending against the Purchaser or its Subsidiaries or,
to the knowledge of the Purchaser, threatened against the Purchaser or its
Subsidiaries, at law or in equity, or before or by any federal or state
commission, board, bureau, agency, regulatory or administrative instrumentality
or other Governmental Entity or any arbitrator or arbitration tribunal, that are
reasonably likely to have a Material Adverse Effect on the Purchaser.
4.11 Employment Relations and Agreements. Except as would not result in
a Material Adverse Change with respect to the Purchaser, (i) each of the
Purchaser and its Subsidiaries is in
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compliance in all material respects with all federal, state or other applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours; (ii) as of the date of this Agreement, there is
no labor strike, dispute, slowdown or stoppage actually pending or, to the best
knowledge of the Purchaser or its Subsidiaries, threatened against or involving
the Purchaser or any of its Subsidiaries; (iii) no collective bargaining
agreement is being negotiated as of the date of this Agreement by the Purchaser
or any of its Subsidiaries; and (iv) the Purchaser and its Subsidiaries taken as
a whole have not experienced any material labor difficulty during the last three
years.
4.12 Environmental Laws and Regulations. (a) The Purchaser and its
Subsidiaries are in compliance with all applicable Environmental Laws, except as
otherwise disclosed in the Purchaser SEC Documents or the Purchaser Disclosure
Letter and except for non-compliance which would not have a Material Adverse
Effect on the Purchaser.
(b) During the period of ownership or operation by the Purchaser and
its Subsidiaries of any of their respective current or previously owned or
leased properties, there have been no Releases of Hazardous Material in, on,
under or affecting such properties or any surrounding site, and none of the
Purchaser or its Subsidiaries has disposed of any Hazardous Material or any
other substance in a manner that has led, or could reasonably be anticipated to
lead, to a Release, except as otherwise disclosed in the Purchaser SEC Documents
or the Purchaser Disclosure Letter and except in each case for those Releases
and disposals which individually or in the aggregate are not reasonably likely
to have a Material Adverse Effect on the Purchaser. Except as disclosed in the
Purchaser SEC Documents or the Purchaser Disclosure Letter, neither the
Purchaser nor its Subsidiaries has received any notice that it is a "potentially
responsible person" under any Environmental Laws.
4.13 Trademarks, Copyrights. Except as set forth in the Purchaser
Disclosure Letter, the Purchaser or its Subsidiaries own or possess adequate
licenses or other valid rights to use all material trademarks, trademark rights,
trade names, trade name rights, copyrights, know-how and other proprietary
information used or held for use in connection with the business of the
Purchaser or any of its Subsidiaries as currently being conducted and, to the
knowledge of the Purchaser, there are no assertions or claims challenging the
validity of any of the foregoing, except where the failure to own or possess, or
where such assertions or claims, would not have a Material Adverse Effect on the
Purchaser.
4.14 Brokers. No broker, investment banker or other person, other than
Donaldson, Lufkin & Jenrette, Inc. ("DLJ") the fees and expenses of which will
be paid by the Purchaser, 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 Purchaser.
4.15 Takeover Statute. The Purchaser has not been an "interested
stockholder" (as such term is defined by Section 13.1-725 of the VSCA) with
respect to the Company at any time prior to the approval by the Board of
Directors of the Company of the Merger Agreement and the entering into of the
Stockholder Agreement.
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ARTICLE 5
COVENANTS
5.1. Alternative Proposals. Prior to the Effective Time, the Company
agrees (a) that neither it nor any of its Subsidiaries shall, nor shall it or
any of its Subsidiaries, knowingly permit their respective officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, initiate, solicit or encourage, directly or indirectly, the
submission of any proposal or offer (including, without limitation, any proposal
or offer to its stockholders) with respect to a merger, consolidation,
reorganization, exchange, plan of liquidation or similar transaction involving
the Company or its Subsidiaries, or any purchase of any equity securities of the
Company or all or any significant portion of the assets of the Company or its
Subsidiaries other than the transactions contemplated hereby (any such proposal
or offer being hereinafter referred to as an "Alternative Proposal"), or engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person or entity relating to an
Alternative Proposal or otherwise facilitate any effort or attempt to make or
implement an Alternative Proposal; (b) that it will promptly cease and cause to
be terminated any existing activities, discussions or negotiations with any
person or entity conducted heretofore with respect to any of the foregoing; and
(c) that it will notify the Purchaser promptly if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, the
Company; provided, however, that nothing contained in this Section 5.1 shall
prohibit the Board of Directors of the Company and its authorized
representatives from (i) furnishing information to or entering into discussions
or negotiations with, any person or entity that makes an unsolicited Alternative
Proposal, if, and only to the extent that, (A) the Board of Directors of the
Company, based upon the advice of outside counsel, determines in good faith that
such action is required for the Board of Directors to comply with its fiduciary
duties to stockholders imposed by law, (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
the Company provides written notice to the Purchaser to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity, and (C) the Company keeps the Purchaser reasonably
informed of the status and all material information with respect to any such
discussions or negotiations; and (ii) to the extent applicable, complying with
Rule 14e-2 promulgated under the Exchange Act with regard to an Alternative
Proposal. Nothing in this Section 5.1 shall (x) permit the Company to terminate
this Agreement (except as specifically provided in Article 7 hereof), (y) permit
the Company to enter into any agreement with respect to an Alternative Proposal
for as long as this Agreement remains in effect (it being agreed that for as
long as this Agreement remains in effect, the Company shall not enter into any
agreement with any person that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement in customary
form)), or (z) affect any other obligation of the Company under this Agreement.
5.2. Interim Operations. (a) Prior to the Effective Time, except as
contemplated by this Agreement, unless the Purchaser has consented in writing
thereto, the Company:
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(i) Shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(ii) Shall use its reasonable efforts, and shall cause each of its
Subsidiaries to use their reasonable efforts, to preserve intact their
respective business organizations and goodwill, keep available the services
of their respective officers and employees and maintain satisfactory
relationships with those persons having business relationships with them;
(iii) Shall not amend its Articles of Incorporation or Bylaws or
comparable governing instruments;
(iv) Shall promptly notify the Purchaser of any material breach of any
representation or warranty contained herein or any Material Adverse Effect
with respect to the Company;
(v) Shall promptly deliver to the Purchaser true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the date
of this Agreement;
(vi) (A) Shall not, except pursuant to (i) the exercise of options,
warrants, conversion rights and other contractual rights existing on the
date hereof and disclosed pursuant to this Agreement, and (ii) the Company
Rights Agreement, issue any shares of its capital stock, effect any stock
split or otherwise change its capitalization as it existed on the date
hereof and (B) shall not, and shall not permit any of its Subsidiaries to,
(x) grant, confer or award any option, warrant, conversion right or other
right not existing on the date hereof to acquire any shares of its capital
stock (except as contemplated by the Company Rights Agreement and as
identified in the Company Disclosure Letter) or grant, confer or award any
bonuses or other forms of cash incentives, except as is consistent with
past practice, to any officer, director or key employee, (y) increase any
compensation under any employment agreement with any present or future
officers, directors or employees, except for normal increases consistent
with past practice, grant any severance or termination pay to, or enter
into any employment or severance agreement with any officer or director or
amend any such agreement in any material respect other than severance
arrangements which are consistent with past practice with respect to
employees terminated by the Company or such Subsidiary, or (z) except as
may be required by law, adopt any new employee benefit plan (including any
stock option, stock benefit or stock purchase plan) or amend any existing
employee benefit plan in any material respect;
(vii) Shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital
stock or other ownership interests or (ii) directly or indirectly redeem,
purchase or otherwise
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acquire any shares of its capital stock or capital stock of any of its
Subsidiaries, or make any commitment for any such action;
(viii) Shall not, and shall not permit any of its Subsidiaries to,
sell, lease or otherwise dispose of any of its assets (including capital
stock of Subsidiaries) or acquire 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 otherwise acquire any
assets, except for purchases and sales of inventory, real estate,
construction services and equipment, in the ordinary course of business
consistent with past practice and the Company's existing business plan as
previously delivered to the Purchaser.
(ix) Shall not, and shall not permit any of its Subsidiaries to, incur
or guarantee any indebtedness for borrowed money or make any loans,
advances or capital contributions to, or investments in, any other person,
or issue or sell any debt securities, other than to the Company or any
wholly owned Company Subsidiary and other than borrowings under existing
lines of credit in the ordinary course of business; provided, however, that
the Company may enter into the proposed new bank credit facility if, prior
to entering into such facility, the Purchaser is afforded an opportunity to
consult with the Company with regard to (but not approve) the terms of such
facility;
(x) Shall not, and shall not permit any of its Subsidiaries to,
mortgage or otherwise encumber or subject to any lien any of its properties
or assets, except in the ordinary course of business and except as may be
incurred by the Company in connection with the entering into of the
proposed new bank credit facility if, prior to entering into such facility,
the Purchaser is afforded an opportunity to consult with the Company with
regard to (but not approve) the terms of such facility;
(xi) Shall not, and shall not permit any of its Subsidiaries to, make
any change to its accounting (including tax accounting) methods, principles
or practices, except as may be required by generally accepted accounting
principles and except, in the case of tax accounting methods, principles or
practices, in the ordinary course of business of the Company or any of its
Subsidiaries;
(xii) Shall not, and shall not permit any of its Subsidiaries to, make
any commitment or enter into any contract or agreement except (x) in the
ordinary course of business consistent with past practice or (y) for
capital expenditures to be made as identified in the Company's existing
business plan previously delivered to the Purchaser;
(xiii) Shall not, and shall not permit any of its Subsidiaries to,
alter through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any Subsidiary of the
Company;
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(xiv) Shall not, and shall not permit any of its Subsidiaries to,
revalue any of its assets, including, without limitation, writing down the
value of its inventory or writing off notes or accounts receivable, other
than in the ordinary course of business, except as may be required in
connection with unamortized fees relating to the Company's existing line of
credit;
(xv) Shall not, and shall not permit any of its Subsidiaries to, make
any material tax election or settle or compromise any material income tax
liability;
(xvi) Shall not, and shall not permit any of its Subsidiaries to,
settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(xvii) Shall not, and shall not permit any of its Subsidiaries to,
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 of
liabilities reflected or reserved against in, or contemplated by, the
financial statements (or the notes thereto) of the Company or incurred in
the ordinary course of business consistent with past practice;
(xviii) Shall not, and shall not permit any of its Subsidiaries to,
except in connection with the exercise of its fiduciary duties by the Board
of Directors of the Company as set forth in Section 5.1, waive, amend or
allow to lapse (other than in accordance with its terms) any term or
condition of any confidentiality or "standstill" agreement to which the
Company or any of its Subsidiaries is a party;
(xix) Shall not, and shall not permit any of its Subsidiaries to, take
any action which would jeopardize the treatment of the Purchaser's
acquisition of the Company as a pooling of interests for accounting
purposes; and
(xx) Shall not, and shall not permit any of its Subsidiaries to, agree
or otherwise commit to take any of the foregoing actions or take, or agree
to take, any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue or incorrect
as of the date when made.
(b) Prior to the Effective Time, except as contemplated by this
Agreement, unless the Company has consented in writing thereto, the Purchaser:
(i) Shall promptly notify the Company of any breach of any
representation or warranty contained herein or any Material Adverse Effect
with respect to the Purchaser;
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(ii) Shall promptly deliver to the Company true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the date
of this Agreement;
(iii) Shall not declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital
stock or other ownership interests;
(iv) Shall, and shall cause each of its Subsidiaries to, conduct the
operations of its lodging facilities according to their usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(v) Shall not amend its Certificate of Incorporation or Bylaws or
comparable governing instruments in any way that would have an adverse
impact on the transactions contemplated by this Agreement, or which would
amend or modify the terms or provisions of the capital stock of the
Purchaser other than any amendment to its Certificate of Incorporation to
increase the number of authorized shares of capital stock;
(vi) Shall not, and shall not permit any of its Subsidiaries to,
settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(vii) Shall not, and shall not permit any of its Subsidiaries to, take
any action which would jeopardize the treatment of the Purchaser's
acquisition of the Company as a pooling of interests for accounting
purposes; and
(xii) Shall not, and shall not permit any of its Subsidiaries to,
agree or otherwise commit to take any of the foregoing actions or take, or
agree to take, any action which would make any of the representations or
warranties of the Purchaser contained in this Agreement untrue or incorrect
as of the date when made.
5.3. Meetings of Stockholders. Each of the Company and the Purchaser will
take all action necessary in accordance with applicable law and its
Articles/Certificate of Incorporation and Bylaws to convene a meeting of its
stockholders as promptly as practicable to consider and vote upon the approval
of this Agreement and the Merger. Each of the Board of Directors of the Company
and the Purchaser shall recommend such approval and the Purchaser and the
Company shall each use their respective reasonable efforts to solicit such
approval, including, without limitation, timely mailing the Proxy
Statement/Prospectus (as defined in Section 5.7); provided, however, that the
Company's and the Purchaser's respective Board of Directors may withdraw or
modify its recommendation to approve this Agreement and the Merger if necessary
in light of the applicable fiduciary duties of the Company's and the Purchaser's
respective directors, as determined by such directors in good faith after
consultation with, and based upon the advice of, outside counsel.
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5.4. Filings, Other Action. Subject to the terms and conditions herein
provided, the Company and the Purchaser shall: (a) promptly make their
respective filings, if necessary, and thereafter make any other required
submissions under the HSR Act; (b) use all reasonable efforts to cooperate with
one another in (i) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations; and (c) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of the Purchaser and the
Company shall take all such necessary action.
5.5. Inspection of Records. Subject to the restrictions contained in
Confidentiality Agreements (as defined below), from the date hereof to the
Effective Time, each of the Company and the Purchaser shall (i) allow all
designated officers, attorneys, accountants and other representatives of the
other reasonable access at all reasonable times and upon reasonable notice to
the offices, records and files, correspondence, audits and properties, as well
as to all information relating to commitments, contracts, titles and financial
position, or otherwise pertaining to the business and affairs, of the Company
and the Purchaser and their respective Subsidiaries, as the case may be, (ii)
furnish to the other, the other's counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as such persons may reasonably request and (iii) instruct the
employees, counsel and financial advisors of the Company or the Purchaser, as
the case may be, to cooperate with the other in the other's investigation of the
business of it and its Subsidiaries. All confidential information provided
pursuant to this Section 5.5 will be subject to the Confidentiality Agreement
dated as of December 30, 1996, and the Confidentiality Agreement dated as of
January 10, 1997 (the "Confidentiality Agreements"), in each case between the
Company and the Purchaser. Notwithstanding the foregoing, no party shall have
access to information or documents subject to the attorney/client privilege.
5.6. Publicity. The initial press release relating to this Agreement
shall be a joint press release, reasonably satisfactory to the Company and the
Purchaser, and thereafter the Company and the Purchaser shall, subject to their
respective legal obligations (including requirements of stock exchanges,
automated quotation systems, and other similar regulatory bodies), consult with
each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any federal or state governmental or regulatory agency or with
any national securities exchange or automated quotation system with respect
thereto.
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5.7. Registration Statement. The Purchaser and the Company shall
cooperate and promptly prepare and the Purchaser shall file with the SEC as soon
as practicable a Registration Statement on Form S-4 (the "Form S-4") under the
Securities Act, with respect to the Purchaser Stock issuable in the Merger, a
portion of which Registration Statement shall also serve as the proxy statement
with respect to the meetings of the stockholders of the Company and the
Purchaser in connection with the Merger (the "Proxy Statement/Prospectus"). The
respective parties will cause the Proxy Statement/Prospectus and the Form S-4 to
comply as to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder. The
Purchaser shall use all reasonable efforts, and the Company will cooperate with
the Purchaser, to have the Form S-4 declared effective by the SEC as promptly as
practicable and to keep the Form S-4 effective as long as is necessary to
consummate the Merger. The Purchaser shall, as promptly as practicable, provide
copies of any written comments received from the SEC with respect to the Form
S-4 to the Company and advise the Company of any verbal comments with respect to
the Form S-4 received from the SEC. The Purchaser shall use its best efforts to
obtain, prior to the effective date of the Form S-4, all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement and will pay all expenses incident
thereto. The Purchaser agrees that the Proxy Statement/Prospectus and each
amendment or supplement thereto at the time of mailing thereof and at the time
of the meetings of stockholders of the Company and the Purchaser, or, in the
case of the Form S-4 and each amendment or supplement thereto, at the time it is
filed and becomes effective, will not include an untrue statement of a material
fact or omit 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; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Purchaser in reliance upon and in
conformity with written information concerning the Company furnished to the
Purchaser by the Company specifically for use in the Proxy Statement/Prospectus.
The Company agrees that the written information concerning the Company provided
by it for inclusion in the Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
meetings of stockholders of the Company and the Purchaser, or, in the case of
written information concerning the Company provided by the Company for inclusion
in the Form S-4 or any amendment or supplement thereto, at the time it is filed
and becomes effective, will not include an untrue statement of a material fact
or omit 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. No amendment or supplement to the Proxy
Statement/Prospectus will be made by the Purchaser or the Company without the
approval of the other party. The Purchaser will advise the Company, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Purchaser Stock issuable
in connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the
Form S-4 or comments thereon and responses thereto or requests by the SEC for
additional information.
5.8. Listing Application. The Purchaser shall promptly prepare and submit
to the Nasdaq National Market a listing application covering the shares of
Purchaser Stock issuable in
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the Merger and pursuant to Company Options, and shall use reasonable efforts to
obtain, prior to the Effective Time, approval for the quotation on Nasdaq of
such Purchaser Stock, subject to official notice of issuance.
5.9. Affiliate Letters. At least 45 days prior to the Closing Date, the
Company shall deliver to the Purchaser a list of names and addresses of those
persons who were, in the Company's reasonable judgment, as of the date of such
list, "affiliates" (each such person, an "Affiliate") of the Company within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act and the Company shall promptly notify the Purchaser if, at any
time prior to the Closing Date, the Company believes a change should be made to
such list. The Company shall use all reasonable efforts to deliver or cause to
be delivered to the Purchaser, at least 30 days prior to the Closing Date, from
each of the Affiliates of the Company identified in the foregoing list, an
Affiliate Letter in the form attached hereto as Exhibit 5.9. The Purchaser shall
be entitled to place legends as specified in such Affiliate Letters on the
certificates evidencing any Purchaser Stock to be received by such Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Purchaser Stock, consistent with the
terms of such Affiliate Letters.
5.10. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses except as
expressly provided herein and except that (a) the filing fee in connection with
the HSR Act filings, if any, (b) the filing fee in connection with the filing of
the Form S-4 or Proxy Statement/Prospectus with the SEC, and (c) the expenses
incurred in connection with printing and mailing the Form S-4 and the Proxy
Statement/Prospectus, shall be shared equally by the Company and the Purchaser.
5.11. Takeover Statute. If any "fair price", "moratorium", "control share
acquisition" or other form of antitakeover statute or regulation shall become
applicable to the transactions contemplated hereby or the transactions
contemplated by the Stockholder Agreement(s), the Company and Purchaser and the
members of the Board of Directors of the Company and Purchaser shall grant such
approvals and take such reasonable actions as are within its authority and
consistent with its fiduciary obligations as determined in good faith by such
Board so that the transactions contemplated hereby and the transactions
contemplated by the Stockholder Agreement(s) may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby and thereby.
5.12. Conduct of Business by NEWCO Pending the Merger. Prior to the
Effective Time and subject to any applicable regulatory approvals, the Purchaser
shall cause NEWCO to (i) perform its obligations under this Agreement in
accordance with the terms hereof and take all other actions necessary or
appropriate for the consummation of the transactions contemplated hereby, (ii)
not incur directly or indirectly any liabilities or obligations except those
incurred in connection with the consummation of this Agreement and the
transactions contemplated hereby, (iii) not engage directly or indirectly in any
business or activities of any type or kind whatsoever and not enter into any
agreements or arrangements with any person or entity, or be subject to or
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be bound by any obligation or undertaking which is not contemplated by this
Agreement and (iv) not create, grant or suffer to exist any lien upon their
respective properties or assets which would attach to any properties or assets
of the Purchaser or the Surviving Corporation after the Effective Time.
5.13. Conveyance Taxes. The Company and the Purchaser shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement that
are required or permitted to be filed on or before the Effective Time.
5.14. Further Amendments to Rights Plan. Prior to the Effective Time, the
Board of Directors of the Company shall not take any action that would amend, or
have the effect of amending the Company Rights Agreement, so that (i) the
Purchaser would become an "Acquiring Person" as a result of the consummation of
the transactions contemplated by this Agreement, (ii) a "Stock Acquisition Date"
or "Distribution Date" (as such terms are defined in the Company Rights
Agreement) would occur as a result of the consummation of the transactions
contemplated by this Agreement, and (iii) all Rights (as defined in the Company
Rights Agreement) issued and outstanding under the Company Rights Agreement
would not expire immediately prior to the Effective Time.
5.15. Indemnification of Officers and Directors. (a) Until such time as
the applicable statute of limitations shall have expired, the Purchaser shall,
and shall cause the Surviving Corporation to, provide with respect to each
present or former director and officer of the Company and its Subsidiaries (both
present and past) (the "Indemnified Parties"), the indemnification rights which
such Indemnified Parties had, whether from the Company or such Subsidiary,
immediately prior to the Merger, whether under the VSCA or the Articles of
Incorporation or Bylaws of the Company or such Subsidiary or otherwise.
(b) Immediately following the Effective Time, the Purchaser shall
cause to be in effect the current policies of directors' and officers' liability
insurance maintained by the Company or any Company Subsidiary (provided the
Purchaser may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous) with
respect to claims arising from facts or events which occurred at or before the
Effective Time, and the Purchaser shall maintain such coverage for a period of
six years after the Effective Time.
(c) This Section 5.15 shall survive the Closing and is intended to
benefit the Company, the Surviving Corporation and each of the Indemnified
Parties and his or her heirs and representatives (each of whom shall be entitled
to enforce this Section 5.15 against the Purchaser or the Surviving Corporation,
as the case may be) and shall be binding on all successors and assigns of the
Purchaser and the Surviving Corporation.
5.16. Tax Treatment. The Purchaser and the Company agree to treat the
Merger as a reorganization within the meaning of Sections 368(a)(1)(A) and
(a)(2)(D) of the Code. During
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the period from the date of this Agreement through the Effective Time, unless
the parties shall otherwise agree in writing, none of the Purchaser, the Company
or any of their respective Subsidiaries shall knowingly take or fail to take any
action which action or failure to act would jeopardize qualification of the
Merger as a reorganization within the meaning of Sections 368(a)(1)(A) and
(a)(2)(D) of the Code.
5.17. Employee Benefits. (a) Accrued Obligations. From and after the
Effective Time, the Purchaser shall cause the Surviving Corporation to honor all
obligations and commitments under the Company Benefit Plans in accordance with
their terms as in effect at the Effective Time, with only such amendments as are
permitted by the terms thereof as in effect at the Effective Time.
(b) Transition Period. For the period commencing with the Effective
Time and ending on December 31, 1997, the Purchaser shall cause the Surviving
Corporation to provide welfare plan benefits (as defined under Section 3(1) of
ERISA) and retirement benefits to employees (and their beneficiaries) of the
Surviving Corporation and its Subsidiaries that are no less favorable in the
aggregate than the benefits provided by the Company and its Subsidiaries to
their employees (the "Company Employees") (and their beneficiaries) in
comparable positions immediately before the Effective Time. The Purchaser shall
take, and shall cause the Surviving Corporation and its Subsidiaries and all
other affiliates of the Purchaser to take, the following actions: (i) waive any
limitations regarding pre-existing conditions under any welfare or other
employee benefit plan maintained by any of them for the benefit of the Company
Employees or in which Company Employees participate after the Effective Time,
and (ii) for all purposes under all compensation and benefit plans and policies
applicable to employees of any of them, treat all service by Company Employees
with the Company or any affiliates of the Company before the Effective Time as
service with the Purchaser and its affiliates, except to the extent such
treatment would result in duplication of benefits.
5.18. Stock Options. (a) At least ten days prior to the Effective Time,
the Company shall deliver to each holder of a Company Option an Option Notice
and Assumption Agreement in the form attached as Exhibit 5.18 (the "Option
Assumption Agreement") setting forth the Purchaser's assumption of the Company
Option and substitution of the Assumed Option in accordance with the terms of
Section 2.2(c). The Purchaser shall not be entitled to or required to substitute
an Assumed Option for a Company Option in accordance with Section 2.2(c) until
it has received from the holder of a Company Option a properly executed and
completed Option Assumption Agreement with respect to the Company Option.
(b) The Purchaser agrees to cause the shares of Purchaser Stock
issuable upon exercise of the Assumed Options and all other options assumed by
the Purchaser or issued by the Purchaser in replacement of the Company Options
to be covered by a Form S-8 Registration Statement filed with the SEC within
thirty days following the Effective Time. The Purchaser further agrees to cause
the shares of Purchaser Stock issuable upon exercise of the Assumed Options
(and, to the extent Assumed Options were not issued in substitution therefor,
the Company Options) to be registered or exempt from the registration
requirements of all applicable state securities laws, rules and regulations.
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5.19 Purchaser Board of Directors. At the Effective Time, the Purchaser
agrees to cause the Purchaser Board of Directors to take all action necessary to
appoint Norwood Cowgill, Jr. as a member of the Board of Directors of the
Purchaser, to serve pursuant to the Certificate of Incorporation and Bylaws of
the Purchaser and applicable law until his successor is elected and qualified or
his earlier resignation, respectively.
5.20 Employment Contract. The Company agrees to use its best efforts to
cause the existing employment agreement between the Company and Norwood Cowgill,
Jr. (the "Cowgill Employment Agreement") to be terminated at or prior to the
Effective Time with no "change of control" or other nonrecurring payments being
made thereunder.
ARTICLE 6
CONDITIONS
6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved, in the manner required by applicable law or by the applicable
regulations of any stock exchange, automated quotation system, or other
regulatory body, as the case may be, and in accordance with the parties'
respective Articles/Certificate of Incorporation and Bylaws, by the holders of
the issued and outstanding shares of capital stock of each of the Company and
the Purchaser.
(b) The waiting period applicable to the consummation of the Merger
under the HSR Act, if applicable, shall have expired or been terminated.
(c) No governmental authority or other regulatory body (including any
court of competent jurisdiction) shall 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 illegal, materially restricting or
in any way preventing or prohibiting the Merger or transactions contemplated by
this Agreement; provided, however, that the parties shall use their reasonable
efforts to cause any such law, rule, regulation, executive order, decree,
injunction or other order to be vacated or lifted.
(d) The Form S-4 shall have become effective and shall be effective at
the Effective Time, and no stop order suspending effectiveness of the Form S-4
shall have been issued, no action, suit, proceeding or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated and be
continuing, or, to the knowledge of the Purchaser or the Company, threatened,
and all necessary approvals under state securities laws relating to the issuance
or trading of the Purchaser Stock to be issued to the Company stockholders in
connection with the Merger shall have been received. At the effective date of
the Form S-4, the Form S-4 shall not contain any untrue statement of a material
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fact, or omit to state any material fact necessary in order to make the
statements therein not misleading, and, at the mailing date of the Proxy
Statement/Prospectus and the date of the stockholders' meetings, the Proxy
Statement/Prospectus shall not contain any untrue statement of a material fact,
or omit to state any material fact necessary in order to make the statements
therein not misleading.
(e) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental commission, board or other regulatory
body required in connection with the execution, delivery and performance of this
Agreement shall have been obtained or made, except for filings in connection
with the Merger and any other documents required to be filed after the Effective
Time and except where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a Material
Adverse Effect on the Purchaser or the Company following the Effective Time.
(f) The Purchaser Stock to be issued to the Company stockholders in
connection with the Merger and the Company Options shall have been approved for
quotation on the Nasdaq National Market, subject only to official notice of
issuance.
(g) The Purchaser and the Company shall each have received a written
opinion from their respective counsel to the effect that the Merger will
constitute a reorganization within the meaning of Sections 368(a)(1)(A) and
(a)(2)(D) of the Code.
(h) The Purchaser and the Company shall have been advised in writing,
as of the Effective Time, by Coopers & Lybrand L.L.P. that, in accordance with
generally accepted accounting principles, the Merger qualifies to be treated as
a "pooling of interests" for accounting purposes.
(i) All authorizations, consents, waivers and approvals from parties
to contracts or other agreements to which either of the Company or the Purchaser
is a party, or by which either is bound, as may be required to be obtained by
them in connection with the performance with this Agreement, the failure to
obtain which would have a Material Adverse Effect on the Company or the
Purchaser, shall have been obtained.
6.2. Conditions to Obligation of Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The Purchaser and NEWCO shall have performed in all material
respects their agreements contained in this Agreement required to be performed
on or prior to the Closing Date, the representations and warranties of the
Purchaser contained in this Agreement and in any document delivered in
connection herewith shall be true and correct in all material respects as of the
Closing Date, except (i) for changes specifically permitted by this Agreement
and (ii) that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date, and the
Company shall have received a certificate of the President or a Vice President
of the Purchaser, dated the Closing Date, certifying to such effect.
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(b) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business or
operations of the Purchaser and its Subsidiaries, taken as a whole, that would
have or would be reasonably likely to have a Material Adverse Effect on the
Purchaser.
(c) The Company shall have received a favorable opinion from Bell,
Boyd & Lloyd, dated the Closing Date, substantially to the effect set forth in
Exhibit 6.2(c).
(d) The Voting Agreement shall have remained in full force and effect
through the Effective Time.
(e) The Purchaser shall have delivered an executed registration rights
agreement, substantially in the form attached hereto as Exhibit 6.2(e) (the
"Registration Rights Agreement"), with each person (other than the Purchaser)
who is a party to a Stockholder Agreement.
6.3. Conditions to Obligation of the Purchaser to Effect the Merger. The
obligation of the Purchaser to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, the representations and warranties of the Company contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct in all material respects as of the Closing Date, except (i) for
changes specifically permitted by this Agreement and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and the Purchaser shall have
received a certificate of the President or a Vice President of the Company,
dated the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business or
operations of the Company and its Subsidiaries, taken as a whole, that would
have or would be reasonably likely to have a Material Adverse Effect on the
Company.
(c) The Stockholder Agreement shall have remained in full force and
effect through the Effective Time.
(d) After the Effective Time, no person shall have any Right (as
defined in the Company Rights Agreement) under the Company Rights Agreement to
acquire any equity securities of the Company.
(e) Stockholders of the Company who have exercised dissenter's rights
with respect to the Merger under Article 15 of the VSCA and other applicable
provisions of the VSCA or other statute shall hold no more than 9.9% of the
outstanding shares of the Company Common Stock, or a lesser amount to the extent
such percentage would negate accounting for the Merger as a pooling of
interests.
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(f) The Purchaser and NEWCO shall have received a favorable opinion
from King & Spalding, dated the Closing Date, substantially to the effect set
forth in Exhibit 6.3(f).
(g) The Cowgill Employment Agreement shall have been terminated and no
"change of control" or other nonrecurring payments shall have been made
thereunder.
ARTICLE 7
TERMINATION
7.1. Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the stockholders of the Company, by the
mutual written consent of the Purchaser and the Company.
7.2. Termination by Either the Purchaser or Company. This Agreement may
be terminated and the Merger may be abandoned by action of the Board of
Directors of either the Purchaser or the Company if (a) the Merger shall not
have been consummated by August 31, 1997, (or such later date as shall have been
approved by the Purchaser and the Company) (b) the approval of the Company's
stockholders and the Purchaser's stockholders required by Section 6.1(a) shall
not have been obtained at a meeting duly convened therefor or at any adjournment
thereof, or (c) a United States federal or state court of competent jurisdiction
or United States federal or state governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; provided, that the
party seeking to terminate this Agreement pursuant to this clause (c) shall have
used all reasonable efforts to remove such injunction, order or decree; and
provided, in the case of a termination pursuant to clause (a) above, that the
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure to consummate the Merger by August 31, 1997 (or such
later date as shall have been approved by the Purchaser and the Company).
7.3. Termination by Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the adoption and approval by the stockholders of the Company or the Purchaser
referred to in Section 6.1(a), by action of the Board of Directors of the
Company, if: (a) there is an Alternative Proposal which, in the exercise of its
good faith judgment as to its fiduciary duties to its stockholders imposed by
law, based upon the advice of outside counsel, the Board of Directors of the
Company determines that such termination is required by reason of such
Alternative Proposal being made; provided that the Company shall notify the
Purchaser promptly of its intention to terminate this Agreement or enter into a
definitive agreement with respect to any Alternative Proposal (which notice
shall describe the material terms of such definitive agreement); or (b) events
occur which render impossible the satisfaction of one or more of the conditions
set forth in Sections 6.1 and 6.2 and such conditions are not waived by the
Company, unless the failure of such occurrence
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shall be due to the failure of the Company to perform or observe the covenants,
agreements and conditions hereof to be performed by it at or before the
Effective Time.
7.4. Termination by the Purchaser. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by the stockholders of the Company or the Purchaser referred
to in Section 6.1(a), by action of the Board of Directors of the Purchaser, if:
(a) the Board of Directors of the Company shall have withdrawn or modified in a
manner materially adverse to the Purchaser its approval or recommendation of
this Agreement or the Merger or shall have recommended an Alternative Proposal
to the Company's stockholders or shall have adopted resolutions to accept or
implement an Alternative Proposal; or (b) events occur which render impossible
the satisfaction of one or more of the conditions set forth in Sections 6.1 and
6.3 and such conditions are not waived by the Purchaser, unless the failure of
such occurrence shall be due to the failure of the Purchaser or NEWCO to perform
or observe the covenants, agreements and conditions hereof to be performed or
observed by them at or before the Effective Time.
7.5. Effect of Termination and Abandonment. (a) In the event that this
Agreement is terminated pursuant to Section 7.3(a) or Section 7.4(a), (such
event being called a "Topping Event"), then the Company shall pay the Purchaser
a fee of $7,500,000, which amount shall be payable by wire transfer of same day
funds within two business days after such amount becomes due. The Company
acknowledges that the agreements contained in this Section 7.5(a) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, the Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 7.5(a), and, in order to obtain such payment, the Purchaser
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 7.5(a), the Company shall pay to the Purchaser its costs
and expenses (including reasonable attorneys' fees) in connection with such
suit, together with interest on the amount of the fee at a rate equal to the
prime rate of NationsBank, N.A.
(b) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 7, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
7.5, the last sentence of Section 5.5, and Section 5.11 and except for the
provisions of Article 8. Nothing herein shall prejudice the ability of the non-
breaching party from seeking damages from any other party for any willful breach
of this Agreement, including without limitation, reasonable attorneys' fees and
the right to pursue any remedy at law or in equity.
7.6. Extension, Waiver. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any 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 signed on
behalf of such party.
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ARTICLE 8
GENERAL PROVISIONS
8.1. Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Merger and shall not survive
the Merger, and thereafter neither the Purchaser, NEWCO or the Company nor any
affiliate, officer, director, employee or stockholder thereof shall have any
liability with respect thereto; provided, however, that the agreements contained
in Articles 1 and 2, Sections 5.4, 5.15, 5.16, 5.17, 5.18, this Article 8 and
any other covenant or agreement which contemplates performance after the
Effective Time shall survive the Merger.
8.2. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to the Purchaser: If to the Company:
Extended Stay America, Inc. Studio Plus Hotels, Inc.
450 Las Olas Boulevard 1999 Richmond Road, Suite 4
Ft. Lauderdale, Florida 33301 Lexington, Kentucky 40502
Attention: Robert A. Brannon, Attention: William A. Anderson,
Secretary Secretary
With copies to: With copies to:
Bell, Boyd & Lloyd King & Spalding
70 West Madison Street 191 Peachtree Street
Suite 3300 Atlanta, Georgia 30303-1763
Chicago, Illinois 60602 Attention: Alan J. Prince
Attention: D. Mark McMillan Fax: 404/572-5100
Fax: 312/372-2098
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.3. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as otherwise
expressly provided in this Agreement, nothing in this Agreement is intended to
confer on any person other
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than the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
8.4. Entire Agreement. This Agreement, the Exhibits, the Company
Disclosure Letter, the Purchaser Disclosure Letter, the Confidentiality
Agreements and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto.
8.5. Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company and the Purchaser, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws.
8.7. Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
8.8. Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.9. Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.10. Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11. Incorporation of Exhibits. The Company Disclosure Letter, the
Purchaser Disclosure Letter and all Exhibits attached hereto and referred to
herein are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
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8.12. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.13. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any Delaware Court, this being in addition to
any other remedy to which they are entitled at law or in equity.
[**SIGNATURE PAGE FOLLOWS**]
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
EXTENDED STAY AMERICA, INC.
By: /s/ George D. Johnson, Jr.
----------------------------------
Name: George D. Johnson, Jr.
--------------------------------
Title: C.E.O
-------------------------------
ESA MERGER SUB, INC.
By: /s/ George D. Johnson, Jr.
----------------------------------
Name: George D. Johnson, Jr.
--------------------------------
Title: President
-------------------------------
STUDIO PLUS HOTELS, INC.
By: /s/ Norwood Cowgill, Jr.
----------------------------------
Name: Norwood Cowgill, Jr.
--------------------------------
Title: Chief Executive Officer
-------------------------------
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EXHIBIT 2.2
AGREEMENT
---------
Extended Stay America, Inc. (the "Company") hereby agrees to furnish
supplementally to the Securities and Exchange Commission, upon request, a copy
of any omitted exhibit to the Agreement and Plan of Merger dated as of January
16, 1997 by and among Extended Stay America, Inc., ESA Merger Sub, Inc., and
Studio Plus Hotels, Inc.
EXTENDED STAY AMERICA, INC.
By: /s/ Robert A. Brannon
--------------------------------
Robert A. Brannon
Senior Vice President and
Chief Financial Officer
Dated: January 21, 1997
