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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
________________________________
UNITED INNS, INC.
(Name of Subject Company)
UNITED INNS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
910688 10 0
(CUSIP Number of Class of Securities)
________________________________
AUGUSTUS B. RANDLE, III
SECRETARY AND GENERAL COUNSEL
UNITED INNS, INC.
5100 POPLAR AVENUE
SUITE 2300, CLARK TOWER
MEMPHIS, TENNESSEE 38137
(901) 767-2880
(Name, address and telephone number of person authorized
to receive notices and communications on behalf of the person(s) filing
statement)
________________________________
WITH COPY TO:
WAYNE SHORTRIDGE, ESQ. SIOBHAN MCBREEN BURKE, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER PAUL, HASTINGS, JANOFSKY & WALKER
GEORGIA PACIFIC CENTER TWENTY-THIRD FLOOR
FORTY-SECOND FLOOR 555 SOUTH FLOWER STREET
133 PEACHTREE STREET, N.E. LOS ANGELES, CALIFORNIA 90071
ATLANTA, GEORGIA 30303-1840 (213) 683-6000
(404) 588-9900
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is United Inns, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 5100 Poplar Avenue, Suite 2300, Clark Tower, Memphis, Tennessee
38137. The class of equity securities to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is the common stock,
par value $1.00 per share (the "Common Stock"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer being made by United/Harvey
Holdings, L.P., a Delaware limited partnership ("Purchaser"), to acquire all
shares of issued and outstanding Common Stock (the "Shares") at a price of
$25.00 per Share (such amount, or such other amount in cash as Purchaser may pay
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount"),
net to the seller thereof in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated November 21, 1994 (the "Offer to
Purchase") and the related Letter of Transmittal (which together constitute the
"Offer"). The Offer is disclosed in the Tender Offer Statement on Schedule
14D-1, dated November 21, 1994 and filed with the Securities and Exchange
Commission (the "SEC") on November 21, 1994 (the "Schedule 14D-1"). The address
of the principal executive offices of Purchaser, as set forth in the Schedule
14D-1, is 2200 Ross Avenue, 4200 Texas Commerce Tower West, Dallas, Texas 75201.
The Offer is being made pursuant to the terms of the Agreement and Plan of
Merger, dated as of November 14, 1994 (the "Merger Agreement"), among the
Company, Purchaser, United/Harvey Hotels, Inc., a Delaware corporation
("United/Harvey"), and United/Harvey Sub, Inc., a Delaware corporation ("Merger
Sub").
The Merger Agreement provides that after completion of the Offer, subject
to the terms and conditions of the Merger Agreement, Merger Sub will be merged
with and into the Company (the "Merger") and the Company will survive as the
surviving corporation and a wholly-owned subsidiary of United/Harvey. Each
outstanding Share, other than those held by United/Harvey or any subsidiary of
the Company or in the treasury of the Company (all of which will be cancelled)
and those Shares held by stockholders of the Company who properly demand and
perfect appraisal rights under the General Corporation Law of the State of
Delaware (the "Delaware Law"), will be converted at the effective time of the
Merger (the "Effective Time") into the right to receive the Per Share Amount, in
cash, without interest thereon.
The Merger Agreement provides for the conversion of nontendered Shares into
the right to receive the Per Share Amount in a cash merger as described above.
As described in the Offer to Purchase, Purchaser expressly has reserved the
right, following the consummation of the Offer, to cause the Merger Agreement to
be amended to provide nontendering stockholders the option (the "Cash/Stock
Option") to elect to receive in exchange for each Share converted in the Merger
either (i) cash in an amount at least equal to the Per Share Amount or (ii)
shares of common stock of United/Harvey. The Offer to Purchase provides that a
number of factors will influence whether or not Purchaser makes the Cash/Stock
Option available to nontendering stockholders, including the number of the
Shares owned by persons other than Purchaser following the consummation of the
Offer and compliance with applicable legal requirements, including the
Securities Act of 1933, as amended (the "Securities Act") and that, as a result,
there can be no assurance as to whether the Cash/Stock Option will be made
available to nontendering stockholders or, if so, as to the timing thereof. The
Offer to Purchase further states that, regardless of whether the Cash/Stock
Option is made available, Purchaser will, either pursuant to the Merger
Agreement as presently in effect or otherwise, subject to conditions no more
favorable to Purchaser than those contained in the Merger Agreement as presently
in effect, provide nontendering stockholders an opportunity following the
consummation of the Offer to receive cash in an amount at least equal to the Per
Share Amount in exchange for each Share not tendered pursuant to the Offer.
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It is contemplated that, upon the purchase of Shares by Purchaser pursuant
to the Offer, the Company's Board of Directors will be reconstituted in its
entirety to consist solely of Purchaser's designees. Any action of the
Company's Board of Directors following the consummation of the Offer with
respect to any amendment to the Merger Agreement to provide for the Cash/Stock
Option will constitute an action of the Company's Board of Directors as then
reconstituted.
This Schedule 14D-9 relates only to the Merger Agreement as presently in
effect and to the transactions contemplated thereby, including without
limitation the cash Merger, and all references herein to the Merger Agreement
and such transactions are to the Merger Agreement as presently in effect and to
such transactions as contemplated by the Merger Agreement as presently in
effect, respectively, and not as it may be subsequently amended by the Company's
Board of Directors as reconstituted upon the purchase of Shares by Purchaser
pursuant to the Offer.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings between
the Company and certain of its executive officers, directors and affiliates are
described under "Board of Directors" and "Employee Benefit Plans" of the
Company's Information Statement, a copy of which is attached hereto as Annex A
and which is incorporated herein by reference.
Certain other contracts, agreements and understandings between the
Company and its directors, executive officers and affiliates and between the
Company and Purchaser are set forth below:
(i) INDEMNIFICATION. The Company's Certificate of Incorporation, as
amended, provides that no director shall be personally liable to the Company or
any stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable under
Section 174 of the Delaware Law or shall be liable by reason that such director
(a) shall have breached his duty of loyalty to the Company or its stockholders,
(b) shall not have acted in good faith, (c) shall have acted in a manner
involving intentional misconduct or a knowing violation of law, or (d) shall
have derived an improper personal benefit.
In addition, the Company's By-laws provide that the Company shall
indemnify all of its officers and directors against any liability on their part
which may at any time be claimed to have resulted to any third person or to the
Company by reason of any acts or omissions by them, in connection with the
business or on behalf of the Company, not resulting from or arising out of fraud
or bad faith.
The Company also has entered into indemnification agreements with
each of its officers and directors, which agreements provide that, in addition
to certain rights of indemnification, the Company will purchase and maintain in
effect one or more policies of director and officer insurance covering the
Company's officers and directors, as can be obtained for the present premium
payments of $177,840 per year.
(ii) MERGER AGREEMENT. On November 14, 1994, the Company, Purchaser,
United/Harvey and Merger Sub entered into the Merger Agreement. The following
discussion of the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which has been filed as an exhibit hereto and is
incorporated herein by reference.
THE OFFER. The Merger Agreement provides that Purchaser will
make the Offer and, subject to the terms and conditions of the Offer, Purchaser
shall accept for payment and pay for
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Shares which have been validly tendered and not withdrawn pursuant to the Offer
at the Per Share Amount net to the seller thereof in cash at the earliest time
following expiration of the Offer that all conditions to the Offer have been
satisfied or waived by Purchaser. Purchaser may waive any of the conditions to
the Offer or make any other changes in the terms and conditions of the Offer,
except that no change may be made (a) that decreases the price per Share payable
in the Offer, except for decreases, if any, to reflect the difference, if any,
between 2,704,899 shares and the number of shares of Common Stock outstanding as
of the expiration of the Offer, calculated on a fully diluted basis, (b) that
reduces the maximum number of Shares to be purchased in the Offer, (c) that
changes the form of consideration to be paid in the Offer, or (d) that imposes
conditions to the Offer in addition to those described below. In addition,
Purchaser has agreed not to extend the expiration date of the Offer, except (a)
in the event that any condition to the Offer is not satisfied on the initial
expiration date of the Offer, (b) as may be required by law, or (c) with the
Company's written permission.
CONDITIONS TO THE OFFER. The Merger Agreement provides that
Purchaser will not be required to accept for payment, or to purchase or pay for,
any tendered Shares and Purchaser may terminate or amend the Offer and may
postpone the purchase of, and payment for, Shares if (a) there shall not have
been validly tendered to Purchaser pursuant to the Offer and not withdrawn
immediately prior to the expiration of the Offer at least that number of Shares
that, when taken as a whole with all other Shares owned or acquired by Purchaser
(whether pursuant to the Offer or otherwise), constitutes at least a majority of
the Shares on a fully diluted basis (the "Minimum Condition"), (b) prior to the
time of payment for any such Shares, any waiting period (and any extension
thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act") shall not have expired or otherwise been terminated or (c) at
any time on or after the date of the Merger Agreement and prior to the time of
payment for any such Shares: (1) there shall have been threatened, instituted
or pending any action, proceeding, application or counterclaim by or before any
governmental, regulatory or administrative agency or authority, domestic,
foreign or transnational, which (A) seeks to restrain or prohibit the making or
consummation of the Offer or the Merger or seeks damages in connection therewith
or resulting therefrom, (B) seeks to prohibit or restrict the ownership or
operation by Purchaser (or any of its affiliates or subsidiaries) of any portion
of its or the Company's business or assets which is material to the business of
all such entities taken as a whole, or to compel Purchaser (or any of its
affiliates or subsidiaries) to dispose of or hold separate any portion of the
Company's business or assets which is material to the business of all such
entities taken as a whole, (C) seeks to impose material limitations on the
ability of Purchaser effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including without limitation the right to
vote the Shares purchased by Purchaser on all matters properly presented to the
stockholders of the Company, (D) seeks to impose any limitations on the ability
of Purchaser or any of its affiliates or subsidiaries effectively to control in
any material respect the business and operations of the Company, or (E) would
otherwise be reasonably likely to have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole; or (2) the representations and
warranties of the Company set forth in the Merger Agreement shall have been
breached in any material respect (or, with respect to those representations and
warranties qualified by material adverse effect, in any respect) or the Company
shall have failed to perform any obligation or covenant required by the Merger
Agreement to be performed or complied with by it in any material respect; or (3)
there shall have occurred (A) any general suspension of, or limitation on prices
for, or trading in, securities on the New York Stock Exchange, (B) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States, (C) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (D) any material limitation (whether or not mandatory) by a governmental
authority, or any other event that is reasonably likely to materially adversely
affect the extension of credit by banks or other financial institutions, or
(E) in the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof; or (4) a tender or
exchange offer for some portion of or all the Shares shall have been publicly
proposed to be made or shall have been commenced at an all cash price per share
in excess of the Per Share Amount (or at any other price if the Board of
Directors of the Company does not promptly announce publicly that it is
recommending that the
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Company's stockholders not tender into such offer) by another person or entity
or Purchaser shall have otherwise learned that any person, entity or "group"
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) shall have acquired beneficial ownership of
more than 25% of the Shares, through the acquisition of stock, the formation of
a group or otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 25% of
the Shares other than acquisitions for bona fide arbitrage purposes only and
other than by persons, entities or groups that have publicly disclosed such
ownership in a Schedule 13D or 13G on file with the SEC on the date of the
Merger Agreement; or (5) any other person or entity shall have commenced a proxy
or consent solicitation of the Company's stockholders to approve a transaction
other than transactions contemplated by the Merger Agreement; or (6) the Merger
Agreement shall have been terminated in accordance with its terms; or (7) the
Board of Directors of the Company shall not have taken all necessary actions to
fulfill the Company's obligations to reconstitute the Company's Board of
Directors as described under the heading "The Board" below; or (8) Purchaser and
the Company shall have agreed that Purchaser shall amend or terminate the Offer
or postpone the payment for Shares pursuant thereto.
The Merger Agreement provides that the foregoing conditions are
for the sole benefit of Purchaser. Such conditions may be waived by Purchaser
with the approval of the Board of Directors of the Company. Any determination
by Purchaser will be final and binding upon all parties including tendering
stockholders. The failure by Purchaser at any time to exercise any of the
foregoing rights will not be deemed a waiver of any such right and each such
right will be deemed an ongoing right which may be asserted at any time and from
time to time.
THE BOARD. The Merger Agreement provides that, promptly upon the
purchase by Purchaser of a majority of the outstanding Shares pursuant to the
Offer, Purchaser shall be entitled, subject to compliance with applicable law,
to designate up to that number of members, rounded up to the nearest whole
number, of the Company's Board of Directors as will make the percentage of the
members designated by Purchaser equal to the percentage of outstanding Shares
held by Purchaser and its affiliates (other than the Company and its
subsidiaries). Pursuant to Merger Agreement, the Company has agreed to increase
the size of its Board and/or use its reasonable efforts to secure the
resignation of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Company's Board of Directors and to cause
Purchaser's designees to be so elected effective immediately upon Purchaser's
acquisition of a majority of the outstanding Shares pursuant to the Offer or
otherwise. In this regard, on November 14, 1994, the Company's Board of
Directors took written action to (a) increase the number of directors of the
Company from six to nine, such increase to be effective immediately prior to
Purchaser's acquisition of a majority of the Shares, (b) elect Messrs. J. Peter
Kline, Donald J. McNamara and Robert A. Whitman (collectively, the "Purchaser
Designees"), as designees of Purchaser to fill the vacancies created by such
increase, with such elections to be effective immediately upon Purchaser's
acquisition of a majority of the Shares, and (c) accept the written resignation
as a director of the Company of each of the existing members of the Board of
Directors of the Company, such resignations being effective immediately upon
Purchaser's acquisition of a majority of the Shares; the Company has represented
to Purchaser that such action will be in effect immediately prior to Purchaser's
acquisition of a majority of the Shares. If any Purchaser Designee becomes
unable or unwilling to serve as a member of the Company's Board of Directors, it
is contemplated that an appropriate substitute will be elected to such Board in
place of such Purchaser Designee. In addition, the Company will cause the
Purchaser Designees to constitute the same percentage (rounded up to the nearest
whole number) on each of the following: (a) each committee of such Board
designated by Purchaser, (b) each board of directors of each subsidiary of the
Company designated by Purchaser, and (c) each committee of each such board
designated by Purchaser. The Company's obligations to appoint designees to the
Company's Board of Directors will be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 thereunder. In this regard, the Company has prepared and
filed with the SEC an Information Statement, a copy of which is attached as
Annex A to this Schedule 14D-9 and which is incorporated herein by reference.
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The Merger Agreement provides that, from the date of the Merger
Agreement to the date on which the Purchaser Designees first become directors of
the Company as described above, the Company will notify Purchaser in advance of
every meeting of the Company's Board of Directors (or any committee thereof) and
will permit a representative of Purchaser to attend, as an observer, each such
meeting.
THE MERGER. The Merger Agreement provides that Merger Sub will
be merged with and into the Company in accordance with the relevant provisions
of the Delaware Law as soon as practicable following the satisfaction or waiver
of the conditions to the Merger described below under the heading "Conditions to
the Merger". Following the Merger, the Company shall continue as the surviving
corporation (the "Surviving Corporation") and the separate corporate existence
of Merger Sub will cease. The Certificate of Incorporation and By-laws of the
Company to be in effect from and after the Effective Time, until amended in
accordance with their respective terms and the Delaware Law will be the
Certificate of Incorporation and By-laws, respectively, of the Company, as
amended and restated in the form attached to the Merger Agreement. The
directors and officers of Merger Sub immediately prior to the Effective Time
shall be the initial directors and officers of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified.
As provided in the Merger Agreement, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
United/Harvey or any subsidiary of the Company or held in the treasury of the
Company, all of which shall be cancelled without consideration, and other than
Dissenting Shares, as defined below) shall, by virtue of the Merger and without
any action on the part of Merger Sub, the Company or United/Harvey, be converted
into and become the right to receive the Per Share Amount, in cash, without
interest thereon and each share of common stock, par value $0.01 per share, of
Merger Sub ("Merger Sub Common Shares") issued and outstanding immediately prior
to the Effective Time will, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become one share of common
stock, par value $0.01 per share, of the Surviving Corporation. Each Merger Sub
Common Share held in Merger Sub's treasury or by any subsidiary of Merger Sub
immediately prior to the Effective Time will be cancelled without the payment of
any consideration therefor. The Merger Agreement provides that the Merger will
be consummated as promptly as practicable after the satisfaction or waiver of
the conditions set forth in the Merger Agreement. The Merger will become
effective at the time of filing of a certificate of merger as required by the
Delaware Law.
Any Shares held by a holder who has demanded and perfected the
right for appraisal of such Shares in accordance with the Delaware Law and who,
as of the Effective Time, has not effectively withdrawn or lost such right to
such appraisal ("Dissenting Shares") will be entitled only to such rights as are
granted by the Delaware Law. If any holder of Shares who demands appraisal of
such Shares under the Delaware Law shall effectively withdraw or lose (through
failure to perfect or otherwise) the right to such appraisal, then, as of the
later of the Effective Time or the occurrence of such event, such holder's
Shares will automatically be converted into and represent only the right to
receive the Per Share Amount in cash, without interest thereon.
The Merger Agreement provides that if required following the
completion of the Offer, the Company shall promptly take all action necessary in
accordance with the Delaware Law and its Certificate of Incorporation and By-
laws to duly call, give notice of, convene and hold a special meeting of its
stockholders (the "United Stockholders' Meeting") to consider and vote upon the
approval and adoption of the Merger. Purchaser has agreed to cause all Shares
purchased pursuant to the Offer and all other Shares owned by the Purchaser or
any affiliate thereof to be voted in favor of the approval the Merger. If the
Minimum Condition is satisfied and Purchaser purchases the Shares pursuant to
the Offer, Purchaser will be able to effect the adoption of the Merger Agreement
(whether in its present form or as it may be amended to implement the Cash/Stock
Option or otherwise) either at a meeting of the Company's
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stockholders or pursuant to written consent in lieu of such a meeting, without
the affirmative vote or consent of any other stockholder of the Company.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of the following
conditions: (a) the Offer shall have been consummated; (b) the Merger Agreement
shall have been adopted by the requisite vote of the stockholders of the Company
if required by applicable law; (c) any waiting period (and extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; and (d) no United States or state governmental
authority or other agency or commission or United States or state court of
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, writ, injunction or other order which is in effect and
has the effect of making the Merger or the Offer illegal or otherwise
prohibiting the consummation of the transactions contemplated by the Merger
Agreement.
REPRESENTATION AND WARRANTIES. The Merger Agreement contains
various customary representations and warranties of the parties.
Representations and warranties of Purchaser include certain matters relating to
its organization, its authority to enter into the Merger Agreement and to
consummate the transactions contemplated thereby, its filings with the SEC in
connection with the Offer, the consents and approvals required for the execution
and delivery of the Merger Agreement and the consummation of the transactions
contemplated thereby and the availability of funds sufficient to consummate the
Offer and the Merger on the terms contemplated thereby.
Representations and warranties of United/Harvey and Merger Sub
include certain matters relating to their organization, their authority to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby and the consents and approvals required for the execution and delivery
of the Merger Agreement and the consummation of the transactions contemplated
thereby.
Representations and warranties of the Company include certain
matters relating to its organization and qualification to do business, its
capitalization, its authority to enter into the Merger Agreement and to
consummate the transactions contemplated thereby, the consents and approvals
required for the execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby, its filings with the SEC,
the absence of certain changes suffered by the Company since August 31, 1994,
its litigation, employees and employee benefit plans, taxes and environmental
matters.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger
Agreement, the Company has agreed that, during the period from the date of the
Merger Agreement to the Effective Time, except as otherwise provided in the
Merger Agreement or unless Purchaser otherwise agrees in writing, the businesses
of the Company and its subsidiaries will be conducted only in, and the Company
and its subsidiaries will not take any action except in, the ordinary course of
business consistent with past practices. The Company has further agreed that it
will (a) use its reasonable best efforts to (i) preserve substantially intact
the business organization of the Company and its subsidiaries, (ii) keep
available the services of the present officers, employees and consultants of the
Company and its subsidiaries, and (iii) preserve the present relationships of
the Company and its subsidiaries with customers, suppliers and other persons
with whom the Company or any of its subsidiaries has significant business
relations, (b) continue in full force and effect without material modification
all existing policies or binders of insurance currently maintained in respect of
the Company and each of its subsidiaries and their respective assets, and (c)
pay, and cause each of its subsidiaries to pay, its indebtedness and otherwise
discharge its liabilities punctually when and as the same become due and payable
and perform and observe, and cause each of its subsidiaries to perform and
observe, its duties and obligations under its material contracts.
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By way of amplification of the foregoing, the Company has agreed
that, except as expressly contemplated by the Merger Agreement, neither the
Company nor any of its subsidiaries will, between the date of the Merger
Agreement and the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Purchaser: (a) amend
or otherwise change its Certificate of Incorporation or By-laws; (b) issue,
sell, pledge, dispose of encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, (i) any shares of capital stock of any class, or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interests, of the
Company or any of its subsidiaries (except for the issuance of shares pursuant
to certain options and other arrangements previously disclosed to Purchaser), or
(ii) any assets of the Company or any of its subsidiaries (except for the sale
of non-material assets in the ordinary course of business consistent with past
practices); (c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock; (d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(e)(i) acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof,
(ii) incur any indebtedness or issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation or become responsible for, the
obligations of any person, or make any loans or advances, (iii) enter into any
contract or agreement (except for certain specified contracts and agreements and
except for those non-material contracts and agreements entered into in the
ordinary course of business consistent with past practices), (iv) authorize new
capital expenditures (other than expenditures incurred in the ordinary course of
business consistent with past practices or as required by the direction or acts
of a franchisor and expenditures required by governmental direction), or (v)
amend any contract, agreement, commitment or arrangement (other than certain
specified contracts and agreements) with respect to any of the foregoing
matters; (f) increase the compensation payable or to become payable to, or grant
or pay any severance or termination pay to, the officers or employees of the
Company or its subsidiaries (except as may be necessary to comply with
applicable law, except for increases in salary or wages of employees of the
Company or its subsidiaries in accordance with existing policies or past
practices, and except pursuant to terms of contracts, policies or benefit
arrangements in effect on the date of the Merger Agreement), enter into any
employment or severance agreement with, any director, officer or other employee
of the Company or any of its subsidiaries, or establish, adopt, enter into or
amend any bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit of any
of the directors, officers or employees of the Company or its subsidiaries
(except as may be necessary to comply with applicable law); (g) take any action
other than in the ordinary course of business consistent with past practices
(none of which actions shall be unreasonable or unusual) with respect to
accounting policies or procedures (including without limitation procedures with
respect to the payment of accounts payable and collection of accounts
receivable); (h) make any tax election or settle or compromise any tax
liability; or (i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of the same in the ordinary course of
business consistent with past practices (including payment of the Company's
liabilities in accordance with their terms).
ACCESS. Pursuant to the Merger Agreement, the Company has
agreed that, from the date of the Merger Agreement to the Effective Time, it
will, and will cause its subsidiaries, officers, directors, employees, auditors
and agents to, afford the officers, employees and agents of Purchaser reasonable
access to its officers, employees, agents, properties, offices, plants and other
facilities and to all books and records, and will furnish Purchaser with all
financial, operating and other data and information as Purchaser, through its
officers, employees, or agents, may reasonably request.
EMPLOYEE BENEFIT PLANS. The Merger Agreement provides that the
Surviving Corporation will pay, in accordance with their terms, all amounts
which are or become due and payable under the terms of all written employment,
severance and termination contracts, agreements, plans, policies and commitments
of the Company and its subsidiaries with or with respect to its current or
former employees, officers and directors. The Surviving Corporation will
maintain, for at least a one year period
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after the Effective Time, employee plans of the Company in effect on the date of
the Merger Agreement or provide benefits to employees of the Surviving
Corporation who were employees of the Company and its subsidiaries immediately
prior to the Effective Time ("United Employees") that are at least substantially
comparable to the benefits provided to similarly situated employees of the
Surviving Corporation who are not United Employees. In addition, from the date
of the Merger Agreement and until the Effective Time, the Company will use its
reasonable efforts to enter into employment contracts, effective not later than
the Effective Time, with those persons identified by United/Harvey to the
Company on or before December 1, 1994, provided that the Company's obligations
under each such contract will be conditioned upon the agreement of the employee
party thereto to cancel any severance or termination agreement between the
Company and such employee in effect on the date of the Merger Agreement.
EXCLUSIVE NEGOTIATIONS. In the Merger Agreement, the Company
represents and warrants that, on November 4, 1994, it ceased and caused to be
terminated any existing negotiations, or prior negotiations with any party
previously conducted, with respect to a business combination with the Company or
a change in control of the Company (a "Change in Control Transaction"). The
Company also agrees that, from and after the execution and delivery of the
Merger Agreement, the Company will not and will cause its affiliates and its or
their representatives not to, solicit any offers from any person or entity in
respect of, or, except as described in the following paragraph, engage in any
negotiations relating to or provide any information in respect of, any Change in
Control Transaction.
The Merger Agreement provides that if any person (other than a
person who participated in the process to which the Company selected Purchaser
to the make the Offer and effect the Merger (a "Prior Person")) publicly
announces or notifies the Company in writing that it intends to commence a
tender or exchange offer to purchase Shares on financial and legal terms which
the Company's Board of Directors determines, based upon advice from the
Company's independent financial and legal advisors, are more favorable to the
Company than those contemplated by the Merger Agreement (an "Unsolicited
Proposal"), the Company will notify Purchaser in writing of such Unsolicited
Proposal by 5:00 p.m., Eastern Time, on the business day next following the
business day on which the Company receives notice of the Unsolicited Proposal.
Any such notice given by the Company (a "Proposal Notice") is required to state
the terms and conditions of such Unsolicited Proposal and the identity of the
person making it (and to include a copy of such Unsolicited Proposal). The
Merger Agreement further provides that, if the Company's Board of Directors
determines, based upon advice from the Company's independent legal advisors,
that its fiduciary duties under applicable law require that the Company commence
negotiations with respect to such Unsolicited Proposal or furnish information in
respect thereof, Purchaser will have the option to terminate the Merger
Agreement, whereupon Purchaser will be entitled to its expenses and a
termination fee as described under the heading "Fees and Expenses" below. The
Merger Agreement also provides that, in the event that a Prior Person makes an
Unsolicited Proposal, the Company will deliver to Purchaser a Proposal Notice
with respect thereto, but will not recommend any such Unsolicited Proposal to
its stockholders.
CERTAIN OTHER AGREEMENTS. Pursuant to the Merger Agreement, each
of the Company, Purchaser, United/Harvey and Merger Sub has agreed to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
or make effective as promptly as practicable the transactions contemplated by
the Merger Agreement and to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides
that the limitations of liability of directors and the indemnification
provisions of the Certificate of Incorporation and the By-laws of the Surviving
Corporation will not be amended, repealed, contradicted by any other provision
of such Certificate of Incorporation or By-laws or otherwise modified for a
period of seven years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at the time of execution and
delivery of the Merger Agreement were directors, officers, employees or
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agents of the Company, unless such modification is required by a change in
applicable law. The Merger Agreement further provides that the Company will to
the fullest extent permitted under applicable law or under the Company's
Certificate of Incorporation or By-laws or pursuant to the Directors/Officers
Indemnification Agreements previously entered into and in effect on the date of
the Merger Agreement and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and after the Effective Time, the Surviving
Corporation will, to the fullest extent permitted under applicable law or under
the Surviving Corporation's Certificate of Incorporation or By-laws, indemnify
and hold harmless, each present and former director, officer, employee,
fiduciary and agent of the Company or any of its subsidiaries against any cost
or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omissions occurring prior to the Effective Time (including, without limitation
any claim, action suit, proceeding or investigation arising out of or pertaining
to the transactions contemplated by the Merger Agreement) for a period of seven
years after the date of the Merger Agreement. Under the Merger Agreement, the
Surviving Corporation is obligated for five years after the Effective Time to
maintain in effect, if available, directors' and officers' liability insurance
substantially comparable in scope and coverage to the Company's current
directors' and officers' liability insurance policy covering those persons who
are presently covered by such policy, except that the Surviving Corporation
shall only be obligated to maintain such coverage at a cost not to exceed
$177,840 per year.
INDEMNIFICATION OF PURCHASER AND AFFILIATES. Under the Merger
Agreement, the Company has agreed to indemnify and hold harmless each of
Purchaser and its affiliates (including United/Harvey and Merger Sub), and their
respective partners, officers, directors, employees, agents, and controlling
persons from and against any loss, damage, or expense, including without
limitation reasonable attorneys' and accountants' fees suffered by any
indemnified party, (a) as a result of any action, suit, proceeding or
investigation which is based upon, relates to or results from the Merger
Agreement or any of the transactions contemplated thereby, except to the extent
that it is finally judicially determined by a court of competent jurisdiction
that the loss in question resulted from a breach by Purchaser of any of the
representations and warranties set forth in the Merger Agreement, or (b) from
and after the Effective Time, or, if applicable, the termination of the Merger
Agreement as a result of any inaccuracy in or breach of any of the
representations, warranties or covenants of the Company set forth in the Merger
Agreement.
INDEMNIFICATION OF THE COMPANY. From and after the Effective
Time, or, if applicable, the termination of the Merger Agreement, Purchaser,
United/Harvey and Merger Sub have agreed to indemnify and hold harmless the
Company and its current and future officers, directors, employees and agents
from and against damage or expense (including without limitation reasonable
attorneys' and accountants' fees) suffered by any of them as a result of any
inaccuracy in or breach of any of the representations, warranties or covenants
made by Purchaser, United/Harvey or Merger Sub under the Merger Agreement.
TERMINATION, AMENDMENT AND WAIVER. The Merger Agreement provides
that it may be terminated at any time prior to the Effective Time: (a) by mutual
consent of Purchaser, United/Harvey and the Boards of Directors of Merger Sub
and the Company; (b) by either Purchaser or the Company if (i) the Merger shall
not have been consummated by March 31, 1995; provided, however, that such right
of termination shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or resulted in, the
failure of the Merger to occur on or before such date, or (ii) a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action which permanently restrains, enjoins or otherwise prohibits the
transactions contemplated by the Merger Agreement; (c) by Purchaser if (i) due
to an occurrence that would result in a failure to satisfy any of the conditions
to the Offer, Purchaser shall have terminated the Offer or failed to pay for
Shares pursuant to the Offer within 180 days after the commencement of the
Offer, or (ii) prior to the purchase of Shares pursuant to the Offer, the
Company's Board of Directors shall have withdrawn or modified in a manner
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adverse to Purchaser its approval or recommendation of the Offer or the Merger
or shall have recommended another offer or transaction; (d) by the Company if
(i) due to an occurrence that would result in a failure to satisfy any of the
conditions to the Offer, Purchaser shall have terminated the Offer or failed to
pay for Shares pursuant to the Offer within 180 days after the commencement of
the Offer, or (ii) prior to the purchase of Shares pursuant to the Offer, the
Company's Board of Directors shall have withdrawn its recommendation to the
Company's stockholders to accept the Offer and shall have recommended another
offer or transaction, provided that, the Company shall not recommend another
Offer or transaction if such Offer is made by or such transaction is to be with
a Prior Person, and accordingly, may not terminate the Merger Agreement pursuant
to this provision under such circumstances; or (e) by Purchaser as described
under the heading "Exclusive Negotiations" above.
The Merger Agreement provides that it may be amended only by
action taken by Purchaser, United/Harvey and the Boards of Directors of the
Company and Merger Sub at any time before or after approval of the Merger
Agreement and by the stockholders of the Company, if required by applicable law.
The Merger Agreement provides that any party may (a) extend the
time for performance of any of the obligations or other acts of the other
parties to the Merger Agreement, (b) waive any inaccuracies in the
representations and warranties contained in the Merger Agreement, and (c) waive
compliance with any of the agreements or conditions of the other parties
contained in the Merger Agreement.
FEES AND EXPENSES. The Merger Agreement provides that all
reasonable out-of-pocket fees, costs and expenses incurred in connection with
the Offer, the Merger Agreement and the transactions contemplated thereby will
be paid or reimbursed by the Company, except that each party will pay its own
fees, costs and expenses in the event that the Offer is not consummated.
Notwithstanding the foregoing, the Merger Agreement provides that the Company
will pay or reimburse to Purchaser an amount equal to the sum of all reasonable
documented fees, costs and expenses in an amount not to exceed $1.0 million
incurred by Purchaser and its affiliates in connection with the Merger Agreement
and the transactions contemplated thereby subsequent to October 26, 1994,
immediately upon the first to occur of: (a) prior to the acceptance for payment
of Shares pursuant to the Offer, the Company's Board of Directors having
withdrawn or modified in a manner adverse to Purchaser its approval or
recommendation of the Offer or having recommended another offer or transaction;
(b) the Company having failed to perform or comply in any material respect with
any obligation or covenant required by the Merger Agreement to be performed or
complied with by it or breached any representation or warranty of the Company
set forth in the Merger Agreement in any material respect (or with respect to
those representations and warranties qualified by material adverse effect, in
any respect); or (c) if the Merger Agreement is terminated as described under
the heading "Exclusive Negotiations" above as a result of an Unsolicited
Proposal; provided that no such payment shall be made to Purchaser if Purchaser,
United/Harvey or Merger Sub, as the case may be, shall have failed to perform or
comply in any material respect with any obligation or covenant required by the
Merger Agreement to be performed or complied with by it or breached any
representation or warranty of it set forth in the Merger Agreement in any
material respect (or with respect to those representations and warranties
qualified by material adverse effect, in any respect). In addition, the Company
will pay to Purchaser immediately upon termination of the Merger Agreement
pursuant to clause (c)(ii), (d)(ii) or (e) under the first paragraph of the
heading "Termination, Amendment and Waiver" above, an amount equal to $1.0
million if such termination occurs on or before November 30, 1994, and an amount
equal to $1.5 million if such termination occurs after November 30, 1994. The
parties have agreed that any amount to be paid as described in this paragraph
will be the exclusive remedy of Purchaser in connection with any such
termination.
GUARANTY OF PERFORMANCE. In the Merger Agreement, United/Harvey,
Merger Sub and The Hampstead Group, Inc. have, jointly and severally, (a)
represented and warranted to the Company that the representations and warranties
of Purchaser set forth in the Merger Agreement are true
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and correct in all material respects, and (b) agreed to cause Purchaser to
perform and comply in all material respects with the obligations and covenants
required by the Merger Agreement to be performed or complied with by it,
effective up to the Effective Time. The provisions of the Merger Agreement
described in the immediately preceding sentence will terminate at the Effective
Time and thereupon become null and void.
(iii) CONFIDENTIALITY AGREEMENT. The Company and an affiliate of
Purchaser, Hampstead Investments, Inc. ("HII") entered into a Confidentiality
Agreement, dated July 14, 1994 (the "Confidentiality Agreement"), relating to
HII's receipt and review of certain confidential evaluation materials and
information furnished by or on behalf of the Company (the "Evaluation
Materials"). Pursuant to the Confidentiality Agreement, HII agreed to use the
Evaluation Materials solely for the purpose of evaluating a possible investment
in the Company, to refrain from allowing such information to be used for private
use or commercial purpose and to take all appropriate measures to safeguard the
confidentiality of the Evaluation Materials. Pursuant to the Confidentiality
Agreement, HII also agreed, on behalf of itself and its principals, not to
actively engage in the purchase of Shares on the open market and not to contact
any mortgagee, note holder, bond holder, lessor or hotel franchisor of the
Company, without prior approval.
The foregoing description of the Confidentiality Agreement is
qualified in its entirety by reference to the complete text of the
Confidentiality Agreement, a copy of which has been filed as a exhibit hereto
and is incorporated herein by reference.
(iv) LETTER AGREEMENT. Purchaser, the Company and Harvey Hotel Co.,
Ltd. entered into a letter agreement dated as of November 4, 1994 (the "Letter
Agreement"). Pursuant to the Letter Agreement, the Company agreed that: (a) it
would immediately cease and cause to be terminated any existing negotiations, or
prior negotiations with any party previously conducted, with respect to a
business combination or a change in control (a "Change in Control Transaction");
(b) from the date of the Letter Agreement until the signing of a definitive
agreement, but not later than January 31, 1995 (the "Exclusivity Period"), it
would not, and it would cause its respective representatives not to, solicit any
offers from any other party relating to a Change in Control Transaction; and (c)
it would, during the Exclusivity Period, exclusively negotiate with Purchaser in
good faith to reach a definitive agreement and enter into definitive
documentation relating to a business combination, except as otherwise required
by fiduciary obligations under applicable law, as advised by counsel in respect
of Another Proposal (as hereinafter defined). The Letter Agreement also
provided that Purchaser could terminate its negotiations with the Company if the
Company were to receive an unsolicited proposal providing for a Change in
Control Transaction from any person or entity who or which was not given an
opportunity prior to the date of the Letter Agreement to propose a Change in
Control Transaction, which unsolicited proposal was on financial and legal terms
more favorable to the Company than Purchaser's proposal ("Another Proposal"),
and the Company in the exercise of its fiduciary duties under applicable law
elected to commence negotiations with respect to Another Proposal. In the event
that Purchaser were to terminate its negotiations in connection with a
Unsolicited Proposal or the Company were to enter into an agreement providing
for a Change in Control Transaction with any person other than Purchaser or its
affiliates prior to the expiration of the Exclusivity Period, the Company would
reimburse Purchaser up to $500,000 for all reasonable out-of-pocket expenses
incurred from and after October 26, 1994, relating to matters contemplated by
Purchaser's proposal to the Company. In addition, if Purchaser were to
terminate its negotiations pursuant to Another Proposal, then the Company would
pay to Purchaser a fee in an amount equal to $500,000 if Purchaser were to
receive notice of Another Proposal on or before November 10, 1994, or in an
amount equal to $1.0 million if Purchaser were to receive notice of Another
Proposal after November 10 and on or before November 20, 1994 or in an amount
equal to $1.5 million if Purchaser were to receive notice of Another Proposal
after November 20, 1994 but prior to the expiration of the Exclusivity Period.
In addition, the Company agreed to indemnify and hold Purchaser and its
affiliates harmless for any loss, cost, damage, expense (including reasonable
attorneys' fees and charges) or liability relating to, resulting from or arising
out of any action, suit or proceeding initiated by any stockholder, other
security holder or lender of the Company, any
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employee or former employee of the Company or by any other person or entity
based upon or relating to, in whole or in part, facts arising out of the
negotiations between Purchaser and the Company during the Exclusivity Period or
relating to the Letter Agreement.
The foregoing description of the Letter Agreement is qualified in
its entirety by reference to the complete text of the Letter Agreement, a copy
of which has been filed as an exhibit hereto and is incorporated herein by
reference.
(v) COCKROFT AGREEMENT. Purchaser and Cockroft Consolidated
Corporation ("Cockroft Consolidated") have entered into an agreement (the
"Cockroft Agreement") pursuant to which Purchaser has agreed to provide that the
expiration date of the Offer will occur in January 1995, subject to extension
only as provided in the Merger Agreement, and further agreed that, regardless of
whether the Cash/Stock Option is made available, Purchaser will, either pursuant
to the Merger Agreement as presently in effect or otherwise, subject to
conditions no more favorable to Purchaser than those contained in the Merger
Agreement as presently in effect, provide nontendering stockholders an
opportunity following the consummation of the Offer to receive cash in an amount
at least equal to the Per Share Amount in exchange for each Share not tendered
pursuant to the Offer.
Pursuant to the Cockroft Agreement, Cockroft Consolidated has
agreed to tender pursuant to the Offer and not withdraw all of the 1,209,214
Shares held by Cockroft Consolidated (the "Cockroft Shares"), constituting
approximately 45.4% of the total number of Shares. In addition, Cockroft
Consolidated has granted to Purchaser an irrevocable option (the "Cockroft
Option") to purchase all (but not less than all) of the Cockroft Shares. The
Cockroft Option is exercisable on or after January 1, 1995 and on or prior to
March 31, 1995, provided that one of the events referred to in clause (c) (4) or
(5) under the heading "The Merger Agreement -- Conditions to the Offer" above
has occurred. The price per share payable upon the exercise of the Cockroft
Option is the greater of (a) the Per Share Amount and (b) the per share amount
of any competing offer which gives Purchaser the right to terminate the Merger
Agreement in the manner described in the second paragraph under the heading "The
Merger Agreement -- Exclusive Negotiations" above.
Pursuant to the Cockroft Agreement, Cockroft Consolidated has
represented to Purchaser that Cockroft Consolidated has good and valid title to
all of the Cockroft Shares and sole and unrestricted voting power and power of
disposition with respect thereto. In addition, Cockroft Consolidated has
agreed, prior to the expiration of the Cockroft Option, not to, among other
things, (a) sell or otherwise dispose of or encumber any of the Cockroft Shares,
(b) grant any proxy with respect to any of the Cockroft Shares (other than to
Purchaser), or (c) exercise any voting or consent rights with respect to the
Cockroft Shares in a manner inconsistent with the intent and purposes of the
Merger Agreement or the Cockroft Agreement.
Mr. Don Cockroft, Chief Executive Officer, President and a
director of the Company, Mr. Robert Cockroft and Mrs. Janet Virgin, both
directors of the Company, and Mrs. Katherine Lammons, beneficially own a
controlling interest in Cockroft Consolidated. The foregoing description of the
Cockroft Agreement is qualified in its entirety by reference to the complete
text of the Cockroft Agreement, a copy of which has been filed as an exhibit
hereto and is incorporated herein by reference.
(vi) SEVERANCE AGREEMENTS. In June 1987, the Company entered into
severance agreements with certain executive officers of the Company. Under the
agreements with Mr. Augustus B. Randle, III and Mr. J. Don Miller, they would be
entitled to severance compensation in the event that their employment is
terminated following a change in control of the Company. The amount of
compensation would be equal to a maximum of 200% of their base compensation for
the twelve months prior to the their termination. The maximum amount of
compensation which would be payable to Messrs. Randle and Miller, if their
employment were terminated, as of November 14, 1994 would be $172,000 and
$178,000, respectively, plus an additional amount for benefits.
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The foregoing description of the severance agreements is
qualified in its entirety by reference to the complete text of the severance
agreements, a copy of which have been filed as exhibits hereto and are
incorporated herein by reference.
Except as set forth above, to the best knowledge of the Company,
there are no contracts, agreements or understandings or any actual or potential
conflicts of interest between the Company or its affiliates, and (a) the
Company's executive officers, directors or affiliates or (b) Purchaser or their
respective executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) (i) RECOMMENDATION REGARDING THE OFFER AND THE CASH MERGER. At a
special meeting of the Company's Board of Directors held on November 14, 1994,
the Board of Directors unanimously (a) determined that the Offer and the cash
Merger are in the best interests of the Company's stockholders, (b) approved the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the cash Merger, and (c) resolved to recommend that the Company's
stockholders accept the Offer. The Company's Board of Directors recommends that
the Company's stockholders accept the Offer and tender their Shares to Purchaser
in the Offer. A copy of a form of letter to stockholders communicating the
Board of Director's recommendation is filed as an exhibit to this Schedule 14D-9
and is incorporated herein by reference.
(ii) NO RECOMMENDATION REGARDING THE POSSIBLE CASH/STOCK OPTION. The
Company's Board of Directors (a) has not made and does not intend to make any
determination with respect to the Cash/Stock Option, including whether the
Cash/Stock Option or any amendment to the Merger Agreement to provide for the
Cash/Stock Option would be in the best interests of the Company's stockholders,
(b) has not approved and does not intend to approve the Cash/Stock Option or any
amendment to the Merger Agreement with respect thereto, and (c) has not made and
does not intend to make any recommendation to the Company's stockholders with
respect to the Cash/Stock Option or any amendment to the Merger Agreement with
respect thereto.
(b) (i) BACKGROUND. The Company owns and operates 25 hotel properties
located in selected cities in the Southern United States. The Company operates
hotels under the Holiday Inn, Holiday Inn Express, Days Inn, Hampton Inns,
Howard Johnson and Ramada flags. The Company's hotels are located in Atlanta,
Georgia (8 hotels), Jackson, Mississippi (4 hotels), Houston and Dallas, Texas
(8 hotels), Colorado Springs, Colorado (2 hotels), Scottsdale and Flagstaff,
Arizona (2 hotels) and Santa Barbara, California (1 hotel). In addition, the
Company owns 11 non-hotel properties, principally land, in the same cities as
the above hotel properties.
During the mid to late 1980's the hotel industry in the United States
was characterized by over-building and intense competition. Room rates remained
relatively fixed because of the intense competitive pressures, although
operating expenses tended to increase because of increases in the prevailing
wage rates and increases in the cost of other goods and services. Due to these
factors as well as the war in the Middle East and its negative impact on
domestic travel, the Company experienced poor operating results in 1990, 1991
and 1992.
As a result of these conditions and following a restructuring of the
Company's debt, in mid-1993, the Company engaged Michael S. McNulty ("McNulty"),
on an informal basis, and Geller & Co. ("GellerCo") to explore certain plans to
enhance stockholder value. The initial purpose in retaining these advisors was
to obtain a review of the Company's operations and to obtain suggestions on
improving operating results.
In July 1994, the Company retained Smith Barney Inc. ("Smith Barney")
to act as financial advisor to the Company to assist the Company in exploring
various strategic alternatives to
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maximize stockholder value, including the possible sale of all or a portion of
the Company's assets. On July 12, 1994, the Company issued a press release
announcing its retention of Smith Barney in this regard.
At a Board of Directors' meeting held on September 9, 1994, the Board
reviewed the status of efforts to identify potentially desirable strategic
transactions for the Company, and the Board was advised that (a) approximately
100 persons both within and outside the hotel industry had been identified and
contacted for an indication of interest on their part with regard to a
transaction involving the Company, (b) a memorandum containing detailed
information regarding the Company and its assets, properties and operations had
been distributed to approximately one-half of the persons contacted, and (c)
preliminary proposals regarding possible transactions involving the Company had
been received. At this meeting, the Board of Directors authorized the Company's
representatives to assemble and make available to these interested parties
additional information regarding the Company.
On October 27, 1994, the Board of Directors held a special meeting at
which the Board reviewed, with its financial and legal advisors, proposals
submitted by three entities, including Purchaser, together with, among other
items, a proposed form Agreement and Plan of Merger which had been submitted to
the potential bidders. After extensive discussion, the Board authorized the
Company's representatives to continue discussions with these three entities.
A special meeting of the Board of Directors was held on November 1,
1994, at which the Board reviewed the newly revised terms of the three
proposals, two of which were all-cash proposals. One of the all-cash proposals
was from Purchaser. Following this Board meeting on November 1, 1994, the
Company issued a press release announcing that it had entered into negotiations
regarding an all-cash business combination, a copy of which is attached to this
Schedule 14D-9 as an exhibit and is incorporated herein by reference.
On November 3, 1994, the Board of Directors held a special meeting to
review the status of the discussions with the two all-cash bidders. The
November 3 special meeting of the Board of Directors was reconvened on November
4, 1994 to review the final proposals of the two all-cash bidders. The Board of
Directors extensively discussed the terms and conditions of the two final
proposals. At the conclusion of this meeting, the Board of Directors authorized
the Company's representatives to negotiate with Purchaser or its affiliates the
terms of an agreement whereby the Company would agree under certain
circumstances not to solicit or enter into or continue negotiations with respect
to alternative proposals (a "no-shop agreement"), as well as the terms of a
definitive Merger Agreement.
Following this Board meeting on November 4, 1994, the Company's
representatives negotiated the terms of, and the Company entered into, a no-shop
agreement with The Hampstead/Harvey Group, an affiliate of Purchaser, in the
form of the letter agreement, a copy of which is attached as an exhibit hereto
and which is incorporated herein by reference. On that date, the Company issued
a press release with respect to this no-shop agreement, a copy of which is
attached hereto and which is incorporated herein by reference. Also, during the
ensuing ten days, the Company's representatives negotiated with representatives
of Purchaser the terms of the Merger Agreement, a copy of which is attached as
an exhibit hereto and which is incorporated herein by reference.
At a special meeting of the Board of Directors held on November 14,
1994, Smith Barney delivered to the Board its written opinion to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the cash consideration to be received by holders of Shares
pursuant to the Offer and the Merger was fair to such stockholders from a
financial point of view.
Following considerable deliberation at this November 14 Board of
Directors' meeting, the Board unanimously (a) determined that the Offer and the
cash Merger are in the best interests of the Company's stockholders, (b)
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the cash Merger, and (c) resolved to recommend that the
Company's stockholders
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accept the Offer. Following the conclusion of this meeting, on November 14,
1994, the parties entered into the Merger Agreement and later that afternoon,
the Company issued a press release announcing the execution of the Merger
Agreement, a copy of which is attached hereto and which is incorporated herein
by reference.
(ii) REASONS FOR RECOMMENDATION REGARDING THE OFFER AND THE CASH
MERGER. On November 14, 1994, the Company's Board of Directors met to review
the terms of the Merger Agreement (including all Annexes, Schedules and Exhibits
thereto) which had been previously distributed to the Board. Prior to approving
the Merger Agreement and the transactions contemplated thereby, the Board of
Directors reviewed the terms and conditions of the Offer and the Merger with the
Company's management, legal counsel and financial advisor. In reaching its
conclusion set forth in Item 4(a) (i) above, the Board of Directors considered a
number of factors, including, without limitation, the following:
(a) The Company's industry profile, including an analysis of the
Company's competitive position in the hotel industry and the necessity for
substantial capital improvements to be made to upgrade a number of the Company's
hotel properties.
(b) The Board's belief that the process undertaken by the Company in
obtaining proposals with respect to a business combination with the Company was
comprehensive and that, after consultation with Smith Barney based on its
involvement in such process, the Company had received the best and final offer
from interested parties.
(c) The Board's belief that the Offer represents an attractive
opportunity for stockholders to promptly receive fair value in cash for their
investment in light of the Company's current and prospective financial condition
and the inherent risks in the hotel industry.
(d) A review of various financial and other considerations, including
the Company's historical and recent stock prices, values placed by the market on
certain other publicly-traded hotel companies and a comparative analysis of the
capitalization rate (based on the earnings of the Company before income taxes,
depreciation and amortization) of the Company's cash flow as compared to the
capitalization rate of other similarly situated companies.
(e) The written opinion of Smith Barney dated November 14, 1994, to
the effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the cash consideration to be received by holders of
Shares in the Offer and the Merger was fair to such stockholders from a
financial point of view. The full text of Smith Barney's written opinion, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken by Smith Barney, is attached as an exhibit hereto and is
incorporated herein by reference. Smith Barney's opinion is directed only to
the fairness, from a financial point of view, of the cash consideration to be
received by holders of Shares pursuant to the transactions contemplated by the
Merger Agreement and is not intended to constitute, and does not constitute, a
recommendation as to whether any stockholder should tender Shares pursuant to
the Offer. Stockholders are urged to read such opinion carefully in its
entirety.
(f) The fact that the consideration to be paid to the Company's
stockholders in the Offer is all cash and is for all of the outstanding Shares.
(g) The terms and conditions of the Offer and the Merger Agreement,
which the Board believes are fair and reasonable, including the absence of any
financing condition.
(h) The provisions of the Merger Agreement that could have a
detrimental effect on third parties who might be interested in a proposed
business combination with the Company. These provisions include the obligation
of the Company to pay a termination fee of up to $1.5 million and reimburse
Purchaser for its out-of-pocket expenses up to $1.0 million if the Offer does
not go forward under certain
-15-
<PAGE>
circumstances. In addition, the Company has agreed not to solicit or engage in
any negotiations relating to or providing information with respect of any
"change of control" transaction except in the event that the Company receives an
unsolicited proposal regarding a business combination from a person or an entity
(other than a person or entity which participated in the solicitation process
described above), in which event, in the exercise of its fiduciary duties under
applicable law, the Company may commence negotiations with such person or entity
submitting the unsolicited proposal. In that event, Purchaser will have the
option to terminate the Merger Agreement and be reimbursed for its expenses and
be paid a termination fee (as described above). The Company has further agreed
that if a person or entity which participated in the solicitation process as
described above makes an unsolicited proposal, the Company will not make a
positive recommendation to its stockholders with respect to such unsolicited
proposal. The Board recognized that these and certain other terms were required
by Purchaser as a condition to entering into the Merger Agreement.
In view of the wide variety of factors considered in connection with
its evaluation of the Offer and the Merger, the Board of Directors did not find
it practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination.
(iii) REASONS FOR NO RECOMMENDATION REGARDING THE POSSIBLE CASH/STOCK
OPTION. In determining not to approve or make any recommendation regarding the
Cash/Stock Option, the Board of Directors considered a number of factors,
including, without limitation, the following:
(a) The fact that the Company has not assessed and does not intend to
assess the value of any noncash consideration that may be received by holders of
Shares pursuant to the Merger or any other transaction if the Merger Agreement
is amended to provide for the Cash/Stock Option or otherwise.
(b) The fact that the written opinion of Smith Barney does not
address and is not intended to address the fairness, from a financial point of
view, to the holders of Shares of any noncash consideration that may be received
by such stockholders pursuant to the Merger or any other transaction if the
Merger Agreement is amended to provide for the Cash/Stock Option or otherwise,
and the fact that Purchaser has not sought or obtained any advice or opinion
from an independent financial advisor with respect thereto.
(c) The fact that as described in the Offer to Purchase, whether
Purchaser will amend the Merger Agreement to provide for the Cash/Stock Option
will depend upon a number of factors and will be subject to compliance with
applicable legal requirements, and Purchaser states that no assurance can be
given as to whether the Cash/Stock Option will be made available or, if so, the
timing thereof.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained Smith Barney as financial advisor to the Company to
furnish financial advisory and investment banking services in connection with a
potential sale or other transfer of all or substantially all of the outstanding
capital stock or assets of the Company to one or more potential purchasers (a
"Transaction"). The Company has agreed to pay Smith Barney for its services an
aggregate financial advisory fee in an amount equal to 1.25% of the total
proceeds and other consideration paid or received in connection with a
Transaction which occurs during Smith Barney's engagement or, with respect to
certain parties, during a period of 12 months thereafter. The Company also has
agreed to reimburse Smith Barney for its reasonable out-of-pocket expenses
(including reasonable travel and legal expenses) and to indemnify Smith Barney
and certain related parties against certain liabilities, including liabilities
under the federal securities laws, arising out of Smith Barney's engagement.
Pursuant to a Consulting Agreement, dated August 13, 1993 (the "Geller
Consulting Agreement"), the Company retained GellerCo for a one-year period as a
financial advisor to the Company to develop and assist in the implementation of
a strategic plan for the future operation of the Company. Under the Geller
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<PAGE>
Consulting Agreement, the Company agreed to pay GellerCo a monthly retainer of
$12,500 and awarded GellerCo 25,000 shares of Common Stock and granted to
GellerCo options to purchase 35,000 shares of Common Stock. On August 31, 1994,
Smith Barney, GellerCo, Laurence Geller (together with GellerCo, "Geller") and
the Company entered into a compensation agreement (the "Compensation
Agreement"), pursuant to which the parties agreed, among other things, that
Geller would receive a fee from Smith Barney equal to 20% of the Transaction Fee
received by Smith Barney from the Company in the event that the Company
successfully completes a Transaction within 12 months of the of the date of the
Compensation Agreement.
In July 1994, the Company formally retained Michael S. McNulty ("McNulty")
to explore certain plans for the Company's operations to enhance stockholder
value. In consideration for such services, the Company has agreed to pay
McNulty a fee of $124,000 and an additional incentive bonus of $50,000 upon
completion of the Offer by Purchaser.
Except as set forth above, neither the Company nor any person acting on its
behalf intends to employ, retain or compensate any person to make solicitations
or recommendations to stockholders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Pursuant to the Geller Consulting Agreement, on August 13, 1994,
25,000 shares of the Company's Common Stock issued to GellerCo became fully
vested and options to purchase 35,000 shares of the Company's Common Stock
granted to GellerCo became exercisable, at an exercise price of $4.55 per share.
The Common Stock issued and issuable upon the exercise of options to GellerCo is
required to be registered under the Securities Act. In connection with the
foregoing, the Company filed a Registration Statement on Form S-1 (Reg. No. 33-
54925), with the SEC on August 4, 1994, as amended by Amendment No. 1 thereto
filed with the SEC on September 26, 1994, Amendment No. 2 thereto filed with the
SEC on October 13, 1994, Amendment No. 3 thereto filed with the SEC on October
31, 1994, and Amendment No. 4 thereto filed with the SEC on November 4, 1994.
On February 11, 1994, the Company granted pursuant to its 1993 Stock
Incentive Plan to each of four directors of the Company, Robert L. Cockroft,
Howard W. Loveless, Janet C. Virgin and Robert J. Wareham, an option to purchase
up to 1,000 shares of Common Stock at an exercise price of $12.87 per share.
All such options become immediately exercisable upon a Change in Control as
defined in the 1993 Stock Incentive Plan.
On November 21, 1994, Purchaser and Cockroft Consolidated entered into
the Cockroft Agreement. See Item 3 above for a description of the Cockroft
Agreement.
Except as set forth above, to the best of the Company's knowledge,
neither the Company nor any director, executive officer, affiliate or subsidiary
of the Company has effected transactions in the Shares during the past 60 days.
(b) To the best of the Company's knowledge, GellerCo and each of the
directors described in Item 6(a) intend to exercise his/her option and tender at
least a majority of all Shares held of record or beneficially by them pursuant
to the Offer. To the best of the Company's knowledge, its executive officers,
other directors and affiliates currently intend to tender at least a majority of
all Shares held of record or beneficially by them pursuant to the Offer.
-17-
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) On November 14, 1994, the Company, Purchaser, United/Harvey and Merger
Sub entered into the Merger Agreement. See Item 3 above for a description of
the Merger Agreement and certain other agreements and transactions relating
thereto.
Except as described in Items 2 and 3(b) above, no negotiation is
underway or is being undertaken by the Company in response to the Offer which
relates to or could result in: (i) an extraordinary transaction such as a merger
or reorganization, involving the Company or any of its subsidiaries; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
of its subsidiaries; (iii) a tender offer for or other acquisition of securities
by or of the Company; or (iv) any material change in the present capitalization
or dividend policy of the Company.
(b) Except as described in Items 3(b) and 4 hereof, there are no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer, which relate to or would result in one or more of the
matters referred to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit Description
- ------- -----------
No.
---
1. Agreement and Plan of Merger among the Company, Purchaser,
United/Harvey and Merger Sub, dated as of November 14, 1994.
2. Press release issued by the Company on November 1, 1994.
3. Press release issued by the Company on November 4, 1994.
4. Press release issued by the Company and Purchaser on November 14,
1994.
5. Confidentiality Agreement between the Company and HII, dated July
14, 1994.
6. Letter agreement among the Company, Purchaser and Harvey Hotel
Co., Ltd., dated November 4, 1994.
7. Agreement between Purchaser and Cockroft Consolidated, dated
November 21, 1994.
8. Agreement between the Company and Augustus B. Randle, III, dated
June 1, 1987.
9. Agreement between the Company and J. Don Miller, dated June 1,
1987.
*10. Letter from the Company to the Company's stockholders, dated
November 23, 1994.
*11. Opinion of Smith Barney Inc., dated November 14, 1994.
______________________
* Exhibits 10 and 11 are being distributed to all stockholders.
-18-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 23, 1994 UNITED INNS, INC.
By: /s/ Don Wm. Cockroft
-----------------------------
Don Wm. Cockroft
President, Chief Executive
Officer and Director
-19-
<PAGE>
ANNEX A
UNITED INNS, INC.
5100 POPLAR AVENUE
SUITE 2300, CLARK TOWER
MEMPHIS, TENNESSEE 38137
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement, which is being mailed on or about November 23,
1994 to holders of record of shares of Common Stock as of November 10, 1994, is
being furnished in connection with the possible designation by Purchaser
pursuant to an Agreement and Plan of Merger, dated as of November 14, 1994 (the
"Merger Agreement"), among United Inns, Inc. (the "Company"), United/Harvey
Holdings, L.P. ("Purchaser"), United/Harvey Hotels, Inc. ("United/Harvey") and
United/Harvey Sub, Inc. ("Merger Sub") of certain persons to be elected to the
Board of Directors (the "Board") of the Company by means other than through a
meeting of the Company's stockholders. This Information Statement is being
distributed with the Company's Schedule 14D-9, to which this Information
Statement is attached as Annex A thereto.
Pursuant to the Merger Agreement, Purchaser commenced a cash tender offer
on November 21, 1994 to acquire all of the issued and outstanding shares of
Common Stock (the "Shares") at a price of $25.00 per Share (such amount, or such
other amount in cash as Purchaser may pay pursuant to the Offer, being
hereinafter referred to as the "Per Share Amount"), net to the seller thereof in
cash, upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase, dated November 21, 1994, and the related Letter of
Transmittal. The Merger Agreement also provides that after completion of the
Offer, subject to the terms and conditions set forth in the Merger Agreement,
Merger Sub will be merged with and into the Company and the Company will survive
as the surviving corporation (the "Surviving Corporation"). Each outstanding
Share, other than those held by United/Harvey or in the treasury of the Company
or by any subsidiary of the Company (all of which will be cancelled) and other
than Shares held by holders who have demanded and perfected and not withdrawn or
lost the right for appraisal of such Shares under the Delaware General
Corporation Law, will be converted at the effective time (the "Effective Time")
of the Merger into the right to receive the Per Share Amount, in cash, without
interest thereon.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of a majority of the outstanding Shares pursuant to the Offer (the "Share
Acquisition"), Purchaser shall be entitled, subject to compliance with
applicable law, to designate up to that number of members, rounded up to the
nearest whole number, of the Board as will make the percentage of the members
designated by Purchaser equal to the percentage of outstanding Shares held by
Purchaser and its affiliates (other than the Company and its subsidiaries). The
Company has agreed to increase the size of its Board and/or use its reasonable
efforts to secure the resignation of such number of directors as is necessary to
enable Purchaser's designees to be elected to the Board and will cause
Purchaser's designees to be so elected effective immediately upon Purchaser's
acquisition of a majority of the outstanding Shares pursuant to the Offer or
otherwise. In connection with the foregoing, the Board has taken written action
to (a) increase the number of directors of the Company from six to nine, such
increase to be effective immediately prior to the Share Acquisition, (b) elect
Messrs. J. Peter Kline, Donald J. McNamara and Robert A. Whitman (collectively,
the "Purchaser Designees"), as designees of Purchaser, to fill the vacancies
created by such increase, with such elections to be effective immediately upon
the Share Acquisition, and (c) accept the written
<PAGE>
resignation as a director of the Company of each of the existing members of the
Board, such resignations being effective immediately upon the Share Acquisition;
the Company has represented to Purchaser that such action will be in effect
immediately prior to the Share Acquisition. In addition, the Company has agreed
to cause persons designated by Purchaser to constitute the same percentage
(rounded up to the nearest whole number) on each of the following as the
designees of Purchaser then constitutes on the Board: (a) each committee of
such Board designated by Purchaser, (b) each board of directors of each
subsidiary designated by Purchaser, and (c) each committee of each such board
designated by Purchaser. The Company's obligation to appoint Purchaser
Designees to its Board is subject to Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 promulgated
thereunder.
NO ACTION IS REQUIRED BY THE STOCKHOLDERS OF THE COMPANY IN CONNECTION WITH
THE ELECTION OF THE PURCHASER DESIGNEES TO THE BOARD. HOWEVER, SECTION 14(F) OF
THE EXCHANGE ACT REQUIRES THE MAILING TO THE COMPANY'S STOCKHOLDERS OF THE
INFORMATION SET FORTH IN THIS INFORMATION STATEMENT PRIOR TO A CHANGE OF A
MAJORITY OF THE COMPANY'S DIRECTORS.
The purpose of this Information Statement is to satisfy the requirements of
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
connection with the reconstitution of the Board pursuant to the Merger
Agreement, and to provide information regarding the Board and executive officers
of the Company and the Purchaser Designees. The information contained in this
Information Statement concerning the Purchaser Designees has been furnished to
the Company by Purchaser and the Company assumes no responsibility for the
accuracy or completeness of such information and Purchaser shall be solely
responsible for such information.
BOARD OF DIRECTORS
GENERAL
The shares of Common Stock are the only class of voting securities of the
Company outstanding. Each share of Common Stock is entitled to one vote on each
matter to be considered at meetings of stockholders, including the election of
directors. As of November 14, 1994, there were 2,665,899 shares of Common Stock
outstanding.
The Certificate of Incorporation of the Company provides that directors of
the Company shall be not less than three nor more than ten and shall be elected
by the stockholders at their annual meeting to serve for a term of one year or
until their successors are duly elected and qualified.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AS OF NOVEMBER 14, 1994
The following table sets forth certain information with respect to each of
the current directors and executive officers of the Company including their
names, ages, principal occupations for the past five years, (in the case of
directors) their directorships with other corporations and their terms as
directors and executive officers:
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<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING EXECUTIVE
THE PAST FIVE YEARS DIRECTOR OFFICER
NAME AGE AND OTHER DIRECTORSHIPS SINCE SINCE
---- --- --------------------------- ----- -----
<S> <C> <C> <C> <C>
DIRECTORS:
Don Wm. Cockroft 56 President and Chief Executive Officer of the Company 1967 1966
(a) (brother of Robert L. Cockroft and Janet C. Virgin,
brother-in-law of J. Howard Lammons)
J. Howard Lammons 65 Private investor (brother-in-law of Don Wm. 1957 --
(a) Cockroft, Robert L. Cockroft and Janet C. Virgin);
Advisory Director of Memphis, NationsBank of TN
Robert L. Cockroft 53 Physician - Memphis Radiological Professional 1971 --
(c) Corporation (brother of Don Wm. Cockroft and Janet
C. Virgin, brother-in-law of J. Howard Lammons)
Howard W. Loveless 67 Private consultant 1977 --
(b) and (c)
Janet C. Virgin 60 Private investor (sister of Don Wm. Cockroft and 1991 --
(a) Robert L. Cockroft, sister-in-law of J. Howard
Lammons)
Ronald J. Wareham 50 President - R.J. Wareham & Company, Incorporated, a 1993 --
(a), (b) and (c) corporate financial advisory firm
NON-DIRECTOR EXECUTIVE
OFFICERS:
Augustus B. Randle, III 53 Secretary and General Counsel -- 1972
J. Don Miller 59 Vice President-Finance -- 1975
John M. Dollar 53 Vice President -- 1973
<FN>
(a) Member of the Executive Committee of the Board.
(b) Member of the Audit Committee of the Board.
(c) Member of the Compensation Committee of the Board.
</TABLE>
The above directors and executive officers have had the principal
occupations set forth above for at least five years, except for Mr. Wareham, Mr.
Lammons and Mr. Loveless. Mr. Wareham has been President of R.J. Wareham &
Company, Incorporated, a corporate financial advisory firm since 1991. From
1984 to 1991, he was a managing director of Dean Witter Reynolds' Corporate
Finance Office in Atlanta, Georgia. Mr. Lammons has been principally involved
in private investment activities since his retirement from the Company in March
1994. Prior to his retirement, Mr. Lammons served as Executive Vice-President
of the Company since 1978. Mr. Loveless has been
-3-
<PAGE>
principally involved in private consulting activities since January 1, 1994.
Prior to that date and for over five years, Mr. Loveless served as President of
Haas, Inc., a private investment advisory company.
INDIVIDUALS DESIGNATED BY PURCHASER AS PURCHASER DESIGNEES
The following table sets forth certain information with respect to each of
the Purchaser Designees including their names, ages, principal occupations for
the past five years and their directorships with other corporations:
PRINCIPAL OCCUPATION DURING
THE PAST FIVE YEARS
NAME AGE AND OTHER DIRECTORSHIPS
- ---- --- ---------------------------
Donald J. McNamara 41 Chairman of the Board of Directors and Co-
Chief Executive Officer of The Hampstead
Group, Inc. (which makes and manages real
estate and health-care related investments);
director of LaQuinta Inns, Inc. (which owns
and operates hotels); director of Forum
Retirement, Inc., the general partner of
Forum Retirement Partners, L.P., a public
master limited partnership (which owns
retirement communities) director of FelCor
Suite Hotels (a real estate investment
trust).
Robert A. Whitman 41 President and Co-Chief Executive Officer of
The Hampstead Group, Inc., from 1992 to
present; Chairman of the Board of Forum
Group, Inc. (which owns and operates
retirement communities) from June 1993 to
present; President and Chief Executive
Officer of Forum Group, Inc. from June 1993
to October 1994; Managing Partner and Chief
Executive Officer for Trammel Crow Ventures
(the real estate investment, banking and
investment management unit of the Trammel
Crow Company) from prior to 1989 to 1992; and
Chief Financial Officer for Trammel Crow
Group and Trammel Crow Company from prior to
1988 to 1991.
J. Peter Kline 47 President of Harvey Hotels, Inc., (which owns
and operates hotels) from prior to 1983 to
present.
-4-
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Company's Board conducted nine meetings during fiscal year 1994, four
of which were regular meetings and five of which were special meetings of the
Board. Each of the directors attended at least 75% of the meetings of the Board
and any Committee of the Board on which they serve, except for Mr. Loveless who
attended 66-2/3% of the Board meetings.
Among the three Committees of the Board are an Executive Committee, an
Audit Committee and a Compensation Committee. The Company does not have a
standing Nominating Committee of the Board of Directors. The Audit Committee
(a) meets and reviews with the independent auditors their audit and non-audit
services, (b) meets and reviews with management the audit and non-audit
services, (c) meets and reviews with management the audit and non-audit services
of the independent auditors, and (d) makes such recommendations to management
and the independent auditors as it deems appropriate. The Audit Committee held
one meeting during fiscal year 1994. The Compensation Committee determines the
salaries, bonuses and other remuneration of the officers of the Company,
administers the Company's Bonus Plan, and makes recommendations to the Board
with respect to the Company's compensation policies. The Compensation Committee
held one meeting during fiscal year 1994.
COMPENSATION OF DIRECTORS
For fiscal year 1994 all directors are to be paid a fee of $750 for each
Board meeting attended. In addition, directors who are not employees of the
Company are to be paid a quarterly fee of $1,500, plus $400 for each Board
Committee meeting attended.
The Company has a consulting arrangement with R.J. Wareham & Company,
Incorporated ("Wareham & Co."), under the terms of which Wareham & Co. is to be
paid by the Company for Ronald J. Wareham's time and expenses for financial
advice to the Company related to a variety of corporate projects. Mr. Wareham
is the sole shareholder of Wareham & Co. The Company has made payments in the
aggregate amount of $26,450 to Wareham & Co., during the Company's fiscal year
ended September 30, 1994.
The Company's 1993 Stock Incentive Plan provides that each director who is
not also an employee of the Company and who is incumbent at the date of each of
the five consecutive annual meetings of stockholders beginning with the
Company's 1994 annual meeting of stockholders shall automatically be granted,
immediately after the conclusion of each such annual meeting, an option to
purchase 1,000 shares of Common Stock. In connection with the Company's 1994
annual meeting of stockholders held on February 11, 1994, the Company granted to
each of Robert L. Cockroft, Howard W. Loveless, Janet C. Virgin and Ronald J.
Wareham, an option to purchase up to 1,000 shares of Common Stock at an exercise
price of $12.87 per share of Common Stock.
-5-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and its other most highly
compensated executive officer, whose total annual salary and bonus for the
Company's 1994 fiscal year exceeded $100,000, for services rendered in all
capacities during the fiscal years ended September 30, 1994, 1993 and 1992.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
ALL OTHER
FISCAL SALARY COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(2) ($)(1)(3)
- --------------------------- ------ ------ ------------
<S> <C> <C> <C>
Don Wm. Cockroft 1994 233,250 11,174
President and Chief Executive 1993 216,000 169,262
Officer 1992 216,000
John M. Dollar 1994 117,167 8,272
Vice President 1993 113,000 47,191
1992 113,000
<FN>
(1) In accordance with transitional provisions of the rules of the Securities
and Exchange Commission (the "SEC") on executive compensation disclosure,
amounts of All Other Compensation have not been included for fiscal year
1992.
(2) Salary includes base salary earned and paid in cash during the fiscal year
and the amount of base salary deferred at the election of the executive
officer under the United Inns, Inc. Retirement Savings Plan (401(K) Plan)
for fiscal years 1992, 1993, and 1994.
(3) All Other Compensation consists of (a) the amount ($3,585) in insurance
premiums provided to each executive officer through the Company's Group
Health Insurance Plan that is not available generally to all salaried
employees, and (b) matching contributions to the United Inns, Inc.
Retirement Savings Plan (401(K) Plan); Such amounts, respectively were as
follows for 1994: Mr. Cockroft, $7,589; and Mr. Dollar, $4,687.
</TABLE>
REPORT ON EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation of the Company's executives consists of three basic
components: base salary, an executive bonus plan, if applicable, and long-term
incentives. The Compensation Committee of the Board, based upon recommendations
of the chief executive officer of the Company, determines the compensation of
the executive officers of the Company, approves the funding of the executive
bonus plan, if applicable, determines the awards of long-term incentives and the
individuals to whom such awards are made, and establishes the compensation of
the chief executive officer of the Company. For fiscal year 1994, the members
of the Company's Compensation Committee were Mr. Howard W. Loveless, who was the
Chairman, and Messrs. Robert L. Cockroft and Ronald J. Wareham.
BASE SALARY
The establishment of competitive base compensation for the Company's
executives is the primary objective in setting base salaries. The Company
considers a number of factors to determine base salary including company and
individual performance, business conditions, the relative
-6-
<PAGE>
importance of an executive officer's position, the extent of accountability of
the position and the skills required to perform the duties of the position.
None of the factors mentioned above is given any particular weight in
determining base compensation. Other factors also may influence such
determination, such as the relative extent of an individual's experience or a
desire to retain a valuable executive.
EXECUTIVE BONUS PLAN
The Company has an executive bonus plan under which individual
discretionary awards can be made to the full-time executive officers of the
Company. The sum to be distributed ranges from 1% to 3% of the consolidated net
income of the Company before income taxes. No cash amounts have been paid under
such plan since fiscal year ending September 30, 1985.
LONG-TERM INCENTIVES
Stock options are authorized to be granted as long-term incentives to
certain key employees of the Company, including executive officers, under the
Company's 1993 Stock Incentive Plan (the "1993 Plan"). Under the terms of this
plan, the Company may grant options to key employees (determined by the
Compensation Committee) to purchase such number of shares of the Common Stock of
the Company as is determined by the Compensation Committee.
The number of shares for which options will be granted to executive
officers will be determined by the Compensation Committee based upon
performance, potential and other subjective factors. However, no set criteria
will be used and other factors may influence the Compensation Committee's
determination with respect to the number of shares granted, such as the
promotion of an individual to a higher position, a desire to retain a valued
executive or the number of shares then available for grant under 1993 Plan. The
stock option holdings of an individual at the time of a grant will not generally
be considered in determining the size of a grant to that individual.
STOCK PERFORMANCE GRAPH
The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Information
Statement into any filing under the Securities Act of 1933, as amended, or under
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The following graph shows changes over the past five fiscal years in the
value of $100 invested on September 30, 1989, in (a) the Common Stock, (b) the
Standard & Poor's 500 Composite Index, and (c) the Dow Jones Lodging Index.
-7-
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, THE S & P 500 INDEX
AND THE DOW JONES LODGING INDEX
<TABLE>
<CAPTION>
9/89 9/90 9/91 9/92 9/93 9/94
<S> <C> <C> <C> <C> <C> <C>
United Inns, Inc. 100 31 13 7 20 56
S & P 500 100 91 119 132 149 155
D J Lodging 100 32 47 55 79 100
</TABLE>
EMPLOYEE BENEFIT PLANS
The material which follows in this section describes the provisions of
employee benefit plans now in effect, or in effect during the Company's last
fiscal year, other than group life and accident insurance, group hospitalization
and other similar group payments and benefits, in which some or all of the
employees of the Company participate.
1993 STOCK INCENTIVE PLAN
On November 19, 1993, the Company's Board of Directors adopted the 1993
Plan, which was approved by the Company's stockholders at the Company's annual
meeting of stockholders held on February 11, 1994 (the "1994 Annual Meeting").
The 1993 Plan provides for the granting of options to purchase for cash an
aggregate of not more than 300,000 shares of Common Stock. Such options may be
granted to key employees, including officers of the Company and its
subsidiaries, as may be designated by the Compensation Committee of the Board.
At November 14, 1994, the
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<PAGE>
Company had granted an aggregate of 4,000 options to non-employee directors of
the Company at an exercise price of $12.87 per share of Common Stock.
Under the terms of the 1993 Plan, the Compensation Committee may from time
to time grant options to key employees to purchase Common Stock at a price which
may not be less than the fair market value of the shares, as determined by the
mean between the high and low prices of the stock on the New York Stock Exchange
on the date the option is granted. In addition, the 1993 Plan provides that
each director who is not also an employee of the Company and who is incumbent at
the date of each of the five consecutive annual meetings of stockholders
beginning with the 1994 Annual Meeting shall automatically be granted,
immediately after the conclusion of each such annual meeting, an option to
purchase 1,000 Shares. Each person who is not also an employee of the Company
and who is elected or appointed a director during such five-year period other
than at an annual meeting shall, upon such election or appointment, be granted
an option to purchase 1,000 shares of Common Stock. The exercise price of
options granted to directors under the 1993 Plan must be equal to the mean
between the high and low prices of the stock on the New York Stock Exchange on
the date of grant of the option and the right to exercise such options will vest
one year from the date of the grant, if not earlier upon the occurrence of
certain specified events as described below.
Options may not be exercised later than five years after the date of grant.
Subject to the limitations imposed by the provisions of the Internal Revenue
Code, certain of the options granted under the 1993 Plan to key employees may be
designated "incentive stock options." The Company may make interest-free demand
loans to holders of options not designated as incentive stock options for the
purpose of exercising such options and paying any tax liability associated with
such exercise.
Except as provided herein, no option may be exercised until the optionee
has completed one year of service after the option is granted, except in the
case of termination of an employee's employment or a director's directorship
because of death or disability, nor may an option be exercised after termination
of an employee's employment or a director's directorship for any reason other
than death, disability, retirement or for cause. Options may be exercised
within twelve months (a) after the optionee retires, (b) after termination of an
employee's employment or a director's directorship on account of permanent
disability, or (c) after death when in the service of the Company or any of its
subsidiaries. Options may also be exercised within three months after
termination of an employee's employment or director's directorship if
termination is for reasons other than death, disability or retirement so long as
such termination is not for cause, as determined by the Compensation Committee.
If termination is for cause, all unexercised options of optionee terminated for
cause shall immediately terminate and be of no further force or effect. In the
event of death within the twelve-month period following termination of an
employee's employment or a director's directorship for retirement or permanent
disability, options may be exercised by the optionee's legal representative
within twelve months following the date of death. However, under no
circumstances may an option be exercised after the expiration of the stated
period of the option.
No cash consideration is paid for the granting of the options. Payment in
full of the option price must be made upon exercise of any option.
The 1993 Plan provides for the use of treasury shares.
No options or awards may be granted under the 1993 Plan after October 1,
2003, but options or awards granted prior to October 1, 2003, may extend beyond
that date. The 1993 Plan
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may be discontinued by the Company's Board of Directors, but no termination may
impair options or awards granted prior thereto.
Upon the occurrence of a Change in Control (as defined in the 1993 Plan) of
the Company, each holder of an unexpired option under the 1993 Plan will have
the right to exercise the option in whole or in part without regard to the date
that such option would be first exercisable, except no option may be exercised
less than six months from the date of grant, and such right will continue, with
respect to any such holder whose employment with the Company or subsidiary or
whose directorship terminates following a change in control, for a period ending
on the earlier of the date of expiration of such option or the date which is
twelve months after such termination of employment or directorship.
The Compensation Committee may alter or amend the 1993 Plan at any time.
No amendment by the Compensation Committee, however, may increase the total
number of shares reserved for purposes of the 1993 Plan, reduce the option price
to an amount less than the fair market value at the time the option was granted,
extend the duration of the 1993 Plan or modify the provision for the automatic
grant of options to directors, unless such amendment is approved by the
stockholders. No amendment or alteration may impair the rights of optionees
with respect to options theretofore granted, except the Compensation Committee
may revoke and cancel any outstanding options which, in the aggregate, would
create a significant adverse effect on the Company's financial statement in the
event that the Financial Accounting Standards Board issues a statement requiring
an accounting treatment which causes such adverse effect with respect to options
then outstanding. The Compensation Committee has the power to interpret the
1993 Plan and to make all other determinations necessary or advisable for its
administration.
Under current federal tax law, non-incentive stock options granted under
the 1993 Plan will not result in any taxable income to the optionee at the time
of grant or any tax deduction to the Company. Upon the exercise of such option,
the excess of the market value of the shares acquired over their cost is taxable
to the optionee as compensation income and is generally deductible by the
Company. The optionee's tax basis for the shares is the market value thereof at
the time of exercise.
Neither the grant nor the exercise of an option designated as an incentive
stock option results in any federal tax consequences to either the optionee or
the Company. At the time the optionee sells shares acquired pursuant to the
exercise of an incentive stock option, the excess of the sale price over the
exercise price will qualify as a capital gain, provided the applicable holding
period is satisfied. If the optionee disposes of such shares within two years
of the date of grant or within one year of the date of exercise, an amount equal
to the lesser of (a) the difference between the fair market value of the shares
on the date of exercise and the exercise price, or (b) the difference between
the exercise price, and the sale price will be taxed as ordinary income and the
Company will be entitled to a deduction in the same amount. The excess, if any,
of the sale price over the sum of the exercise price and the amount taxed as
ordinary income will qualify as capital gain if the applicable holding period is
satisfied. If the optionee exercises an incentive stock option more than three
months after his or her termination of employment due to retirement, he or she
is deemed to have exercised a non-incentive stock option.
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<PAGE>
CHANGE IN CONTROL CONTRACTS
On June 1, 1987, the Company entered into a severance agreement with Mr.
John M. Dollar. Under this agreement, Mr. Dollar would be entitled to severance
compensation in the event that his employment is terminated following a change
in control of the Company. The amount of compensation would be equal to a
maximum of 200% of his base compensation for the twelve months prior to his
termination plus an additional amount for benefits. The maximum amount of
compensation which would be payable to Mr. Dollar, if his employment was
terminated, as of November 14, 1994, would be $236,000 plus an additional amount
for benefits.
EFFECT OF MERGER
Pursuant to the Merger Agreement, the Surviving Corporation will maintain,
for at least a one year period after the Effective Time, the employee plans of
the Company in effect on the date of the Merger Agreement or provide benefits to
employees of the Surviving Corporation who were employees of the Company and its
subsidiaries immediately prior to the Effective Time ("United Employees") that
are at least substantially comparable to the benefits provided to similarly
situated employees of the Surviving Corporation who are not United Employees.
BENEFICIAL OWNERS OF MORE THAN
5% OF COMMON STOCK
The following table sets forth the ownership of the Common Stock by the
persons, companies or groups known to the Company on the basis of internal
records and/or required filings under Section 13 of the Exchange Act to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock on
November 14, 1994. As used in this information statement, beneficial ownership
means generally the power to vote or dispose of the shares, regardless of any
personal economic interest therein. Unless otherwise noted these individuals or
entities have sole voting and investment power with respect to their shares.
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<PAGE>
NAME AND ADDRESS TITLE NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER OF CLASS BENEFICIALLY OWNED CLASS
- ------------------- -------- ------------------ -----
Cockroft Consolidated Common 1,209,214(1) 45.4
Corporation
Suite 2300
5100 Poplar Avenue
Memphis, TN 38137
Dimensional Fund Advisors Inc. Common 182,400(2) 6.8
1299 Ocean Avenue, Ste. 650
Santa Monica, CA 90401
Mario J. Gabelli Common 581,300(3) 21.8
One Corporate Center
Rye, NY 10580
(1) Don Wm. Cockroft, Robert L. Cockroft, Janet Virgin, and Katherine Lammons
beneficially own a controlling interest in Cockroft Consolidated
Corporation.
(2) According to Schedule 13G as filed with the SEC by Dimensional Fund
Advisors Inc., reporting ownership as of February 19, 1991, Dimensional
Fund Advisors Inc. has beneficial ownership of 182,400 shares. Dimensional
Fund Advisors Inc. has sole voting and sole dispositive power over 116,600
of these shares and officers of Dimensional Fund Advisors Inc. have sole
voting and dispositive power over 65,800 of these shares. The shares of
Dimensional Fund Advisors Inc., a registered investment advisor, are held
in portfolios of DFA Investment Dimensions Group Inc., a registered open-
end investment company, or the DFA Group Trust, an investment vehicle for
qualified employee benefit plans, for both of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional Fund Advisors Inc.
disclaims beneficial ownership of all such shares.
(3) According to Schedule 13D as filed with the SEC by Gabelli Funds, Inc.,
Gamco Investors, Inc., Gabelli International Limited II, and Mario J.
Gabelli (the "Reporting Persons") reporting ownership as of June 6, 1994,
Gamco Investors, Inc. is deemed to have beneficial ownership of 420,800 of
these shares; Gabelli Funds, Inc. is deemed to have beneficial ownership of
160,000 of these shares; Gabelli International Limited II is deemed to have
beneficial ownership of 500 of these shares; Mario J. Gabelli is deemed to
have beneficial ownership of all of the 581,300 shares; and Gabelli Funds,
Inc. is deemed to have beneficial ownership of the securities owned by each
of the foregoing persons other than Mario J. Gabelli. Each of the
Reporting Persons has the sole power to vote and sole power to dispose of
the securities reported except that Gamco Investors, Inc. does not have the
authority to vote 50,000 of the reported shares; except that Gabelli Funds,
Inc. has sole dispositive and voting power with respect to the shares held
by The Gabelli Asset Fund, The Gabelli Growth Fund, The Gabelli Convertible
Securities Fund, The Gabelli Value Fund, Inc., The Gabelli Small Cap Growth
Fund, The Gabelli Equity Income Fund, The Gabelli Equity Trust, The Gabelli
Global Telecommunications Fund, The Gabelli Global Convertible Securities
Fund, The Gabelli Interactive Couch Potato Fund, and/or The Gabelli ABC
Fund with respect to the 160,000 shares held by one or more of such funds,
and except that the power of Mr. Mario J. Gabelli and Gabelli Funds, Inc.
is indirect with respect to securities beneficially owned directly by other
Reporting Persons. The Reporting Persons do not admit that they constitute
a group.
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SECURITIES BENEFICIALLY OWNED BY DIRECTORS,
MANAGEMENT AND PURCHASER DESIGNEES
The following table sets forth, as of November 14, 1994, the amount and
percentage of the Shares beneficially owned by each director, executive officer
and Purchaser Designee and by the directors, officers and Purchaser Designees,
as a group:
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNERSHIP
- ------------------------ -------------------- ---------
DIRECTORS:
Don Wm. Cockroft 1,891(1) *
J. Howard Lammons 950(1) *
Robert L. Cockroft 0 --
Howard W. Loveless 500 *
Janet C. Virgin 31 *
Ronald J. Wareham 0 --
NON-DIRECTOR EXECUTIVE OFFICER:
John M. Dollar 24 *
PURCHASER DESIGNEES:
Donald J. McNamara 0 --
Robert A. Whitman 0 --
J. Peter Kline 0 --
All directors, officers and Purchaser Designees
as a group (12 persons) 4,996(2) *
*Less than 1%
(1) Includes: (a) 1,800 shares owned by the wife and dependent child of Don
Wm. Cockroft; and (b) 490 shares owned by the wife of J. Howard Lammons.
Except as noted hereinabove, all of the shares are owned directly by said
persons with sole voting and investment power.
(2) Does not include 1,209,214 shares owned by Cockroft Consolidated
Corporation. The controlling shareholders of Cockroft Consolidated
Corporation are Don Wm. Cockroft, Robert L. Cockroft, Katherine Lammons,
the wife of J. Howard Lammons, and Janet C. Virgin.
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EXHIBIT INDEX
Exhibit
No. Description
--- -----------
1. Agreement and Plan of Merger among the Company, Purchaser,
United/Harvey and Merger Sub, dated as of November 14, 1994.
2. Press release issued by the Company on November 1, 1994.
3. Press release issued by the Company on November 4, 1994.
4. Press release issued by the Company and Purchaser on November 14,
1994.
5. Confidentiality Agreement between the Company and HII, dated July
14, 1994.
6. Letter agreement among the Company, Purchaser and Harvey Hotel
Co., Ltd., dated November 4, 1994.
7. Agreement between Purchaser and Cockroft Consolidated, dated
November 21, 1994.
8. Agreement between the Company and Augustus B. Randle, III, dated
June 1, 1987.
9. Agreement between the Company and J. Don Miller, dated June 1,
1987.
10. Letter from the Company to the Company's stockholders, dated
November 23, 1994.
11. Opinion of Smith Barney Inc., dated November 14, 1994.
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of November 14, 1994 by and between United/Harvey Holdings,
L.P., a Delaware limited partnership ("Purchaser"), United/Harvey Hotels, Inc.,
a Delaware corporation ("New Parent"), United/Harvey Sub, Inc., a Delaware
corporation ("Merger Sub"), and United Inns, Inc., a Delaware corporation (the
"Company").
RECITALS
A. Purchaser has agreed, on the terms and subject to the conditions
set forth herein, to make a cash tender offer to acquire all shares of issued
and outstanding common stock, par value $1.00 per share, of the Company (the
"Company Common Stock") (all issued and outstanding shares of Company Common
Stock being hereinafter collectively referred to as the "Shares") at a price of
$25.00 per Share (such amount, or such other amount in cash as Purchaser may pay
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount"),
net to the seller in cash (the "Offer").
B. The Board of Directors of the Company has approved the making of
the Offer and resolved and agreed to recommend that the stockholders of the
Company tender their Shares pursuant to the Offer.
C. In connection with the foregoing, the Board of Directors of the
Company has approved the merger (the "Merger") of Merger Sub with and into the
Company following the Offer in accordance with the General Corporation Law of
the State of Delaware (the "Delaware Law") and upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser, New Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that (i) this Agreement shall not have been terminated
in accordance with Section 8.1 and (ii) none of the events set forth in ANNEX I
hereto shall have occurred or be existing, Purchaser will commence the Offer as
promptly as practicable after the date hereof, but in no
<PAGE>
event later than five business days after the date hereof. Subject to the terms
and conditions of the Offer, Purchaser shall accept for payment and pay for
Shares which have been validly tendered and not withdrawn pursuant to the Offer
at the Per Share Amount net to the Seller in cash at the earliest such time
following expiration of the Offer that all conditions to the Offer shall have
been satisfied or waived by Purchaser. The Offer will not be extended for any
reason except (i) to provide additional time within which to satisfy any
conditions to the Offer which are not satisfied on the expiration date
originally set forth in the Offer to Purchase (as defined below), or (ii) as may
be required by applicable law. The obligation of Purchaser to accept for
payment any Shares tendered pursuant to the Offer will be subject only to the
satisfaction of the conditions set forth in ANNEX I hereto. Purchaser expressly
reserves the right to waive any such condition, to increase the price per Share
payable in the Offer or to make any other changes in the terms and conditions of
the Offer (provided that no change may be made (A) that decreases the price per
Share, payable in the Offer, except for decreases, if any, to reflect the
difference, if any, between 2,704,899 shares and the number of shares of Common
Stock outstanding, calculated on a fully diluted basis, (B) that reduces the
maximum number of Shares to be purchased in the Offer, (C) that changes the form
of consideration to be paid in the Offer, or (D) that imposes conditions to the
Offer in addition to those set forth in ANNEX I hereto). The Offer will be made
by means of an offer to purchase (the "Offer to Purchase") having provisions
consistent in all material respects with the terms set forth in this Agreement
and the conditions set forth in ANNEX I hereto.
(b) As soon as practicable on the date the Offer is commenced,
Purchaser will file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto the "Schedule 14D-1") with respect to the Offer. The
Schedule 14D-1 will contain or incorporate by reference the Offer to Purchase
(or portions thereof) and a form of the related letter of transmittal (such
Schedule 14D-1, Offer to Purchase and other documents, together with all
supplements or amendments thereto, being collectively referred to as the "Offer
Documents"). The Offer Documents will comply in all material respects with the
provisions of the applicable federal securities laws. The Company will
cooperate with Purchaser in its preparation of the Offer Documents. Each of
Purchaser and the Company will promptly correct any information provided by it
for use in the Offer Documents that shall have become false or misleading in any
material respect, and Purchaser will take all steps necessary to cause the
Schedule 14D-1 as so corrected to be
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filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable law.
SECTION 1.2 COMPANY ACTION.
(a) The Company represents and warrants to Purchaser that (i) its
Board of Directors has unanimously (A) approved this Agreement and the
transactions contemplated hereby, (B) resolved to recommend that the
stockholders of the Company accept the Offer and adopt this Agreement, if
necessary under applicable law, and the transactions contemplated hereby, and
(C) determined that the Offer and the Merger are in the best interests of the
holders of Shares; (ii) Smith Barney Inc. ("Smith Barney") has rendered to the
Board of Directors of the Company its written opinion (a true and correct copy
of which has been delivered to Purchaser), to the effect that as of the date of
this Agreement the Per Share Amount to be received by holders of the Shares in
the Offer and the Merger is fair to such holders from a financial point of view,
and (iii) pursuant to Section 203(a)(1) of the Delaware Law, its Board of
Directors has approved the acquisition by Purchaser (or any Affiliate (as
hereinafter defined) thereof) of shares of Company Common Stock pursuant to the
Offer, or pursuant to any other legally permissible purchase of Company Common
Stock at the Per Share Amount with the result that Section 203(a) will not apply
to any subsequent transaction between the Company and Purchaser (or any
Affiliate thereof).
(b) The Company will file with the SEC, contemporaneously with the
filing by Purchaser of the Schedule 14D-1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the recommendation of the Board of
Directors of the Company described in Section 1.2(a) and will disseminate such
Schedule 14D-9 as required by Rule 14d-9 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Purchaser will cooperate
with the Company in its preparation of the Schedule 14D-9. Each of the Company
and Purchaser will promptly correct any information provided by it for use in
the Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further will take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
holders of Shares, in each case as and to the extent required by applicable law.
(c) The Company will promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and security
position listings
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of Shares held in stock depositories, each as of a recent date, and thereafter
will promptly furnish Purchaser with such additional information, including
updated lists of stockholders, mailing labels and security position listings,
and such other assistance as Purchaser or its agents may reasonably request in
connection with the Offer.
(d) Subject to the requirements of law, and except for such steps as
are necessary to disseminate the Offer Documents, Purchaser and each of its
Affiliates and associates will hold in confidence the information contained in
any of such labels and lists, will use such information only in connection with
the Offer, and, if this Agreement shall be terminated, will deliver to the
Company all copies of such information then in their possession.
SECTION 1.3 BOARD OF DIRECTORS OF THE COMPANY.
(a) Upon Purchaser's acquisition of a majority of the outstanding Shares
pursuant to the Offer, Purchaser will be entitled, subject to compliance with
applicable law, to designate up to that number of members, rounded up to the
nearest whole number, of the Company's Board of Directors as will make the
percentage of the members designated by Purchaser equal to the percentage of
outstanding Shares held by Purchaser and its Affiliates (other than the Company
and its Subsidiaries). The Company will increase the size of its Board of
Directors and/or use its reasonable efforts to secure the resignation of such
number of directors as is necessary to enable Purchaser's designees to be
elected to the Company's Board of Directors as hereinabove contemplated and will
cause Purchaser's designees to be so elected effective immediately upon
Purchaser's acquisition of a majority of the outstanding Shares as described
above pursuant to the Offer or otherwise. In addition, the Company will cause
persons designated by Purchaser to constitute the same percentage (rounded up to
the nearest whole number) on each of the following as the designees of Purchaser
then constitute on the Board of Directors of the Company: (i) each committee of
such Board designated by Purchaser, (ii) each board of directors of each
Subsidiary of the Company designated by Purchaser, and (iii) each committee of
each such board designated by Purchaser.
(b) Without limiting the generality or effect of Section 1.3(a), the
Company hereby represents and warrants that the Board of Directors of the
Company duly adopted the written action in lieu of a meeting, attached hereto as
ANNEX I-A, and that such written action is, and as of immediately prior to the
purchase of Shares pursuant to the Offer will be, in full force and effect in
the form so adopted.
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<PAGE>
(c) The Company's obligations to appoint designees to the Company's Board
of Directors will be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company will promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill the Company's obligations under
this Section 1.3, and Purchaser will provide the Company with all necessary
assistance, in order to fulfill the Company's obligations under this Section
1.3. The Company will include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1. Purchaser will supply to the Company any
information with respect to Purchaser and its nominees required by Section 14(f)
and Rule 14f-1 and Purchaser shall be solely responsible for such information.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. On the terms and subject to the conditions
of this Agreement and the applicable provisions of Delaware Law, at the
Effective Time (as hereinafter defined) Merger Sub will be merged with and into
the Company (the "Merger"), the separate corporate existence of Merger Sub will
cease, and the Company will continue as the surviving corporation (the Company
as the surviving corporation after the Merger being sometimes hereinafter
referred to as the "Surviving Corporation").
SECTION 2.2 EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VIII-A, the
parties hereto will cause the Merger to be consummated by filing a certificate
of merger with the Secretary of State of the State of Delaware and making such
other filings as may be required by the Delaware Law, in such form as may be
required by, and executed in accordance with, the relevant provisions of the
Delaware Law. The Merger will become effective at the time of the filing of
such certificate of merger (the "Effective Time").
SECTION 2.3 EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger will be as provided in the applicable provisions of the Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time
all the property, rights, privileges, powers and franchises of the Company and
Merger Sub will vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub will become the debts, liabilities and
duties of the Surviving Corporation.
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SECTION 2.4 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) The Certificate of Incorporation of the Surviving Corporation to
be in effect from and after the Effective Time until amended in accordance with
its terms and the Delaware Law will be the Certificate of Incorporation of the
Company, as amended and restated in the form of ANNEX II hereto.
(b) The By-Laws of the Surviving Corporation to be in effect
immediately from and after the Effective Time until amended in accordance with
its terms and the Delaware Law will be the By-Laws of the Company, as amended
and restated in the form of ANNEX III hereto.
SECTION 2.5 DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation, and the officers of Merger Sub immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.6 CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or New Parent,
(a) each Share of Company Common Stock, issued and outstanding
immediately prior to the Effective Time (other than Company Common Stock held by
New Parent and any Dissenting Shares (as hereinafter defined)) will be converted
into and become the right to receive the Per Share Amount, in cash, without
interest thereon;
(b) each Share of Company Common Stock held in the Company's
treasury, by any Subsidiary of the Company or by New Parent immediately prior to
the Effective Time will be cancelled without the payment of any consideration
therefor;
(c) each Share of common stock, par value $0.01 per share, of Merger
Sub ("Merger Sub Common Shares") issued and outstanding immediately prior to the
Effective Time will be converted into and become one share of Common Stock, par
value $0.01 per share, of the Surviving Corporation ("Surviving Corporation
Common Share"); and
(d) each Merger Sub Common Share held in Merger Sub's treasury or by
any Subsidiary of Merger Sub
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immediately prior to the Effective Time will be cancelled without the payment of
any consideration therefor.
SECTION 2.7 DISSENTING SHARES
(a) Notwithstanding any provision of this Agreement to the contrary,
any Company Common Stock held by a holder who has demanded and perfected the
right for appraisal of such shares in accordance with the Delaware Law and who,
as of the Effective Time, has not effectively withdrawn or lost such right to
such appraisal ("Dissenting Shares"), will not be converted into or represent a
right to receive the Per Share Amount in cash pursuant to Section 2.6, but the
holder thereof will be entitled only to such rights as are granted by the
Delaware Law.
(b) Notwithstanding the provisions of Section 2.7(a), if any holder
of Company Common Stock who demands appraisal of such shares under the Delaware
Law shall effectively withdraw or lose (through failure to perfect or otherwise)
the right to such appraisal, then, as of the later of the Effective Time or the
occurrence of such event, such holder's shares will automatically be converted
into and represent only the right to receive the Per Share Amount in cash as
provided in Section 2.6, without interest thereon, upon surrender of the
certificate or certificates evidencing such shares in the manner provided by
Section 2.8.
(c) The Company will give New Parent (i) prompt notice of any written
demands for appraisal of any Company Common Stock, withdrawals of such demands,
any other instruments served pursuant to the Delaware Law and received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the Delaware Law. The Company will not,
except with the prior written consent of New Parent, voluntarily make any
payment with respect to any demands for appraisal of Company Common Stock or
offer to settle or settle any such demands.
SECTION 2.8 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) New Parent will act or appoint a bank or trust company or other
entity with fiduciary powers to act as agent for the holders of Company Common
Stock (in such capacity, the "Exchange Agent") to receive and disburse the funds
to which holders of Company Common Stock shall become entitled pursuant to
Section 2.6.
(b) Promptly after the Effective Time, New Parent will cause to be
mailed to each Person who was, at the
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Effective Time, a holder of record of Company Common Stock entitled to receive
the Per Share Amount in cash pursuant to Section 2.6 a form of letter of
transmittal and instructions for use in effecting the surrender of the
certificates (mutually agreed to by New Parent and the Company) that,
immediately prior to the Effective Time, evidenced Company Common Stock to be
exchanged pursuant to the Merger. Upon surrender to the Exchange Agent of such
certificates, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be reasonably requested, New Parent will promptly cause to be
delivered to the Persons entitled thereto the Per Share Amount in cash to which
the former holder of Company Common Stock shall have become entitled pursuant to
Section 2.6. Until so surrendered and exchanged, each such certificate that
immediately prior to the Effective Time evidenced Company Common Stock shall,
after the Effective Time, be deemed to evidence only the right to receive the
Per Share Amount in cash to which the holder thereof is entitled pursuant to
Section 2.6. No interest will be paid or will accrue on such amount payable in
cash upon surrender of such certificate.
(c) If payment of the Per Share Amount in cash in respect of
cancelled Company Common Stock is to be made to a Person other than the Person
in whose name the surrendered certificate formerly evidencing such Company
Common Stock is registered, it will be a condition to such payment that the
certificate so surrendered be properly endorsed or otherwise in proper form for
transfer and that the Person requesting such payment shall have paid any
transfer and other taxes required by reason of such payment or shall have
established to the satisfaction of the Exchange Agent that such tax either has
been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
will be closed and there will be no further registration of transfers of Company
Common Stock thereafter on the records of the Company.
(e) From and after the Effective Time, the holders of certificates
evidencing ownership of Company Common Stock outstanding immediately prior to
the Effective Time will cease to have any rights with respect to such shares
except as otherwise provided herein or by law.
(f) Notwithstanding anything to the contrary in this Section 2.8,
none of New Parent, the Exchange Agent (if other than New Parent) and the
Surviving Corporation will be liable to a holder of a certificate or
certificates formerly evidencing Company Common Stock for any amount properly
paid
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to a public official pursuant to any applicable property, escheat or similar
law.
ARTICLE III-A
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company that:
SECTION 3A.1 ORGANIZATION. Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority and any necessary
governmental authority to own, operate or lease the properties that it purports
to own, operate or lease and to carry on its business as it is now being
conducted, except where the failure of the foregoing to be true would not have a
material adverse effect on Purchaser's ability to perform its obligations under
this Agreement.
SECTION 3A.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has all
necessary limited partnership power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Agreement by Purchaser, the performance by Purchaser of its obligations
hereunder and the consummation by Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary limited partnership action on
the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and, assuming the due authorization, execution and delivery by the
Company, this Agreement constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
SECTION 3A.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution, delivery and performance of this Agreement do not
and will not (i) conflict with or violate any material law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award applicable to
Purchaser or by which Purchaser or any of its properties is bound or affected,
(ii) violate or conflict with the partnership agreement of Purchaser or the
constituent documents of any of its partners, or (iii) result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or
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result in the creation of any Encumbrance (as hereinafter defined) on any of the
property or assets of Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Purchaser is a party or by which Purchaser or
any of its properties may be bound or affected, except where the failure of the
foregoing to be true would not have a material adverse effect on Purchaser's
ability to perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
or any third party or parties, except (i) for (A) applicable requirements, if
any, of the Exchange Act, state securities laws ("Blue Sky laws") and state
takeover laws, (B) the notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and (C) approvals under relevant state environmental
control laws, and (ii) where failure to obtain such consents, approvals,
authorizations or actions, or to make such filings or notifications, would not
prevent Purchaser from performing its obligations under this Agreement.
SECTION 3A.4 OFFER DOCUMENTS. The Offer Documents (and any other
documents required to be filed with the SEC by Purchaser in connection with the
transactions contemplated hereby) will not, at the time the Offer Documents or
such other documents (including any amendments or supplements thereto) are filed
with the SEC or are first published, sent or given to stockholders, as the case
may be, contain any untrue statement of material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, Purchaser makes no representation or warranty with respect to any
Company Information (as hereinafter defined) contained in any of the Offer
Documents (or such other documents). The Offer Documents (and any other
documents required to be filed with the SEC by Purchaser in connection with the
transactions contemplated hereby) and any amendments or supplements thereto will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder.
SECTION 3A.5 FINANCING. Purchaser will have available or will cause
to be made available all the funds necessary to pay for the Shares pursuant to
the Offer and the Merger.
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SECTION 3A.6 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Purchaser.
ARTICLE III-B
REPRESENTATIONS AND WARRANTIES OF NEW PARENT AND MERGER SUB
New Parent and Merger Sub hereby represent and warrant to the Company
that:
SECTION 3B.1 CORPORATE ORGANIZATION. Each of New Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite power and authority and
any necessary governmental authority to own, operate or lease the properties
that it purports to own, operate or lease and to carry on its business as it is
now being conducted, except where the failure of the foregoing to be true would
not have a material adverse effect on its ability to perform its obligations
under this Agreement.
SECTION 3B.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of New
Parent and Merger Sub has all necessary corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement by each of New Parent and Merger
Sub, the performance by New Parent and Merger Sub of their respective
obligations hereunder and the consummation by each of New Parent and Merger Sub
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of New Parent and Merger Sub. This
Agreement has been duly executed and delivered by each of New Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the other
parties hereto and thereto, this Agreement constitutes the legal, valid and
binding obligation of each of New Parent and Merger Sub, enforceable against
each of New Parent and Merger Sub in accordance with its terms.
SECTION 3B.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution, delivery and performance of this Agreement by New
Parent or Merger Sub do not and will not (i) conflict with or violate any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to New Parent or Merger Sub or by which either
of New Parent or Merger Sub or any of
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their respective properties is bound or affected, (ii) violate or conflict with
the Certificate of Incorporation or By-Laws of New Parent or the Certificate of
Incorporation or By-laws of Merger Sub, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the property or assets of New Parent or Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which New Parent
or Merger Sub is a party or by which New Parent or Merger Sub or any of their
respective properties may be bound or affected, except where the failure of the
foregoing to be true would not have a material adverse effect on the ability of
either New Parent or Merger Sub to perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement by New Parent and
Merger Sub do not, and the performance of this Agreement by New Parent and
Merger Sub will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, or any third party or parties, except (i) for
(A) applicable requirements, if any, of the Exchange Act, Blue Sky laws and
state takeover laws, (B) the notification requirements of the HSR Act,
(C) approvals under relevant state environmental control laws, and (D) the
filing of a Certificate of Merger in accordance with the Delaware Law, and
(ii) where failure to obtain such consents, approvals, authorizations or
actions, or to make such filings or notifications, would not prevent New Parent
or Merger Sub from performing its obligations under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser, New Parent
and Merger Sub that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of
the Company and each of its Subsidiaries (as hereinafter defined) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and any necessary governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified
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or licensed to do business as a foreign corporation in good standing in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification or license necessary,
except as disclosed in SCHEDULE 4.1, PART A of the Disclosure Schedule attached
as ANNEX IV hereto (the "Disclosure Schedule"), or except where such failure
would not have a Material Adverse Effect. The term "Material Adverse Effect" as
used in this Agreement means the existence or occurrence of any event or
circumstance which would have a material adverse affect on the business,
operations, property or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole. A true and complete list of all the
Company's Subsidiaries, together with the jurisdiction of incorporation of each
such Subsidiary and the percentage of each such Subsidiary's outstanding capital
stock owned by the Company or another Subsidiary, is set forth in SCHEDULE 4.1,
PART B of the Disclosure Schedule. For purposes of this Agreement, a
"Subsidiary" of a Person (as hereinafter defined) means any corporation,
partnership, joint venture, association or other entity, wherever and however
organized, in which such Person owns directly or indirectly or has the right to
acquire any capital stock, equity or beneficial interest, is a partner, or
otherwise controls management of, by having the right or ability to designate a
majority of the directors or members of the governing body thereof, whether by
agreement or otherwise.
SECTION 4.2 CERTIFICATES OF INCORPORATION AND BY-LAWS. The Company
has heretofore furnished, or has made available, to Purchaser a complete and
correct copy of the Certificates of Incorporation and the By-Laws or equivalent
organizational documents, each as amended to date, of the Company and each of
its Subsidiaries. Such Certificates of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither the Company nor
any of its Subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws or equivalent organizational documents.
SECTION 4.3 CAPITALIZATION; VALIDITY OF THE SHARES. The authorized
capital stock of the Company consists of 10,000,000 shares of Company Common
Stock. As of the date hereof, (i) 2,665,899 shares of Company Common Stock are
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable, (ii) 1,451,914 shares of Company Common Stock are held
in the treasury of the Company, of which 39,000 shares are subject to being
issued upon the exercise of outstanding options, (iii) no shares of Company
Common Stock are held by Subsidiaries of the Company, and (iv) 300,000 shares of
Company Common Stock are reserved for issuance pursuant to
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the Company's 1993 Stock Incentive Plan. Except for the obligations under this
Agreement and as set forth in SCHEDULE 4.3, PART A of the Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock or other equity
interests in the Company or any of its Subsidiaries. Except as set forth in
SCHEDULE 4.3, PART B of the Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity. Each of the outstanding
shares of capital stock of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in SCHEDULE 4.3, PART C of the Disclosure Schedule, such shares are owned
by the Company, directly or indirectly, free and clear of any and all liens,
claims, charges, encumbrances, restrictions on voting or alienation or
otherwise, or adverse interests (collectively, "Encumbrances").
SECTION 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
all necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder 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 the adoption of this Agreement by the Company's
stockholders, if required by applicable law. This Agreement has been duly
executed and delivered by the Company and, assuming due authorization, execution
and delivery by the other parties hereto, this Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
SECTION 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution, delivery and performance of this Agreement by the
Company do not and will not (i) conflict with or violate any material law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Company or any of its Subsidiaries or by which any of its or
any of their respective properties are bound or affected, (ii) violate or
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conflict with the Certificates of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of the Subsidiaries, or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of any Encumbrance on any of the properties or assets of the
Company or any of its Subsidiaries, pursuant to (A) any note, bond, mortgage,
indenture or other evidence of indebtedness, except as set forth in
SCHEDULE 4.5, PART A of the Disclosure Schedule, (B) any contract, service
agreement, lease, license or permit, except as set forth in SCHEDULE 4.5, PART B
of the Disclosure Schedule, or (C) any franchise instrument or obligation
related thereto, except as set forth in SCHEDULE 4.5, PART C of the Disclosure
Schedule, in each case to which the Company or any of its Subsidiaries is a
party or by any of which the Company or any of its Subsidiaries or any of its or
any of their respective properties may be bound or affected, where such breach,
default, termination, acceleration, cancellation, or Encumbrance would have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
or any third party or parties, except (i) for (A) applicable requirements, if
any, of the Exchange Act, Blue Sky laws and state takeover laws, (B) the
notification requirements of the HSR Act, (C) approvals under relevant state
environmental control laws, and (D) the filing of a Certificate of Merger in
accordance with the Delaware Law, (ii) as set forth in SCHEDULE 4.5, PART D of
the Disclosure Schedule, and (iii) where failure to obtain such consents,
approvals, authorizations or actions, or to make such filings or notifications,
would not prevent the Company from performing its obligations under this
Agreement and would not have a Material Adverse Effect.
SECTION 4.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required
to be filed with the SEC since September 30, 1989, and has heretofore delivered
or will promptly deliver to Purchaser for the fiscal years ended September 30,
1992, September 30, 1993 and September 30, 1994, (i) its Annual Reports on
Form 10-K (it being acknowledged that the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994 may not be available prior to the
expiration of the Offer and has not yet been filed), (ii) all definitive proxy
statements
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relating to the Company's meetings of stockholders (whether annual or special),
and (iii) all other reports, registration statements or schedules filed by the
Company with the SEC, including all Quarterly Reports on Form 10-Q for the
Company's Fiscal Year ended September 30, 1994 (all such forms, reports,
documents and statements being hereinafter called, collectively, the "SEC
Reports"). The SEC Reports (i) were or will be prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and (ii) did not or will not at the
time they were or will be filed contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were or will be made, not misleading. None of the Subsidiaries of
the Company is required to file any reports, statements, forms or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the SEC Reports has been or will be
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be otherwise
indicated in the notes thereto) and each fairly presents either, as the case may
be, the consolidated financial position of the Company and its Subsidiaries at
the respective dates thereof or the consolidated results of its operations or
changes in financial position for the period indicated.
(c) Except as and to the extent set forth on the unaudited trial
balance of the Company and its Subsidiaries as of August 31, 1994 (the "Trial
Balance"), and except for liabilities with respect to the transactions
contemplated hereby, and except as set forth in SCHEDULE 4.6 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liabilities or
obligations whether or not accrued, contingent or otherwise that would be
required to be included on a balance sheet prepared in accordance with generally
accepted accounting principles, except for liabilities or obligations incurred
in the ordinary course of business consistent with past practices since
August 31, 1994 (which liabilities or obligations would not, individually or in
the aggregate, have a Material Adverse Effect). The Trial Balance is subject to
adjusting and consolidating and reclassification entries to properly categorize
asset, liability and equity accounts for presentation of a balance sheet
prepared in accordance with generally accepted accounting principles.
Substantially all such required entries were reflected in the Company's balance
sheet included in the Company's quarterly report on SEC Form 10-Q for the
quarterly period ending June 30, 1994.
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(d) The Company has heretofore furnished to Purchaser true and
complete copies of all amendments or modifications, which have not yet been
filed with the SEC, to the agreements, documents and other instruments which
previously have been filed by the Company with the SEC pursuant to the Exchange
Act.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since August 31,
1994, except as contemplated in this Agreement or as disclosed in SCHEDULE 4.7
of the Disclosure Schedule, (i) there has not been (A) any event with respect to
the Company or any of its Subsidiaries having a Material Adverse Effect, (B) any
change by the Company in its accounting principles or practices (other than
changes required by changes in generally accepted accounting principles),
(C) any declaration, payment or setting aside for payment of any dividends, or
any redemption, purchase or other acquisition of any securities of the Company,
or (D) any revaluation by the Company of any of its assets, including without
limitation any writing down of the value of inventory or writing off of notes or
accounts receivable other than in the ordinary course of business consistent
with past practices, (ii) the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course of business consistent with
past practices and have not made any material change in the conduct of the
business or operations of the Company or any of its Subsidiaries, and (iii) the
Company has not made any increase in the compensation payable or to become
payable by the Company and its Subsidiaries to their employees, and the Company
has not entered into or made any increase in any bonus, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any
such employees, except in the ordinary course of business consistent with past
practices.
SECTION 4.8 ABSENCE OF LITIGATION. Except as disclosed in the SEC
Reports or in SCHEDULE 4.8, PART A of the Disclosure Schedule, there are no
claims, actions, suits, proceedings or investigations pending or, to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or any properties or rights of the Company or any of its
Subsidiaries, before any court, arbitrator, or administrative, governmental or
regulatory authority or body, domestic or foreign, that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect. As of the
date hereof, except as disclosed in SCHEDULE 4.8, PART B of the Disclosure
Schedule, none of the Company, its Subsidiaries or any of their respective
properties is subject to any order, writ, judgment, injunction, decree,
determination or award having a Material Adverse Effect.
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SECTION 4.9 EMPLOYEE BENEFIT PLANS. SCHEDULE 4.9 of the Disclosure
Schedule lists all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other material fringe or employee benefit
plans, programs or arrangements, and any employment or compensation agreements,
written or otherwise, for the benefit of, or relating to, any employee of the
Company or any of its Subsidiaries (the "Employee Plans"). Except as otherwise
disclosed in SCHEDULE 4.9 of the Disclosure Schedule, none of the Employee Plans
is a multiemployer plan, as defined in Section 4001(a)(3) of ERISA (a
"Multiemployer Plan"). There have been no "prohibited transactions", as such
term is defined in Section 406 of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), with respect to any Employee Plan. All
Employee Plans are in compliance in all material respects with the requirements
prescribed by any and all applicable statutes, orders or governmental rules or
regulations currently in effect with respect thereto, and the Company and each
of its Subsidiaries have performed in all material respects all obligations
required to be performed by them under, are not in default under or in violation
of, and have no knowledge of any default or violation by any other party to, any
of the Employee Plans. Each Employee Plan intended to qualify under
Section 401(a) of the Code has heretofore been determined by the Internal
Revenue Service (the "IRS") to so qualify, and each trust created thereunder has
heretofore been determined by the IRS to be exempt from tax under the provisions
of Section 501(a) of the Code, and nothing has since occurred which may
reasonably be expected to cause the loss of such qualification or exemption. No
Employee Plan subject to Part 3 of Subtitle I of ERISA or Section 412 of the
Code has incurred any "accumulated funding deficiency" (as defined in ERISA or
the Code), whether or not waived. Except as set forth in SCHEDULE 4.9 of the
Disclosure Schedule, with respect to each Employee Plan subject to Title IV of
ERISA, no "reportable event" within the meaning of Section 4043 of ERISA nor any
event described in Section 4062, 4063 or 4041 of ERISA has occurred which could
result in liability to the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries has incurred or reasonably expects to incur
any liability under Title IV of ERISA with respect to any Employee Plan (other
than a liability for premiums pursuant to Section 4007 of ERISA). All
contributions required to be made to any Employee Plan have been made on or
before their due dates. The Company has no obligation to make payments in
respect of retiree health care or death benefits. With respect to each Employee
Plan, the Company has furnished Purchaser with true and correct copies of
(i) such Employee
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Plan, (ii) each summary plan description and summary of material modification,
(iii) the most recently filed IRS Form 5500, and (iv) the most recently received
IRS determination letter.
SECTION 4.10 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth in SCHEDULE 4.10, PART A of the Disclosure
Schedule, (i) neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or agreement of any kind with any union or labor
organization, (ii) no union or other collective bargaining unit has been
certified or recognized by the Company or any of its Subsidiaries as
representing any employee thereof nor is a union or other collective bargaining
unit seeking recognition for such purpose, (iii) there are no controversies
pending or, to the best knowledge of the Company, threatened between the Company
or any of its Subsidiaries and any labor union or collective bargaining unit
representing, or seeking to represent, any employees of the Company, and
(iv) neither the Company nor any of its Subsidiaries has received notice that
there has been any attempt by any union or other labor organization to organize
any employees of the Company or any of its Subsidiaries at any time since
October 1, 1989. Except as set forth in SCHEDULE 4.10, PART B of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received notice or
charges that it has not complied with all its obligations under the National
Labor Relations Act, as amended, Title VII of the Civil Rights Act of 1964, as
amended, the Age Discrimination in Employment Act, as amended, or any other
federal, state and local labor or labor-related laws applicable to persons
employed in connection with the businesses of the Company or any of its
Subsidiaries, including without limitation those laws, rules and regulations
relating to wages, hours, health and safety, payment of social security
withholding and other taxes, maintenance of workers' compensation insurance,
labor and employment relations and employment discrimination. Except as set
forth in SCHEDULE 4.10, PART C of the Disclosure Schedule, the consent of the
unions which are parties to the collective bargaining agreements of the Company
or any of its Subsidiaries is not required to consummate the transactions
contemplated by this Agreement.
(b) SCHEDULE 4.10, PART D of the Disclosure Schedule lists all material
employment, consulting and severance agreements to which the Company or any of
its Subsidiaries is a party with any of their respective employees and
consultants, including any such agreements providing for the payment of
severance or other compensation, or the vesting of options, in the event of a
change in Control of the Company or such Subsidiary.
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SECTION 4.11 OFFER DOCUMENTS, ETC. Neither the Schedule 14D-9, nor
any Company Information (as hereinafter defined) contained in the Offer
Documents will, at the respective times the Schedule 14D-9, the Offer Documents
and any amendments thereof or supplements thereto are or were filed with the SEC
or are first published, sent or given to stockholders, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. For the purposes of this Agreement, the term "Company Information"
means all information with respect to the Company and its Affiliates provided
specifically for use in the Offer Documents or derived from the SEC Reports.
The Schedule 14D-9 will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 4.12 TAXES. Except as disclosed in SCHEDULE 4.12 of the
Disclosure Schedule, each of the Company and each of its Subsidiaries has timely
filed all tax returns and reports, including information returns and reports,
required to be filed by it. Except as disclosed in the SEC Reports, each of the
Company and each of its Subsidiaries has timely paid, or has timely withheld and
paid over, to the proper authority (or the Company has paid, or withheld and
paid over, on its behalf) all Taxes (as hereinafter defined) required to be paid
or withheld by it, and the Trial Balance reflects an adequate reserve for all
Taxes payable by the Company and its Subsidiaries for all taxable periods and
portions thereof through September 30, 1994. Except as disclosed in the SEC
Reports or in SCHEDULE 4.12 of the Disclosure Schedule, no deficiencies for any
Taxes have been proposed, asserted or assessed against the Company or any of its
Subsidiaries, and no requests for waivers of the time to assess any such Taxes
have been granted or are pending. The Company's Federal income tax returns for
all periods through September 30, 1986, have been accepted by the IRS. The
statute of limitations has expired with respect to the Company's fiscal years
ended 1987 through 1990. Except as disclosed in SCHEDULE 4.12, the "Deferred
Taxes" as shown in the Trial Balance represents an adequate reserve for all
amounts of income realized but not recognized prior to the date thereof by the
Company and its Subsidiaries whether by reason of the use of any method of
accounting (including the installment method), the existence of deferred
intercompany transactions or otherwise, which are required to be reserved in
accordance with generally accepted accounting principles. (As used in this
Agreement, the term "Taxes" includes all Federal, state, local and foreign
income, property, sales, excise and other taxes or similar charges of any nature
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whatsoever, including any interest, penalties and additions to tax.)
SECTION 4.13 ENVIRONMENTAL. Except as disclosed by the environmental
audits and reports listed in SCHEDULE 4.13, PART A of the Disclosure Schedule,
copies of which have heretofore been delivered to Purchaser, or in
SCHEDULE 4.13, PART B, SCHEDULE 4.13, PART C and SCHEDULE 4.13, PART D of the
Disclosure Schedule, each of the representations and warranties set forth in
paragraphs (a) through (g) of this Section 4.13 is true and correct with respect
to each parcel of real property owned, leased, operated or used by the Company
or any Subsidiary or Affiliate of the Company or any predecessor of any of the
foregoing Persons if any of the foregoing Persons may have liability as a result
thereof (the "Properties"), except as circumstances giving rise to any such
failure to be so true and correct would not have a Material Adverse Effect:
(a) The Properties do not contain, and have not previously contained,
therein, thereon or thereunder, including without limitation the soil and
groundwater thereunder, any Hazardous Materials (as hereinafter defined) in
concentrations which violate Environmental Laws (as hereinafter defined).
(b) The Properties, and all operations and facilities at the
Properties, are in compliance with all Environmental Laws, and there is no
Hazardous Materials contamination or violation of any Environmental Law
that would interfere with the continued operation of any of the Properties
or impair the fair saleable value thereof.
(c) Neither the Company nor any of its Subsidiaries has received any
written complaint, or notice of violation, alleged violation,
investigation, advisory action, potential liability or potential
responsibility regarding environmental protection matters or compliance
with any permit with regard to the Properties, nor to the best knowledge of
the Company is any governmental authority contemplating delivering to the
Company or any of its Subsidiaries any such notice.
(d) Except in compliance with Environmental Laws, Hazardous Materials
have not been generated, released, treated, stored or disposed of at, on or
under any of the Properties, nor have any Hazardous Materials been
transferred from the Properties to any other location.
(e) There are no governmental, administrative or judicial actions or
proceedings pending or to the best
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knowledge of the Company contemplated under any Environmental Laws to which the
Company or any of the Subsidiaries is or will be named as a party with respect
to the Properties, nor are there any consent decrees, other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements, outstanding under any Environmental Law with respect to
any of the Properties.
(f) Except as disclosed in Schedule 4.13, Part C, there are no
underground storage tanks located on the Properties.
(g) Except as disclosed in Section 4.13, Part D, there are no claims
associated with any underground storage tanks previously located on the
Properties.
For the purposes of this Agreement the following terms have the following
meanings: (i) "Environmental Laws" means any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or requirements of any governmental authority regulating, relating to or
imposing liability or standards of conduct concerning public or occupational
health and safety, the environment or any Hazardous Material as now in effect
and applied, or as in effect and applied at the time the event occurred which
gave rise to the alleged violation, as the case may be, and (ii) "Hazardous
Materials" means (A) petroleum and petroleum products, radioactive materials,
asbestos in any form that is or could become friable, transformers or other
equipment that contained polychlorinated biphenyls, and radon gas, (B) any other
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any applicable Environmental Law, and (C) any other chemical, material or
substance exposure to which is regulated by any governmental authority.
SECTION 4.14 BROKERS. No broker, finder or investment banker (other
than Smith Barney and Laurence Geller/Geller and Co.) is entitled to any
brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based
upon arrangements made by and on behalf of the Company or any of its
Subsidiaries. The Company has heretofore furnished or made available to
Purchaser a complete and correct copy of all agreements between the Company
and Smith Barney and the Company and Laurence Geller/Geller and Co. pursuant to
which such firms would be
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entitled to any payment relating to the transactions contemplated by this
Agreement.
SECTION arsi BREACHES, VIOLATIONS AND DEFAULTS. Except as set forth
on SCHEDULE 4.15 of the Disclosure Schedule, or except where any of the
following described events or occurrences would not reasonably be expected to
have a Material Adverse Effect, neither the Company nor any of its Subsidiaries
is (a) in breach of or default under, nor has an event occurred which, with
notice or lapse of time or both, would become a default under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of an Encumbrance on any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, (i) any note, bond, mortgage,
indenture or other evidence of indebtedness, (ii) any contract, service
agreement, lease, license or permit, or (iii) any franchise instrument or
obligation related thereto, in each case to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of its or any of their respective properties may be bound or affected, or
(b) in violation of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Company or any of
its Subsidiaries or by which any of its or any of their respective properties
are bound or affected.
ARTICLE V
CONDUCT OF BUSINESS PENDING COMPLETION OF THE MERGER
SECTION 5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Between the date of this Agreement and the Effective Time, except as otherwise
provided in this Agreement or unless Purchaser shall otherwise agree in writing,
the businesses of the Company and its Subsidiaries will be conducted only in,
and the Company and its Subsidiaries will not take any action except in, the
ordinary course of business consistent with past practices. The Company further
will (i) use its reasonable best efforts to (A) preserve substantially intact
the business organization of the Company and its Subsidiaries, (B) keep
available the services of the present officers, employees and consultants of the
Company and its Subsidiaries, and (C) preserve the present relationships of the
Company and its Subsidiaries with customers, suppliers and other Persons with
which the Company or any of its Subsidiaries has significant business relations,
(ii) continue in full force and effect without material modification all
existing policies or binders of insurance currently maintained in respect of the
Company and each of its Subsidiaries and their respective assets, and (iii) pay,
and cause each of
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its Subsidiaries to pay, its indebtedness and otherwise discharge its
liabilities punctually when and as the same becomes due and payable and perform
and observe, and to cause each of its Subsidiaries to perform and observe, its
duties and obligations under its material contracts.
By way of amplification and not in limitation of the foregoing, and,
except as expressly contemplated by this Agreement, neither the Company nor any
of its Subsidiaries will, between the date of this Agreement and the Effective
Time, directly or indirectly, do, or propose to do, any of the following without
the prior written consent of Purchaser:
(i) amend or otherwise change its Certificate of Incorporation
or By-Laws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, (A) any shares
of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interests, of the Company or any
of its Subsidiaries, except for the issuance of shares pursuant to the
options, warrants, or other rights or arrangements set forth in
SCHEDULE 4.3, PART A of the Disclosure Schedule, or (B) any assets of
the Company or any of its Subsidiaries, except for the disposition of
the assets and properties listed in SCHEDULE 5.1, PART A of the
Disclosure Schedule and except for the sale of non-material assets in
the ordinary course of business consistent with past practices;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(v) (A) acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof; (B) incur any indebtedness or issue
any debt securities or assume, guarantee or endorse or otherwise as an
accommodation or become responsible for, the obligations of any
Person, or make any loans or advances; (C) except for the
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contracts and agreements set forth in SCHEDULE 5.1, PART B of the
Disclosure Schedule, enter into any contract or agreement and except
for those non-material contracts and agreements entered into in the
ordinary course of business consistent with past practices; (D) except
as set forth in SCHEDULE 5.1, PART C of the Disclosure Schedule,
authorize new capital expenditures, other than expenditures incurred
in the ordinary course of business consistent with past practices or
is required by the direction or acts of a franchisor and expenditures
required by governmental direction; or (E) except as set forth in
SCHEDULE 5.1, PART D of the Disclosure Schedule, amend any contract,
agreement, commitment or arrangement with respect to any of the
matters set forth in this Section 5.1(v);
(vi) except as set forth in Schedule 5.1, Part E, or as may be
necessary to comply with applicable law, increase the compensation
payable or to become payable to, or grant or pay any severance or
termination pay to, the officers or employees of the Company or its
Subsidiaries, except for increases in salary or wages of employees of
the Company or its Subsidiaries in accordance with existing policies
or past practice, and except pursuant to the terms of contracts,
policies or benefit arrangements in effect on the date hereof, enter
into any employment or severance agreement with, any director, officer
or other employee of the Company or any of its Subsidiaries, or
establish, adopt, enter into or amend any bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, termination severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any of the directors, officers or employees of the Company or its
Subsidiaries;
(vii) take any action other than in the ordinary course of
business consistent with past practices (none of which actions shall
be unreasonable or unusual) with respect to accounting policies or
procedures (including without limitation procedures with respect to
the payment of accounts payable and collection of accounts
receivable);
(viii) make any Tax election or settle or compromise any Tax
liability; or
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(ix) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction of the same in the
ordinary course of business consistent with past practices (including
payment of the Company's liabilities in accordance with their terms).
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 PROXY STATEMENT. Following the completion of the Offer
and if required by the Exchange Act, the Company will as promptly as practicable
prepare and file with the SEC a preliminary proxy statement, related proxy
materials and any other information statements or reports that may be required
by applicable law (collectively, and, together with any amendments or
supplements thereto, the "Proxy Statement") to be used in soliciting proxies of
the stockholders of the Company in connection with the United Stockholders'
Meeting (as hereinafter defined) or in respect of the Merger. The Proxy
Statement will contain the recommendation of the Board of Directors of the
Company as then constituted substantially to the effect that stockholders vote
in favor of the Merger and the approval and adoption of this Agreement. The
Company will use reasonable efforts to respond to any comments of the SEC or its
staff and have the Proxy Statement cleared by the SEC and to cause a definitive
Proxy Statement to be mailed to the stockholders of the Company as soon as
practicable thereafter. Each party hereto represents and warrants to the other
that the information supplied in writing by such party specifically for
inclusion in the Proxy Statement, at the time first mailed, the time of the
United Stockholders' Meeting and at the Effective Time, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of circumstances under which they were made, not misleading. Each party hereto
will promptly notify the other party hereto if at any time before the Effective
Time it becomes aware (i) that the Proxy Statement contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading or (ii) that an event
shall have occurred that should be set forth in an amendment or a supplement to
the Proxy Statement. In such event, the Company will prepare a supplement
correcting such misstatement or omission, and will cause the same to be
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filed with the SEC and distributed to the stockholders of the Company. The
Company will pay all fees, costs and expenses of the preparation, filing and
clearance of the Proxy Statement and all other costs and expenses relating to
the solicitation of proxies and the United Stockholders' Meeting.
SECTION 6.2 MEETING OF STOCKHOLDERS OF THE COMPANY. If required
following the completion of the Offer, the Company will promptly take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and By-Laws to duly call, give notice of, convene and hold a
meeting of its Stockholders (the "United Stockholders' Meeting") to consider and
vote upon the approval and adoption of the Merger. The Company will use its
best efforts to solicit from the stockholders of the Company proxies in favor of
the Merger and the adoption of this Agreement and will take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the Delaware Law to effect the Merger and the other transactions contemplated
hereby. Purchaser agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Purchaser or any Affiliate thereof to be voted in
favor of the approval of the Merger.
SECTION 6.3 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, the Company will, and
will cause its Subsidiaries, officers, directors, employees, auditors and agents
to, afford the officers, employees and agents of Purchaser reasonable access to
its officers, employees, agents, properties, offices, plants, other facilities
and to all books and records, and will furnish Purchaser with all financial,
operating and other data and information as Purchaser, through its officers,
employees or agents, may reasonably request.
(b) Purchaser will comply with the provisions with respect to
confidentiality set forth in the letter agreement, dated July 14, 1994, between
the Company and Hampstead Investments, Inc., as if it were a party thereto.
(c) No investigation pursuant to this Section 6.3 or otherwise will
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto.
SECTION 6.4 NO SOLICITATION OF TRANSACTIONS.
(a) The Company represents and warrants that, on November 4, 1994 it
ceased and caused to be terminated any
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existing negotiations, or prior negotiations with any Person previously
conducted, with respect to a business combination with the Company or a change
in control of the Company (a "Change in Control Transaction"). From and after
the execution and delivery of this Agreement, the Company will not, and will
cause its Affiliates and its or their representatives not to, solicit any offers
from any Person in respect of, or, except as provided in Section 6.4(b), engage
in any negotiations relating to or provide any information in respect of, any
Change of Control Transaction.
(b) (i) In the event that, after execution of this Agreement, any
Person, other than a Person who participated in the process pursuant to which
the Company selected the Purchaser to make the Offer and effect the Merger
["Prior Person"] publicly announces or notifies the Company in writing that it
intends to commence a tender or exchange offer to purchase Shares on financial
and legal terms which the Board of Directors of the Company determines, based
upon advice from the Company's independent financial and legal advisors, are
more favorable to the Company than those contemplated by this Agreement (an
"Unsolicited Proposal"), the Company will notify Purchaser in writing of each
such Unsolicited Proposal. Such notice ("Proposal Notice") will state the terms
and conditions of such Unsolicited Proposal and the identity of the Person
making it (together with a copy of such Unsolicited Proposal) by 5:00 p.m.
Eastern Time on the business day next following the business day on which it
receives notice of the Unsolicited Proposal. If the Board of Directors of the
Company determines, based upon advice from the Company's independent legal
advisors, that its fiduciary duties under applicable law require that the
Company commence negotiations with respect to such Unsolicited Proposal or
furnish information in respect thereof (which determination shall be made
promptly after receipt of the Unsolicited Proposal, and which determination
shall be communicated to Purchaser by facsimile transmission prior to
commencement of such negotiations), Purchaser will have the option to terminate
the Agreement, whereupon Purchaser will be entitled to its expenses as provided
in Section 8.3(b) and the applicable termination fee as provided in Section
8.3(c). If Purchaser elects to so terminate this Agreement, Purchaser will, as
soon as practicable, advise the Company of such election by delivery of a
facsimile transmission; and (ii) in the event that, after the execution of this
Agreement, a Prior Person makes an Unsolicited Proposal, the Company will (A)
send a Proposal Notice to the Purchaser as set forth above and (B) not make a
positive recommendation to its stockholders with respect to such Unsolicited
Proposal.
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SECTION 6.5 NOTIFICATION OF CERTAIN MATTERS. From the date hereof
until the Effective Time, the Company will give prompt notice to Purchaser, and
Purchaser for itself and on behalf of New Parent and Merger Sub, will give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of the Company, or Purchaser, New Parent and Merger
Sub, as the case may be, contained in this Agreement to be
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untrue or inaccurate in any material respect (or, with respect to those
representations or warranties qualified by Material Adverse Effect, in any
respect) at or prior to the Effective Time and (ii) any failure of the Company,
or Purchaser, New Parent, and Merger Sub, as the case may be, to comply with or
satisfy in all material respects any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 6.5 will not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 6.6 FURTHER ACTION. On the terms and subject to the
conditions hereof, each of the parties hereto will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things, necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings.
SECTION 6.7 PUBLIC ANNOUNCEMENTS. From the date hereof until the
Effective Time, Purchaser and the Company will consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated by this Agreement and will not issue any such
press release or make any such public statement prior to such consultation or
without the consent of the other, unless such party has been advised by counsel
that it is required by law to do so.
SECTION 6.8 HSR ACT. Purchaser and the Company will, as soon as
practicable after the date of this Agreement, but in no event later than five
business days after the date of this Agreement, file Notification and Report
Forms under the HSR Act with the Federal Trade Commission and the Antitrust
Division of the Department of Justice and will use their respective reasonable
best efforts to respond as promptly as practicable to all inquiries received
from such agencies for additional information or documentation. Purchaser will
pay all filing fees required to be paid in connection with all such filings made
by the parties under the HSR Act.
SECTION 6.9 OTHER AUTHORIZATIONS; NOTICES AND CONSENTS.
(a) Each party hereto will use its reasonable best efforts to obtain
(or cause its Subsidiaries to obtain) all authorizations, consents, orders,
licenses, permits and approvals of all governmental authorities and officials
and third parties that may be or become necessary for its
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execution and delivery of, and the performance of its obligations pursuant to,
this Agreement, and the parties hereto will cooperate fully with each other in
promptly seeking to obtain all such authorizations, consents, orders and
approvals.
(b) The Company will and will cause its Subsidiaries to use all
reasonable best efforts to give such notices to third parties and use all
reasonable best efforts to obtain such third party consents, licenses or permits
as Purchaser may reasonably deem necessary or desirable in connection with the
transactions contemplated by this Agreement.
SECTION 6.10 BOARD ATTENDANCE. From the date hereof to the date on
which designees of Purchaser first become directors of the Company pursuant to
Section 1.3, the Company will notify Purchaser at least 48 hours (or, if
shorter, when a general notice is given pursuant to the By-Laws of the Company)
in advance of every meeting of the Board of Directors of the Company (or any
committee thereof) and will permit a representative of Purchaser to attend, as
an observer, each such meeting (including, at the option of Purchaser, by
telephone); provided that, if the Chairman in his sole discretion, requests such
representative to leave the meeting, such representative shall immediately do
so.
SECTION 6.11 INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation of the Surviving Corporation
will contain the provisions with respect to limitation of liability of directors
set forth in ANNEX III hereto, and the By-Laws of the Surviving Corporation will
contain the provisions with respect to indemnification set forth in ANNEX III
hereto, and such provisions will not be amended, repealed, contradicted by any
other provision of such Certificate of Incorporation or By-Laws or otherwise
modified for a period of seven years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the time of
execution and delivery of this Agreement were directors, officers, employees or
agents of the Company, unless such modification is required by a change in
applicable law.
(b) The Company will, to the fullest extent permitted under
applicable law or under the Company's Certificate of Incorporation or By-Laws or
pursuant to Directors/Officers Indemnification Agreements previously entered
into and in effect on the date hereof ("Indemnification Agreements") and
regardless of whether the Merger becomes effective, indemnify and hold harmless,
and after the Effective Time, the Surviving Corporation will, to the fullest
extent permitted under applicable law or under
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the Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each present and former director, officer, employee,
fiduciary and agent of the Company or any of its Subsidiaries (collectively, the
"Indemnified Persons") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action or omission occurring prior to the Effective
Time (including without limitation any claim, action, suit, proceeding or
investigation arising out of or pertaining to the transactions contemplated by
this Agreement) for a period of seven years after the date hereof and in the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company or the Surviving
Corporation, as the case may be, will pay the reasonable fees and expenses of
counsel selected by the Indemnified Persons, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received, (ii) the Company and the Surviving Corporation
will cooperate in the defense of any such matter, and (iii) any determination
required to be made with respect to whether an Indemnified Persons' conduct
complies with the standards set forth under the Delaware Law and the Company's
or the Surviving Corporation's Certificate of Incorporation or By-Laws will be
made by independent counsel mutually acceptable to the Surviving Corporation and
the Indemnified Person; PROVIDED, HOWEVER, that neither the Company nor the
Surviving Corporation will be liable for any settlement effected without its
written consent (which consent will not be unreasonably withheld) and PROVIDED
FURTHER that, in the event any claim or claims for indemnification are asserted
or made within such seven-year period, all rights to indemnification in respect
of any such claim or claims will continue until the disposition of any and all
such claims.
(c) Notwithstanding anything to the contrary contained herein, if (a)
an Indemnified Person elects to retain counsel in connection with any claim,
action, suit, preceding or investigation in respect of which indemnification may
be sought by the Indemnified Person against the Surviving Corporation pursuant
to this Agreement and (b) any other Indemnified Person may also be subject to
liability arising out of such claim, action, suit, preceding or investigation
and in connection with such claim, action, suit, preceding or investigation may
seek indemnification against the Company pursuant to this Agreement, all such
Indemnified Persons will employ counsel to represent jointly such Indemnified
Persons unless the Board of Directors of the Surviving Corporation, upon the
written request of an
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Indemnified Person delivered to the Surviving Corporation (to the attention of
the Secretary) setting forth in reasonable detail the basis for such request,
determines that such joint representation would be precluded under the
applicable standards of professional conduct then prevailing under the law of
the State of Delaware, in which case such Indemnified Person will be entitled to
be represented by separate counsel. In the event that the Board or Directors of
the Surviving Corporation fails to act on such request within 30 calendar days
after receipt thereof by the Surviving Corporation, the Indemnified Person will
be deemed to be entitled to be represented by separate counsel in connection
with such claim, action, suit, preceding or investigation.
(d) For five years from the Effective Time, the Surviving Corporation
will maintain in effect, if available, directors' and officers' liability
insurance substantially comparable in scope and coverage to the Company's
current directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to New Parent) covering those Persons who are
presently covered by such current policy to the extent that the cost thereof
does not exceed $177,840 per annum; PROVIDED, HOWEVER, that in the event such
cost would exceed $177,840 per annum, the Surviving Corporation will obtain such
coverage of the nature described above as may be obtained through the
expenditure of such amount for each such year.
(e) In the event any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto.
SECTION 6.12 BENEFIT PLANS.
(a) Except as provided in Section 6.12(c), the Surviving Corporation
will pay, in accordance with their terms as in effect on the date hereof, all
amounts which are or become due and payable under the terms of all written
employment, severance and termination contracts, agreements, plans, policies and
commitments of the Company and its Subsidiaries with or with respect to its
current or former employees, officers and directors as described in the SEC
Documents or as otherwise disclosed in writing to Purchaser on or prior to the
date hereof.
(b) The Surviving Corporation will maintain for a period of not less
than one year after the Effective Time Employee Plans in effect on the date of
this Agreement or
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provide benefits to employees of the Surviving Corporation who were employees of
the Company and its Subsidiaries immediately prior to the Effective Time
("United Employees") that are at least substantially comparable to the benefits
provided to similarly situated employees of the Surviving Corporation who are
not United Employees.
(c) From the date hereof and until the Effective Time, the Company
will use reasonable efforts to enter into employment contracts, effective not
later than the Effective Time, with those persons identified by New Parent to
the Company on or before December 1, 1994, on terms to be agreed upon. The
Company will condition its obligations under each such contract upon the
agreement of the employee party thereto to cancel any severance or termination
agreement between the Company and such employee in effect on the date hereof.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 INDEMNIFICATION OF PURCHASER. Subject to the terms of
this Article VII, the Company will indemnify and hold harmless each of Purchaser
and its Affiliates (including without limitation New Parent and Merger Sub), and
their respective partners, officers, directors, employees, agents and
controlling persons (collectively, "Indemnified Parties") from and against any
loss, damage or expense, including without limitation reasonable attorneys' and
accountants' fees (each such individual occurrence is hereinafter referred to as
a "Loss" and collectively, as "Losses") suffered by any Indemnified Party,
(a) directly or indirectly, as a result of any action, suit, proceeding or
investigation which, in whole or in part, is based upon, relates to or results
from this Agreement or any of the transactions contemplated hereby, except to
the extent that it is finally judicially determined by a court of competent
jurisdiction that the Loss in question resulted from a breach by Purchaser of
any of the representations, warranties or covenants of the Purchaser set forth
in this Agreement, or (b) from and after the Effective Time, or, if applicable,
the termination of this Agreement, directly or indirectly, as a result of any
inaccuracy in or breach of any of the representations, warranties or covenants
of the Company set forth in this Agreement.
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SECTION 7.2 PROCEDURE FOR CLAIMS.
(a) NOTICE OF CLAIM. After obtaining knowledge of any claim or
demand which has given rise to, or could reasonably give rise to, a claim for
indemnification under this Article VII (referred to herein as an
"Indemnification Claim"), an Indemnified Party shall give written notice to the
party obligated to provide indemnification pursuant to this Article VII (the
"Indemnitor") of such Indemnification Claim ("Notice of Claim"). A Notice of
Claim shall be given with respect to each Indemnification Claim; PROVIDED,
HOWEVER, that the failure to give Notice of Claim to the Indemnitor will relieve
the Indemnitor from its liability hereunder only if, and to the extent that,
such failure results in the forfeiture by the Indemnitor of substantial rights
and defenses. If reasonably practicable, the Notice of Claim shall set forth
the amount (or a reasonable estimate) of the Loss or Losses suffered, or which
may be suffered, by an Indemnified Party as a result of such Indemnification
Claim. The Indemnified Party shall furnish to the Indemnitor such information
(in reasonable detail) it may have with respect to such Indemnification Claim
(including copies of any summons, complaint or other pleading which may have
been served on it and any written claim, demand, invoice, billing or other
document evidencing or asserting the same).
(b) THIRD PARTY CLAIMS.
(i) If the claim or demand set forth in the Notice of Claim is a
claim or demand asserted by a third party (a "Third Party Claim"), the
Indemnitor shall have 15 days after the date of receipt by the Indemnitor of the
Notice of Claim (the "Notice Date") to notify the Indemnified Parties in writing
of the election by the Indemnitor to defend the Third Party Claim on behalf of
the Indemnified Parties.
(ii) If the Indemnitor elects to defend a Third Party Claim on
behalf of the Indemnified Parties, the Indemnified Parties shall make available
to the Indemnitor and its agents and representatives all records and other
materials in their possession which are reasonably required in the defense of
the Third Party Claim and the Indemnitor shall pay all expenses payable in
connection with the defense of the Third Party Claim as they are incurred.
(iii) In no event may the Indemnitor settle or compromise any
Third Party Claim without the Indemnified Parties' consent, which shall not be
unreasonably withheld; PROVIDED, HOWEVER, that if a settlement is presented by
the Indemnitor to the Indemnified Parties for approval and the Indemnified
Parties withhold their consent thereto, then any
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amount by which the final Losses (including reasonable attorneys' fees)
resulting from the resolution of the matter exceeds the rejected settlement
amount, plus attorneys' fees incurred to such date, shall be excluded from the
amount covered by the indemnification provided for in this Agreement and shall
be borne by the Indemnified Parties.
(iv) If the Indemnitor elects to defend a Third Party Claim, the
Indemnified Parties shall have the right to participate in the defense of the
Third Party Claim, at the Indemnified Parties' expense (and without the right to
indemnification for such expense under this Agreement); PROVIDED, HOWEVER, that
the reasonable fees and expenses of counsel retained by the Indemnified Parties
shall be at the expense of the Indemnitor if (A) the use of the counsel chosen
by the Indemnitor to represent the Indemnified Parties would present such
counsel with a conflict of interest; (B) the parties to such proceeding include
both Indemnified Parties and the Indemnitor and there may be legal defenses
available to Indemnified Parties which are different from or additional to those
available by the Indemnitor; or (C) the Indemnitor shall authorize the
Indemnified Parties to retain a single separate counsel at the expense of the
Indemnitor.
(v) If the Indemnitor does not elect to defend a Third Party
Claim, or does not defend a Third Party Claim in good faith, the Indemnified
Parties shall have the right, in addition to any other right or remedy it may
have hereunder, at the sole and exclusive expense of the Indemnitor, to defend
such Third Party Claim.
(c) COOPERATION IN DEFENSE. The Indemnified Parties shall cooperate
with the Indemnitor in the defense of a Third Party Claim and make reasonably
available the facts relating to the Third Party Claim. Subject to the
foregoing, (A) no Indemnified Party shall have any obligation to participate in
the defense of or to defend any Third Party Claim, and (B) no Indemnified
Parties' defense or of their participation in the defense of any Third Party
Claim shall in any way diminish or lessen their right to indemnification as
provided in this Agreement.
SECTION 7.3 INDEMNIFICATION OF THE COMPANY. From and after the
Effective Time, or, if applicable, the termination of this Agreement, Purchaser,
New Parent and Merger Sub will indemnify and hold harmless the Company and its
current and future officers, directors, employees and agents from and against
damage or expense (including without limitation reasonable attorneys' and
accountants' fees)
suffered by any of them as a result of any inaccuracy in or breach of any of the
representations, warranties or covenants made by Purchaser, New Parent or Merger
Sub under
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this Agreement or the Merger Agreement. The procedures for indemnification in
respect of the obligations of Purchaser under this Section 7.3 will be the same
as those set forth in Section 7.2.
ARTICLE VIII-A
CONDITIONS OF MERGER
SECTION 8A.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each party to effect or cause to be effected the Merger will be
subject to the satisfaction or waiver at or prior to the Effective Time of each
of the following conditions:
(a) OFFER. The Offer shall have been consummated.
(b) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by
the requisite vote of the stockholders of the Company if required by
applicable law.
(c) HSR ACT. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(d) NO ORDER. No United States or state governmental authority or
other agency or commission or United States or state court of jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, writ, injunction or other order (whether temporary, preliminary
or permanent) which is in effect and has the effect of making the Merger or
the Offer illegal or otherwise prohibiting consummation of the transactions
contemplated hereby.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time:
(a) By mutual consent of Purchaser, New Parent and the Boards of
Directors of Merger Sub and the Company; or
(b) By either Purchaser or the Company if (i) the Merger shall not
have been consummated by March 31, 1995; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 8.1(b) shall not effect a
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rescission of the purchase of the Shares pursuant to the Offer and shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
occur on or before such date or (ii) a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their best efforts
to vacate), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
(c) By Purchaser if (i) due to an occurrence that would result in a
failure to satisfy any of the conditions set forth in ANNEX I hereto, and only
in the event of such occurrence, Purchaser shall have (A) failed to commence the
Offer within 30 days of the date hereof, (B) terminated the Offer, or (C) failed
to pay for Shares pursuant to the Offer within 180 days after the commencement
of the Offer, or (ii) prior to the purchase of Shares pursuant to the Offer, the
Company's Board of Directors shall have withdrawn or modified in a manner
adverse to Purchaser its approval or recommendation of the Offer, or the Merger
or shall have recommended another offer or transaction; or
(d) By the Company if (i) due to an occurrence that would result in a
failure to satisfy any of the conditions set forth in ANNEX I hereto, and only
in the event of such occurrence, Purchaser shall have (A) failed to commence the
Offer within 30 days of the date hereof, (B) terminated the Offer, or (C) failed
to pay for Shares pursuant to the Offer within 180 days after commencement of
the Offer, or (ii) prior to the purchase of Shares pursuant to the Offer, the
Company's Board of Directors shall have withdrawn its recommendation to the
Company's stockholders to accept the Offer and shall have recommended another
offer or transaction, provided that, the Company shall not recommend another
Offer or transaction if such Offer is made by or such transaction is to be with
a Prior Person, and accordingly, may not terminate this Agreement pursuant to
this Section 8.1(d) under such circumstances; or
(e) By Purchaser as provided in Section 6.4(b).
SECTION 8.2 EFFECT OF TERMINATION. In the event of the termination
of this Agreement as provided in Section 8.1, this Agreement will forthwith
become null and void and there shall be no liability on the part of any party
hereto except that (A) Article VII and Sections 8.3 and 9.1 will remain in full
force and effect and (B) nothing herein will relieve any party from liability
for any wilful breach hereof.
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SECTION 8.3 FEES AND EXPENSES.
(a) All reasonable out-of-pocket fees, costs and expenses incurred in
connection with the Offer, this Agreement, and the transactions contemplated
hereby (including, without limitation, fees paid by Purchaser pursuant to
Section 6.8) will be paid or reimbursed by the Company, provided that, except as
provided in Sections 8.3(b) and 8.3(c), each party will pay its own fees, costs
and expenses in the event that the Offer is not consummated.
(b) The Company will pay or reimburse to Purchaser an amount equal to
the sum of all reasonable documented fees (including, without limitation, fees
paid by Purchaser pursuant to Section 6.8), costs and expenses in an amount not
to exceed $1,000,000 incurred by Purchaser and its Affiliates in connection with
this Agreement and the transactions contemplated hereby subsequent to
October 26, 1994, immediately upon the first to occur of: (i) prior to the
acceptance for payment of Shares pursuant to the Offer, the Company's Board of
Directors (A) having withdrawn or modified in a manner adverse to Purchaser its
approval or recommendation of the Offer or (B) having recommended another offer
or transaction; (ii) the Company having (A) failed to perform or comply with in
any material respect any obligation or covenant required by this Agreement to be
performed or complied with by it or (B) breached any representation or warranty
of the Company set forth in this Agreement in any material respect (or with
respect to those representations and warranties qualified by Material Adverse
Effect, in any respect); or (iii) if this Agreement is terminated pursuant to
Section 8.1(e); provided that no payment shall be made to Purchaser under this
Section 8.3(b) if Purchaser, New Parent or Merger Sub, as the case may be, shall
have (A) failed to perform or comply with in any material respect any obligation
or covenant required by this Agreement to be performed or complied with by it or
(B) breached any representation or warranty of it set forth in this Agreement in
any material respect (or with respect to those representations and warranties
qualified by material adverse effect, in any respect).
(c) The Company will pay to Purchaser immediately upon termination of
this Agreement pursuant to Sections 8.1(c)(ii), 8.1(d)(ii) or 8.1(e), an amount
equal to $1,000,000 if such termination occurs on or before November 30, 1994,
and an amount equal to $1,500,000 if such termination occurs after November 30,
1994; and the parties hereto agree that the amount to be paid pursuant to
Section 8.3(b) and this Section 8.3(c) shall be the exclusive remedies of
Purchaser in connection with any such termination.
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SECTION 8.4 AMENDMENT. This Agreement may be amended only by action
taken by Purchaser, New Parent and the Boards of Directors of Company and Merger
Sub at any time before or after approval of this Agreement and by the
stockholders of the Company (if required by applicable law).
SECTION 8.5 WAIVER. Any party hereto may (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 of the other
parties contained herein, and (c) waive compliance with any of the agreements or
conditions of the other parties contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each of the representations and warranties contained in this
Agreement will survive the Effective Time and remain in full force and effect
until the sixth anniversary thereof. Any claim for indemnification asserted
under Article VII within such period of survival will be timely made for
purposes hereof.
(b) Unless a specified period is set forth in this Agreement (in
which event such specified period will control), the covenants contained in this
Agreement will survive the Effective Time and remain in effect indefinitely.
SECTION 9.2 NOTICES. All notices and other communications given or
made pursuant hereto will be in writing and will be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), or transmitted by confirmed facsimile, to the parties at the
following addresses or facsimile numbers, as the case may be, or at such other
address or facsimile number for a party as shall be
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specified by like notice, except that notices of changes of address or facsimile
number shall be effective upon receipt:
(a) if to Purchaser, New Parent or Merger Sub:
UNITED/HARVEY HOLDINGS, L.P.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
Attn: Daniel A. Decker
Facsimile: (214) 220-4949
with a copy to:
JONES, DAY, REAVIS & POGUE
599 Lexington Avenue
New York, New York 10022
Attn: Robert A. Profusek
Facsimile: (212) 755-7306
(b) if to the Company:
UNITED INNS, INC.
Suite 2300, Clark Tower
5100 Poplar Avenue
Memphis, Tennessee 38137
Attn: A.B. Randle, III, Esq.
Secretary and General Counsel
Facsimile: (901) 767-4278
with a copy to:
PAUL, HASTINGS, JANOFSKY & WALKER
Suite 4200
133 Peachtree Street
Atlanta, Georgia 30303
Attn: Paul J. Connell
Facsimile: (404) 527-6882
SECTION 9.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "AFFILIATE" of a Person means a Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, the first mentioned Person;
(b) "BENEFICIAL OWNER" with respect to any shares means a Person who
shall be deemed to be the Beneficial Owner of such Shares (i) which such Person
or any of its Affiliates or associates beneficially owns, directly or
indirectly, (ii) which such Person or any of its Affiliates or associates (as
such term is defined in Rule 12b-2 of the
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Exchange Act) has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or
(B) the right to vote pursuant to any agreement, arrangement, or understanding
or (iii) which are beneficially owned, directly or indirectly, by any other
Persons with whom such Person or any of its Affiliates or Person with whom such
Person or any of its Affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
shares;
(c) "CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise; and
(d) "PERSON" means an individual, corporation, partnership,
association, trust or any unincorporated organization.
SECTION 9.4 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the greatest extent
possible.
SECTION 9.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement, and supersede all prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof and are not intended to confer upon any other Person any rights or
remedies hereunder.
SECTION 9.6 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Purchaser may assign all or any of
its rights hereunder to any Affiliate of Purchaser provided that no such
assignment will relieve the assigning party of its obligations
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hereunder and the assignee shall specifically assume the obligations of the
assignor hereunder.
SECTION 9.7 HEADINGS. Article and Section headings in this Agreement
are included herein for convenience of reference only and will not constitute a
part of this Agreement for any other purpose.
SECTION 9.8 GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the law of the State of New York, without giving
effect to the principles of conflict of laws of such State.
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when so executed will be deemed to be an original but all of which
taken together will constitute one and the same instrument.
SECTION 9.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.11 GUARANTY OF PERFORMANCE. New Parent, Merger Sub, and
The Hampstead Group, Inc., jointly and severally, (a) represent and warrant to
the Company that the representations and warranties of Purchaser set forth in
this Agreement are true and correct in all material respects and (b) agree to
cause Purchaser to perform and comply with in all material respects the
obligations and covenants required by this Agreement to be performed or complied
with by it. Notwithstanding anything to the contrary contained herein, this
Section 9.11 will terminate automatically at
the Effective Time and will forthwith become null and void and there shall be no
further liability under this Section 9.11 on the part of New Parent, Merger Sub
or The Hampstead Group, Inc.
IN WITNESS WHEREOF, Purchaser, New Parent, Merger Sub and the Company
have caused this Agreement to be executed as of the date first written above by
their respective representatives thereunto duly authorized.
PURCHASER:
UNITED/HARVEY HOLDINGS, L.P.
By: Hampstead Genpar, L.P., its General Partner
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By: HH Genpar Partners, its General Partner
By: Hampstead Associates, Inc., its
General Partner
/s/ J. Peter Kline By: /s/Donald J. McNamara
- --------------------- --------------------------
Name: J. Peter Kline Name: Donald J. McNamara
Title: Witness Title: Authorized Officer
NEW PARENT:
UNITED/HARVEY HOTELS, INC.
Attest:
/s/J. Peter Kline By: /s/Donald J. McNamara
- --------------------- --------------------------
Name: J. Peter Kline Name: Donald J. McNamara
Title: Witness Title: Authorized Officer
MERGER SUB:
UNITED/HARVEY SUB, INC.
Attest:
/s/J. Peter Kline By: /s/Donald J. McNamara
- --------------------- --------------------------
Name: J. Peter Kline Name: Donald J. McNamara
Title: Witness Title: Authorized Officer
COMPANY:
UNITED INNS, INC.
Attest:
/s/Augustus B. Randle, III By: /s/Don Wm. Cockroft
- ------------------------------ --------------------------
Name: Augustus B. Randle, III Name: Don Wm. Cockroft
Title: Secretary Title: President
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The undersigned is a signatory hereto solely for the purpose of agreeing to the
provisions of Section 9.11 solely as it relates to the undersigned.
THE HAMPSTEAD GROUP, INC.
By: /s/Donald J. McNamara
--------------------------
Name: Donald J. McNamara
Title: Authorized Officer
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ANNEX I
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED NOVEMBER 14, 1994
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment, or to purchase or pay for, any tendered Shares
and Purchaser may terminate or amend the Offer and may postpone the purchase of,
and payment for, Shares if (i) there shall not have been validly tendered to
Purchaser pursuant to the Offer and not withdrawn immediately prior to the
expiration of the Offer at least that number of Shares that, when taken as a
whole with all other Shares owned or acquired by Purchaser (whether pursuant to
the Offer or otherwise), constitutes at least a majority of the Shares on a
fully diluted basis, (ii) prior to the time of payment for any such Shares, any
waiting period (and any extension thereof) applicable to the Offer under the HSR
Act shall not have expired or otherwise been terminated or (iii) at any time on
or after the date hereof and prior to the time of payment for any such Shares:
(a) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by or before any governmental,
regulatory or administrative agency or authority, domestic, foreign or
transnational, which (1) seeks to restrain or prohibit the making or
consummation of the Offer or the Merger or seeks damages in connection therewith
or resulting therefrom, (2) seeks to prohibit or restrict the ownership or
operation by Purchaser (or any of its Affiliates or Subsidiaries) of any portion
of its or the Company's business or assets which is material to the business of
all such entities taken as a whole, or to compel Purchaser (or any of its
Affiliates or Subsidiaries) to dispose of or hold separate any portion of the
Company's business or assets which is material to the business of all such
entities taken as a whole, (3) seeks to impose material limitations on the
ability of Purchaser effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including without limitation the right to
vote the Shares purchased by Purchaser on all matters properly presented to the
stockholders of the Company, (4) seeks to impose any limitations on the ability
of Purchaser or any of its Affiliates or Subsidiaries
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effectively to control in any material respect the business and operations of
the Company, or (5) would otherwise be reasonably likely to have a Material
Adverse Effect on the Company; or
(b) the representations and warranties of the Company set forth in this
Agreement shall have been breached in any material respect (or, with respect to
those representations and warranties qualified by Material Adverse Effect, in
any respect) or the Company shall have failed to perform any obligation or
covenant required by this Agreement to be performed or complied with by it in
any material respect; PROVIDED, HOWEVER, that Purchaser will not have the right
to decline or accept for payment or purchase or pay for or terminate or amend
the Offer or postpone the purchase of or payment for Shares as a result of a
breach of the representation set forth in Section 4.8 of this Agreement except
for a breach of such representation when made; or
(c) there shall have occurred (1) any general suspension of, or limitation
on prices for, or trading in, securities on the New York Stock Exchange, (2) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (3) a commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States, (4) any material limitation (whether or not mandatory) by a
governmental authority, or any other event that is reasonably likely to
materially adversely affect the extension of credit by banks or other financial
institutions, or (5) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof; or
(d) a tender or exchange offer for some portion of or all the Shares shall
have been publicly proposed to be made or shall have been commenced at an all
cash price per share in excess of the Per Share Amount (or at any other price if
the Board of Directors of the Company does not promptly announce publicly that
it is recommending that the Company's stockholders not tender into such offer)
by another Person or Purchaser shall have otherwise learned that any Person,
entity or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
shall have acquired beneficial ownership of more than 25% of the Shares, through
the acquisition of stock, the formation of a group or otherwise, or shall have
been granted any right, option or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 25% of the Shares other than acquisitions for
bona fide arbitrage purposes only and other than by Persons, entities or groups
that have publicly disclosed such ownership in a Schedule 13D or 13G on file
with the SEC on the date hereof; or
(e) any other Person shall have commenced a proxy or consent solicitation
of the Company's stockholders to approve
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a transaction other than transactions contemplated by this Agreement; or
(f) this Agreement shall have been terminated in accordance with its
terms; or
(g) the Board of Directors of the Company shall not have taken all
necessary actions to fulfill the Company's obligations under Section 1.3; or
(h) Purchaser and the Company shall have agreed that Purchaser shall amend
or terminate the Offer or postpone the payment for Shares pursuant thereto.
The foregoing conditions are for the sole benefit of Purchaser. Such
conditions may be waived by Purchaser with the approval of the Board of
Directors of the Company. Any determination by Purchaser will be final and
binding upon all parties including tendering stockholders.
The failure by Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right and each such right will be
deemed an ongoing right which may be asserted by any time and from time to time.
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ANNEX I-A
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
ACTION BY
WRITTEN CONSENT OF DIRECTORS
OF UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
Pursuant to Section 141(f) of the General Corporation Law of the sate of
Delaware, the undersigned, being all of the directors of United Inns, Inc., a
Delaware corporation (the "Company"), hereby consent to the adoption of the
following resolutions by unanimous written consent:
WHEREAS, the Company has entered into an Agreement and Plan of Merger,
dated as of November 14, 1994 (the "Merger Agreement"), with United/Harvey
Holdings, L. P. ("Purchaser"), United/Harvey Hotels, Inc. and United/Harvey Sub,
Inc., pursuant to which Purchaser has agreed to make a cash tender offer (the
"Offer") to acquire all shares of issued and outstanding common stock, par value
$1.00 per share, of the Company (the "Shares"); and
WHEREAS, the Merger Agreement provides that, upon Purchaser's acquisition
of a majority of the outstanding Shares pursuant to the Offer or as otherwise
provided in the Agreement (such time hereinafter being referred to as the
"Effective Time"), Purchaser will be entitled to designate up to that number of
members of the Company's Board of Directors as will make the percentage of
members designated by Purchaser equal to the percentage of outstanding Shares
held by Purchaser and its affiliates, and that the Company will increase the
size of its Board of Directors and/or use its best efforts to secure the
resignation of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Company's Board of Directors and will cause
Purchaser's designees to be so elected effective immediately upon the Effective
Time;
<PAGE>
NOW, THEREFORE, be it:
RESOLVED, that, pursuant to Section 4 of the Company's Bylaws, the number
of directors of the Company is hereby increased from six to nine, such increase
to be effective immediately prior to the Effective time;
RESOLVED FURTHER, that the three individuals identified on EXHIBIT A hereto
as the designees of Purchaser are hereby elected to fill the vacancies created
by the increase in the number of directors of the Company to be effected
pursuant to the immediately preceding resolution, the election of such
individuals to be effective immediately upon the Effective Time; and
RESOLVED FURTHER, that the written resignations previously submitted to the
Secretary of the Company by the directors of the Company identified on EXHIBIT B
hereto are hereby accepted, such resignations being effective immediately upon
the Effective Time.
The undersigned hereby acknowledge that the foregoing resolutions have been
adopted in accordance with the Section 1.3 of the Merger Agreement and that the
Purchaser will be relying hereon in connection with the execution and delivery
of the Merger Agreement.
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<PAGE>
EXECUTED as of November 14, 1994 and effective as provided above.
________________________
Don Wm. Cockroft
________________________
J. Howard Lammons
________________________
Robert L. Cockroft
________________________
Howard W. Loveless
________________________
Janet C. Virgin
________________________
Ronald J. Wareham
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<PAGE>
EXHIBIT A
DESIGNEES OF PURCHASER
J. Peter Kline
Donald J. McNamara
Robert A. Whitman
<PAGE>
EXHIBIT B
Don Wm. Cockroft
J. Howard Lammons
Robert L. Cockroft
Howard W. Loveless
Janet C. Virgin
Ronald J. Wareham
<PAGE>
ANNEX II
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNITED INNS, INC.
FIRST. The name of the corporation is United Inns, Inc. (the
"Corporation").
SECOND. The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of the Corporation's registered agent at such address
is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
FOURTH. The total number of shares which the Corporation will have
authority to issue is 100 shares of Common Stock, par value $0.01 per share.
Each holder of Common Stock will have one vote for each share of Common Stock
held.
FIFTH. In furtherance of, and not in limitation of, the powers conferred
by statute, the Board of Directors of the Corporation (the "Board") is expressly
authorized and empowered to adopt, amend, or repeal the By-Laws of the
Corporation, without any action on the part of the stockholders, but the
stockholders may make additional By-Laws and may amend or repeal any By-Law
whether adopted by them or otherwise. The Corporation may in its By-Laws confer
powers upon the Board in addition to the foregoing and in addition to the powers
and authorities expressly conferred upon the Board by applicable law.
SIXTH. To the full extent permitted by the DGCL or any other applicable
law currently or hereafter in effect, no Director of the Corporation will be
personally liable to the Corporation or its stockholders for or with respect to
any acts or omissions in the performance of his or her duties as a Director of
the Corporation. Any repeal or modification of this Article Sixth will not
adversely affect any right or protection of a Director of the Corporation
existing immediately prior to such repeal or modification.
<PAGE>
SEVENTH. Each person who is or was or had agreed to become a Director or
officer of the Corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board or an officer of the Corporation as
an employee or agent of the Corporation or as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other entity
(including the heirs, executors, administrators, or estate of such person) will
be indemnified by the Corporation to the full extent permitted by the DGCL or
any other applicable law as currently or hereafter in effect. The right of
indemnification provided in this Article Seventh will not be exclusive of any
other rights to which any person seeking indemnification may otherwise be
entitled, and will be applicable to matters otherwise within its scope whether
or not such matters arose or arise before or after the adoption of this Article
Seventh. Without limiting the generality or the effect of the foregoing, the
Corporation may adopt By-Laws, or enter into one or more agreements with any
person, which provide for indemnification greater or different than that
provided in this Article Seventh. Any amendment, or repeal of, or adoption of
any provision inconsistent with, this Article Seventh will not adversely affect
any right or protection existing hereunder immediately prior to such amendment,
repeal, or adoption.
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<PAGE>
ANNEX III
UNITED INNS, INC.
BY-LAWS
As Adopted and in Effect
on _________ __, 199_
<PAGE>
UNITED INNS, INC.
BY-LAWS
TABLE OF CONTENTS
Page
----
STOCKHOLDERS' MEETINGS
1. Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . 1
2. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 1
5. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
6. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DIRECTORS
7. Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
8. Number and Term of Office. . . . . . . . . . . . . . . . . . . . . . 2
9. Vacancies and New Directorships. . . . . . . . . . . . . . . . . . . 2
10. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 3
11. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 3
12. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
13. Written Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
14. Participation in Meetings by Telephone
Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
15. Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
16. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
17. Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
NOTICES
18. Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
19. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
OFFICERS
20. Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
21. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
22. Succession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
23. Authority and Duties . . . . . . . . . . . . . . . . . . . . . . . . 5
24. Execution of Documents and Action with
Respect to Securities of Other Corporations. . . . . . . . . . . . 5
STOCK
25. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
26. Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
i
<PAGE>
INDEMNIFICATION
27. Damages and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 6
28. Insurance, Contracts, and Funding. . . . . . . . . . . . . . . . . .12
GENERAL
29. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
30. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
31. Reliance upon Books, Reports, and Records. . . . . . . . . . . . . .12
32. Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
33. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
34. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . .12
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<PAGE>
STOCKHOLDERS' MEETINGS
1. TIME AND PLACE OF MEETINGS. All meetings of the stockholders for the
election of Directors or for any other purpose will be held at such time and
place, within or without the State of Delaware, as may be designated by the
Board or, in the absence of a designation by the Board, the Chairman, the
President, or the Secretary and stated in the notice of meeting.
2. ANNUAL MEETING. An annual meeting of the stockholders will be held at
such date and time as may be designated from time to time by the Board, at which
meeting the stockholders will elect by a plurality vote the Directors to succeed
those whose terms expire and will transact such other business as may properly
be brought before the meeting.
3. SPECIAL MEETINGS. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by law or by the Certificate of
Incorporation, may be called by the Chairman or the President and will be called
by the President or the Secretary at the request in writing of stockholders
owning a majority in interest of the entire capital stock of the Company issued
and outstanding and entitled to vote. Any such request must be sent to the
President and the Secretary and must state the purpose or purposes of the
proposed meeting.
4. NOTICE OF MEETINGS. Written notice of every meeting of the
stockholders, stating the place, date, and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
will be given not less than 10 nor more than 60 calendar days before the date of
the meeting to each stockholder of record entitled to vote at such meeting,
except as otherwise provided herein or by law. When a meeting is adjourned to
another place, date or time, written notice need not be given of the adjourned
meeting if the place, date, and time thereof are announced at the meeting at
which the adjournment is taken; PROVIDED, HOWEVER, that if the adjournment is
for more than 30 calendar days, or if after the adjournment a new record date is
fixed for the adjourned meeting, written notice of the place, date and time of
the adjourned meeting must be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
5. QUORUM. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, will
constitute a quorum at all meetings of the stockholders for the transaction of
<PAGE>
business thereat. If, however, such quorum is not present or represented at any
meeting of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, will have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present or represented.
6. VOTING. Except as otherwise provided by law or by the Certificate of
Incorporation, each stockholder will be entitled at every meeting of the
stockholders to one vote for each share of stock having voting power standing in
the name of such stockholder on the books of the Company on the record date for
the meeting and such votes may be cast either in person or by written proxy.
Every proxy must be duly executed and filed with the Secretary. A stockholder
may revoke any proxy that is not irrevocable by attending the meeting and voting
in person or by filing an instrument in writing revoking the proxy or another
duly executed proxy bearing a later date with the Secretary. The vote upon any
question brought before a meeting of the stockholders may be by voice vote,
unless otherwise required by these By-Laws or unless the holders of a majority
of the outstanding shares of all classes of stock entitled to vote thereon
present in person or by proxy at such meeting otherwise determine. When a
quorum is present at any meeting, the vote of the holders of a majority of the
stock which has voting power present in person or represented by proxy and which
has actually voted will decide any question properly brought before such
meeting, unless the question is one upon which by express provision of law, the
Certificate of Incorporation, or these By-Laws, a different vote is required, in
which case such express provision will govern and control the decision of such
question.
DIRECTORS
7. FUNCTION. The business and affairs of the Company will be managed
under the direction of the Board.
8. NUMBER AND TERM OF OFFICE. The Board will consist of one or more
members. The number of Directors will be fixed by resolution of the Board or by
the stockholders at the annual meeting or a special meeting. The Directors will
be elected at the annual meeting of the stockholders, except as provided in
By-Law 9, and each Director elected will hold office until his or her successor
is elected and qualified, except as required by law. Any decrease in the
authorized number of Directors will not be effective until the expiration of the
term of the Directors then in office, unless, at the time of such decrease,
there are vacancies on the Board which are being eliminated by such decrease.
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<PAGE>
9. VACANCIES AND NEW DIRECTORSHIPS. Vacancies and newly created
directorships resulting from any increase in the authorized number of Directors
which occur between annual meetings of the stockholders may be filled by a
majority of the Directors then in office, though less than a quorum, or by a
sole remaining Director, and the Directors so elected will hold office until the
next annual meeting of the stockholders and until their successors are elected
and qualified, except as required by law.
10. REGULAR MEETINGS. Regular meetings of the Board may be held
immediately after the annual meeting of the stockholders and at such other time
and place as may from time to time be determined by the Board. Notice of
regular meetings of the Board need not be given.
11. SPECIAL MEETINGS. Special meetings of the Board may be called by the
Chairman or the President on one day's notice to each Director by whom such
notice is not waived, given either personally or by mail, telephone, telegram,
telex, facsimile, or similar medium of communication.
12. QUORUM. At all meetings of the Board, a majority of the total number
of Directors then in office will constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum will be the act of the Board. If a quorum is not
present at any meeting of the Board, the Directors present thereat may adjourn
the meeting from time to time to another place, time, or date, without notice
other than announcement at the meeting, until a quorum is present.
13. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board or of any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes or proceedings
of the Board or committee.
14. PARTICIPATION IN MEETINGS BY TELEPHONE CONFERENCE. Members of the
Board, or any committee designated by the Board, may participate in a meeting of
the Board, or any such committee, by means of telephone conference or similar
means by which all persons participating in the meeting can hear each other, and
such participation in a meeting will constitute presence in person at the
meeting.
15. COMMITTEES. The Board, by resolution passed by a majority of the
Board, may designate one or more committees, each committee to consist of one or
more Directors and each to have such lawfully delegable powers and duties as the
Board may confer. Each such committee will serve at the pleasure of the Board.
The Board may designate one or more
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<PAGE>
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Except as otherwise
provided by law, any such committee, to the extent provided in the resolution of
the Board, will have and may exercise all the powers and authority of the Board
in the direction of the management of the business and affairs of the Company.
Any committee or committees so designated by the Board will have such name or
names as may be determined from time to time by resolution adopted by the Board.
Unless otherwise prescribed by the Board, a majority of the members of the
committee will constitute a quorum for the transaction of business, and the act
of a majority of the members present at a meeting at which there is a quorum
will be the act of such committee. Each committee will prescribe its own rules
for calling and holding meetings and its method of procedure, subject to any
rules prescribed by the Board, and will keep a written record of all actions
taken by it.
16. COMPENSATION. The Board may establish such compensation for, and
reimbursement of the expenses of, Directors for attendance at meetings of the
Board or committees, or for other services by Directors to the Company, as the
Board may determine.
17. RULES. The Board may adopt rules and regulations for the conduct of
its meetings and the management of the affairs of the Company.
NOTICES
18. GENERALLY. Whenever by law or under the provisions of the Certificate
of Incorporation or these By-Laws, notice is required to be given to any
Director or stockholder, it will not be construed to require personal notice,
but such notice may be given in writing, by mail, addressed to such Director or
stockholder, at his address as it appears on the records of the Company, with
postage thereon prepaid, and such notice is deemed to be given at the time when
the same is deposited in the United States mail. Notice to Directors may also
be given by telephone, telegram, telex, facsimile, or similar medium of
communication or as may otherwise be permitted by these By-Laws.
19. WAIVERS. Whenever any notice is required to be given by law or under
the provisions of the Certificate of Incorporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time of the event for which notice is to be given,
will be deemed equivalent to such notice. Attendance of a person at a meeting
will constitute a waiver of notice of such meeting, except when the person
attends a meeting for the express purpose of objecting, at
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<PAGE>
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
OFFICERS
20. GENERALLY. The officers of the Company will be elected by the Board
and will consist of a President, a Secretary, and a Treasurer. The Board may
also choose any or all of the following: a Chairman, one or more Vice Chairmen,
one or more Vice Presidents, and such other officers as the Board may from time
to time determine. Notwithstanding the foregoing, by specific action the Board
may authorize the Chairman to appoint any person to any office other than
Chairman, President, Secretary, or Treasurer. Any number of offices may be held
by the same person.
21. COMPENSATION. The compensation of all officers and agents of the
Company who are also Directors of the Company will be fixed by the Board or by a
committee of the Board. The Board may fix, or delegate the power to fix, the
compensation of other officers and agents of the Company to an officer of the
Company.
22. SUCCESSION. The officers of the Company will hold office until their
successors are elected and qualified. Any officer may be removed at any time by
the affirmative vote of a majority of the Directors. Any vacancy occurring in
any office of the Company may be filled by the Board.
23. AUTHORITY AND DUTIES. Each of the officers of the Company will have
such authority and will perform such duties as are customarily incident to
their respective offices or as may be specified from time to time by the Board.
24. EXECUTION OF DOCUMENTS AND ACTION WITH RESPECT TO SECURITIES OF OTHER
CORPORATIONS. The President will have, and is hereby given, full power and
authority, except as otherwise required by law or directed by the Board, (a) to
execute, on behalf of the Company, all duly authorized contracts, agreements,
deeds, conveyances, or other obligations of the Company, applications, consents,
proxies, and other powers of attorney, and other documents and instruments and
(b) to vote and otherwise act on behalf of the Company, in person or by proxy,
at any meeting of stockholders (or with respect to any action of such
stockholders) of any other corporation in which the Company may hold securities
and otherwise to exercise any and all rights and powers which the Company may
possess by reason of its ownership of securities of such other corporation. In
addition, the President may delegate to other officers,
-5-
<PAGE>
employees, and agents of the Company the power and authority to take any action
which the President is authorized to take under this By-Law 24, with such
limitations as the President may specify; such authority so delegated by the
President may not be re-delegated by the person to whom such execution authority
has been delegated.
STOCK
25. CERTIFICATES. Certificates representing shares of stock of the
Company will be in such form as is determined by the Board, subject to
applicable legal requirements. Each such certificate will be numbered and its
issuance recorded in the books of the Company, and such certificate will exhibit
the holder's name and the number of shares and will be signed by, or in the name
of, the Company by the Chairman or the President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer. Any or all of
the signatures and the seal of the Company, if any, upon such certificates may
be facsimiles, engraved, or printed.
26. TRANSFERS. Upon surrender to the Company of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, it will be the duty of the Company to issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon its books.
INDEMNIFICATION
27. DAMAGES AND EXPENSES. (a) Without limiting the generality or effect
of Article Seventh of the Certificate of Incorporation, the Company will to the
fullest extent permitted by applicable law as then in effect indemnify any
person (an "Indemnitee") who is or was involved in any manner (including without
limitation as a party or a witness) or is threatened to be made so involved in
any threatened, pending, or completed investigation, claim, action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (including
without limitation any action, suit, or proceeding by or in the right of the
Company to procure a judgment in its favor) (a "Proceeding") by reason of the
fact that such person is or was or had agreed to be a Director, officer,
employee, or agent of the Company, or is or was serving at the request of the
Board or an officer of the Company as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other entity, whether
or not for profit (including the heirs, executors, administrators, or estate of
such person), or anything done
-6-
<PAGE>
or not done by such person in any such capacity, against all expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by such person in connection with such Proceeding. Such
indemnification will be a contract right and will include the right to receive
payment in advance of any expenses incurred by an Indemnitee in connection with
such Proceeding, consistent with the provisions of applicable law as then in
effect.
(b) The right of indemnification provided in this By-Law 27 will not be
exclusive of any other rights to which any person seeking indemnification may
otherwise be entitled, and will be applicable to Proceedings commenced or
continuing after the adoption of this By-Law 27, whether arising from acts or
omissions occurring before or after such adoption.
(c) In furtherance, but not in limitation of the foregoing provisions, the
following procedures, presumptions, and remedies will apply with respect to
advancement of expenses and the right to indemnification under this By-Law 27:
(i) All reasonable expenses incurred by or on behalf of an Indemnitee
in connection with any Proceeding will be advanced to the Indemnitee by the
Company within 30 calendar days after the receipt by the Company of a
statement or statements from the Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of
such Proceeding. Such statement or statements will reasonably evidence the
expenses incurred by the Indemnitee and, if and to the extent required by
law at the time of such advance, will include or be accompanied by an
undertaking by or on behalf of the Indemnitee to repay such amounts
advanced as to which it may ultimately be determined that the Indemnitee is
not entitled. If such an undertaking is required by law at the time of an
advance, no security will be required for such undertaking and such
undertaking will be accepted without reference to the recipient's financial
ability to make repayment.
(ii) To obtain indemnification under this By-Law 27, the Indemnitee
will submit to the Secretary a written request, including such
documentation supporting the claim as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what
extent the Indemnitee is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's entitlement to
indemnification will be made not less than 60 calendar days after receipt
by the Company of the written request
-7-
<PAGE>
for indemnification together with the Supporting Documentation. The
Secretary will promptly upon receipt of such a request for indemnification
advise the Board in writing that the Indemnitee has requested
indemnification. The Indemnitee's entitlement to indemnification under
this By-Law 27 will be determined in one of the following ways: (A) by a
majority vote of the Disinterested Directors (as hereinafter defined), if
they constitute a quorum of the Board, or, in the case of an Indemnitee
that is not a present or former officer of the Company, by any committee of
the Board or committee of officers or agents of the Company designated for
such purpose by a majority of the Board of Directors; (B) by a written
opinion of Independent Counsel if (1) a Change of Control has occurred and
the Indemnitee so requests or (2) in the case of an Indemnitee that is a
present or former officer of the Company, a quorum of the Board consisting
of Disinterested Directors is not obtainable or, even if obtainable, a
majority of such Disinterested Directors so directs; (C) by the
stockholders (but only if a majority of the Disinterested Directors, if
they constitute a quorum of the Board, presents the issue of entitlement to
indemnification to the stockholders for their determination); or (D) as
provided in subparagraph (iii) below. In the event the determination of
entitlement to indemnification is to be made by Independent Counsel
pursuant to clause (B) above, a majority of the Disinterested Directors
will select the Independent Counsel, but only an Independent Counsel to
which the Indemnitee does not reasonably object; PROVIDED, HOWEVER, that if
a Change of Control has occurred, the Indemnitee will select such
Independent Counsel, but only an Independent Counsel to which the Board
does not reasonably object.
(iii) Except as otherwise expressly provided in this By-Law 27, the
Indemnitee will be presumed to be entitled to indemnification under this
By-Law 27 upon submission of a request for indemnification together with
the Supporting Documentation in accordance with subparagraph (c)(ii) above,
and thereafter the Company will have the burden of proof to overcome that
presumption in reaching a contrary determination. In any event, if the
person or persons empowered under subparagraph (c)(ii) to determine
entitlement to indemnification has not been appointed or has not made a
determination within 60 calendar days after receipt by the Company of the
request therefor together with the Supporting Documentation, the Indemnitee
will be deemed to be entitled to indemnification and the Indemnitee will be
entitled to such indemnification unless (A) the Indemnitee misrepresented
or failed to disclose a material fact in making the request for
indemnification
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<PAGE>
or in the Supporting Documentation or (B) such indemnification is
prohibited by law. The termination of any Proceeding described in
paragraph (a) of this By-Law 27, or of any claim, issue, or matter therein,
by judgment, order, settlement, or conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, will not, of itself, adversely affect the
right of the Indemnitee to indemnification or create a presumption that the
Indemnitee did not act in good faith and in a manner which the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal Proceeding, that the Indemnitee
had reasonable cause to believe that his conduct was unlawful.
(iv) (A) In the event that a determination is made pursuant to
subparagraph (c)(ii) that the Indemnitee is not entitled to indemnification
under this By-Law 27, (1) the Indemnitee will be entitled to seek an
adjudication of his entitlement to such indemnification either, at the
Indemnitee's sole option, in (x) an appropriate court of the State of
Delaware or any other court of competent jurisdiction or (y) an arbitration
to be conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association, (2) any such judicial proceeding or
arbitration will be DE NOVO and the Indemnitee will not be prejudiced by
reason of such adverse determination, and (3) in any such judicial
proceeding or arbitration the Company will have the burden of proving that
the Indemnitee is not entitled to indemnification under this By-Law 27.
(B) If a determination is made or deemed to have been made, pursuant
to subparagraph (c)(ii) or (iii) of this By-Law 27 that the Indemnitee is
entitled to indemnification, the Company will be obligated to pay the
amounts constituting such indemnification within five business days after
such determination has been made or deemed to have been made and will be
conclusively bound by such determination unless (1) the Indemnitee
misrepresented or failed to disclose a material fact in making the request
for indemnification or in the Supporting Documentation or (2) such
indemnification is prohibited by law. In the event that advancement of
expenses is not timely made pursuant to subparagraph (c)(i) of this By-Law
27 or payment of indemnification is not made within five business days
after a determination of entitlement to indemnification has been made or
deemed to have been made pursuant to subparagraph (c)(ii) or (iii) of this
By-Law 27, the Indemnitee will be entitled to seek judicial enforcement of
the Company's obligation to pay to the Indemnitee such advancement of
expenses or indemnification.
-9-
<PAGE>
Notwithstanding the foregoing, the Company may bring an action, in an
appropriate court in the State of Delaware or any other court of competent
jurisdiction, contesting the right of the Indemnitee to receive
indemnification hereunder due to the occurrence of any event described in
subclause (1) or (2) of this clause (B) (a "Disqualifying Event");
PROVIDED, HOWEVER, that in any such action the Company will have the burden
of proving the occurrence of such Disqualifying Event.
(C) The Company will be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to the provisions of this
subparagraph (c)(iv) that the procedures and presumptions of this By-Law 27
are not valid, binding, and enforceable and will stipulate in any such
court or before any such arbitrator that the Company is bound by all the
provisions of this By-Law 27.
(D) In the event that the Indemnitee, pursuant to the provisions of
this subparagraph (c)(iv), seeks a judicial adjudication of, or an award in
arbitration to, enforce his rights under, or to recover damages for breach
of, this By-Law 27, the Indemnitee will be entitled to recover from the
Company, and will be indemnified by the Company against, any expenses
actually and reasonably incurred by the Indemnitee if the Indemnitee
prevails in such judicial adjudication or arbitration. If it is determined
in such judicial adjudication or arbitration that the Indemnitee is
entitled to receive part but not all of the indemnification or advancement
of expenses sought, the expenses incurred by the Indemnitee in connection
with such judicial adjudication or arbitration will be prorated
accordingly.
(v) For purposes of this paragraph (c):
(A) "Change in Control" means the occurrence of any of the
following events:
(1) The Company is merged, consolidated, or reorganized into or
with another corporation or other legal entity, and as a result
of such merger, consolidation, or reorganization less than a
majority of the combined voting power of the then-outstanding
securities of such corporation or entity immediately after such
transaction are held in the aggregate by the holders of the
then-outstanding securities entitled to vote generally in the
election of directors ("Voting Stock") of the Company immediately
prior to such transaction;
-10-
<PAGE>
(2) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other
legal entity and, as a result of such sale or transfer, less than
a majority of the combined voting power of the then-outstanding
securities of such other corporation or entity immediately after
such sale or transfer is held in the aggregate by the holders of
Voting Stock of the Company immediately prior to such sale or
transfer;
(3) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form, or report or item therein),
each as promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), disclosing that any person
(as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act)
of securities representing 30% or more of the combined voting
power of the Voting Stock of the Company;
(4) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form, or report or item therein) that a
change in control of the Company has occurred or will occur in
the future pursuant to any then-existing contract or transaction;
or
(5) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors
cease for any reason to constitute at least a majority thereof;
PROVIDED, HOWEVER, that for purposes of this clause (5) each
Director who is first elected, or first nominated for election by
the Company's stockholders by a vote of at least two-thirds of
the Directors (or a committee of the Directors), then still in
office who were Directors at the beginning of any such period
will be deemed to have been a Director at the beginning of such
period.
Notwithstanding the foregoing provisions of clauses (3) or (4) of the paragraph
(c)(v)(A), unless otherwise determined in a specific case by majority vote of
the Board, a "Change
-11-
<PAGE>
in Control" will not be deemed to have occurred for purposes of such clauses (3)
or (4) solely because (x) the Company, (y) an entity in which the Company,
directly or indirectly, beneficially owns 50% or more of the voting securities
(a "Subsidiary"), or (z) any employee stock ownership plan or any other employee
benefit plan of the Company or any Subsidiary either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K, or Schedule 14A (or any successor schedule, form, or
report or item therein) under the Exchange Act disclosing beneficial ownership
by it of shares of Voting Stock of the Company, whether in excess of 30% or
otherwise, or because the Company reports that a change in control of the
Company has occurred or will occur in the future by reason of such beneficial
ownership.
(B) "Disinterested Director" means a Director of the Company who is
not or was not a party to the Proceeding in respect of which
indemnification is sought by the Indemnitee.
(C) "Independent Counsel" means a law firm or a member of a law firm
that neither presently is, nor in the past five years has been, retained to
represent (1) the Company or the Indemnitee in any matter material to
either such party or (2) any other party to the Proceeding giving rise to a
claim for indemnification under this By-Law 27. Notwithstanding the
foregoing, the term "Independent Counsel" will not include any person who,
under the applicable standards of professional conduct then prevailing
under the law of the State of Delaware, would be precluded from
representing either the Company or the Indemnitee in an action to determine
the Indemnitee's rights under this By-Law 27.
(d) If any provision or provisions of this By-Law 27 are held to be
invalid, illegal, or unenforceable for any reason whatsoever: (i) the validity,
legality, and enforceability of the remaining provisions of this By-Law 27
(including without limitation all portions of any paragraph of this By-Law 27
containing any such provision held to be invalid, illegal, or unenforceable,
that are not themselves invalid, illegal, or unenforceable) will not in any way
be affected or impaired thereby and (ii) to the fullest extent possible, the
provisions of this By-Law 27 (including without limitation all portions of any
paragraph of this By-Law 27 containing any such provision held to be invalid,
illegal, or unenforceable, that are not themselves invalid, illegal, or
unenforceable) will be construed so as to give effect to the intent manifested
by the provision held invalid, illegal, or unenforceable.
-12-
<PAGE>
28. INSURANCE, CONTRACTS, AND FUNDING. The Company may purchase and
maintain insurance to protect itself and any Indemnitee against any expenses,
judgments, fines, and amounts paid in settlement or incurred by any Indemnitee
in connection with any Proceeding referred to in By-Law 27 or otherwise, to the
fullest extent permitted by applicable law as then in effect. The Company may
enter into contracts with any person entitled to indemnification under By-Law 27
or otherwise, and may create a trust fund, grant a security interest, or use
other means (including without limitation a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in By-Law 27.
GENERAL
29. FISCAL YEAR. The fiscal year of the Company will be fixed from time
to time by the Board.
30. SEAL. The Board may adopt a corporate seal and use the same by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
31. RELIANCE UPON BOOKS, REPORTS, AND RECORDS. Each Director, each member
of a committee designated by the Board, and each officer of the Company will, in
the performance of his or her duties, be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports, or statements presented to the Company by any of the Company's officers
or employees, or committees of the Board, or by any other person or entity as to
matters the Director, committee member, or officer believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company.
32. TIME PERIODS. In applying any provision of these By-Laws that
requires that an act be done or not be done a specified number of days prior to
an event or that an act be done during a period of a specified number of days
prior to an event, calendar days will be used, the day of the doing of the act
will be excluded and the day of the event will be included.
33. AMENDMENTS. These By-Laws may be amended or repealed, or new By-Laws
may be adopted, by the stockholders or by the Board.
34. CERTAIN DEFINED TERMS. Terms used herein with initial capital letters
that are defined in the Certificate of Incorporation are used herein as so
defined.
-13-
<PAGE>
NOVEMBER 14, 1994
ANNEX IV
DISCLOSURE SCHEDULES
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
Schedule 4.1(A) Exceptions to Good Standing and Qualification to do
Business
Schedule 4.1(B) List of Company's Subsidiaries, Jurisdiction of
Incorporation and Percentage of Outstanding Capital Stock
Schedule 4.3(A) Options, Warrants or Other Rights, Agreements,
Arrangements or Commitments of Issued or Unissued Capital
Stock
Schedule 4.3(B) Material Outstanding Contractual Obligations Regarding
the Shares
Schedule 4.3(C) Security Interests in Subsidiaries' Stock
Schedule 4.5(A) Violations of or Liens on Any Note, Bond, Mortgage or
Indenture on the Properties or Assets of the Company or
Its Subsidiaries
Schedule 4.5(B) Violations of or Liens or Other Encumbrances on Any
Contract, Service Agreement, Lease License or Permit of
the Company or Its Subsidiaries
Schedule 4.5(C) Violations of or Liens or Other Encumbrances on Any
Franchise or Other Instrument or Obligation of the
Company or Its Subsidiaries
<PAGE>
Schedule 4.5(D) Required Consents, Approvals, Authorizations or Actions
Schedule 4.6 Liabilities or Obligations Not Included on the Balance
Sheet, Nor Contemplated by the Agreement, Nor Incurred in
Ordinary Course of Business Since August 31, 1994
Schedule 4.7 Certain Changes or Events Since August 31, 1994
Schedule 4.8(A) Pending Claims, Actions, Suits, Proceedings or
Investigations (Not Otherwise Disclosed in SEC Reports)
Schedule 4.8(B) Outstanding Court Orders
Schedule 4.9 List of all Material Employee Benefit Plans and ERISA -
"Prohibited Transactions" - "Reportable Events"
Schedule 4.10(A) Collective Bargaining Agreements
Schedule 4.10(B) Compliance With Obligations Under the National Labor
Relations Act, etc.
Schedule 4.10(C) Consent of the Unions
Schedule 4.10(D) List of All Material Employment, Consulting and Severance
Agreements
Schedule 4.12 Material Deficiencies and Waiver With Respect to Taxes
Schedule 4.13(A) Environmental Audits and Reports
Schedule 4.13(B) Governmental Investigations or Proceedings Regarding
Environmental Matters
Schedule 4.13(C) Underground Storage Tanks
Schedule 4.13(D) Underground Storage Tanks -- Claims
Schedule 4.15 Breaches, Violations and Defaults
Schedule 5.1(A) Disposition of Assets and Properties
Schedule 5.1(B) Contracts and Agreements
- ii -
<PAGE>
Schedule 5.1(C) New Capital Expenditures
Schedule 5.1(D) Amendment to Contracts, Agreements, Commitments or
Arrangements
Schedule 5.1(E) Increase in Compensation or Grants or Payments of
Severance or Termination Pay
- iii -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.1(A)
EXCEPTIONS TO GOOD STANDING AND
QUALIFICATION TO DO BUSINESS
See Schedule 4.12 with respect to the Tennessee Tax Matter (as defined therein).
- 1 -
<PAGE>
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.1(B)
LIST OF COMPANY'S SUBSIDIARIES,
JURISDICTION OF INCORPORATION AND
PERCENTAGE OF OUTSTANDING CAPITAL STOCK
The Company is the owner of 100% of the capital stock, directly or indirectly,
of each listed subsidiary, unless otherwise indicated.
State of
Corporation Relationship Incorporation
- ----------- ------------ -------------
United Inns Inc. of Tennessee Subsidiary Tennessee
United Inns of Colorado, Inc. Subsidiary Colorado
United Supply Company Subsidiary Tennessee
Gary Hotel Courts, Inc. Subsidiary Georgia
Stagner Hotel Courts, Inc. Subsidiary Georgia
Kizer Motel Courts, Inc. Subsidiary Texas
Lammons Hotel Courts, Inc. Subsidiary Georgia
Turley Inns, Inc. Subsidiary Texas
Rodgers Hotel Courts, Inc. Subsidiary Georgia
Dotson, Inc. Subsidiary Texas
Haywood Hotel Courts, Inc. Subsidiary Georgia
Sepp Hotel Courts, Inc. Subsidiary Georgia
Scott Inn, Inc. Subsidiary Texas
Johnson Inn, Inc. Subsidiary Texas
South Jacksonville Inn, Inc. Subsidiary Florida
Eastex Inn, Inc. Subsidiary Texas
Croswell Inn, Inc. Subsidiary Texas
[CONTINUED]
- 2 -
<PAGE>
State of
Corporation Relationship Incorporation
- ----------- ------------ -------------
Rier Inn Inc. Subsidiary Texas
Clayton County Inn, Inc. Subsidiary Georgia
Houston Airport Inn, Inc. Subsidiary Texas
Peachtree Lenox Inn, Inc. Subsidiary Georgia
I-20 East Inn, Inc. Subsidiary Georgia
Jackson Downtown Inn, Inc. Subsidiary Mississippi
Northside Inn, Inc. Subsidiary Georgia
Old National Inn, Inc. Subsidiary Georgia
Gaines, Inc. Subsidiary Tennessee
Friscia Inn, Inc. Subsidiary Texas
Airport Utilities, Inc. Subsidiary Texas
Transcontinental Motor Hotels, Inc. Subsidiary Texas
Ellison Hotel Corporation Subsidiary Texas
Glenjon, Inc. Subsidiary Texas
TMH Motor Hotels, Inc. Subsidiary California
Houston Inns Service Co., Inc. Subsidiary(1) Texas
Ox John, Inc. Subsidiary(2) Texas
La Mancha Club, Inc. Subsidiary(3) Texas
La Strada Club, Inc. Subsidiary(3) Texas
Roswell Road Inn, Inc. Subsidiary Georgia
Memorial Katy Inn, Inc. Subsidiary Texas
Greenway Plaza Inn, Inc. Subsidiary Texas
Hobby Inn, Inc. Subsidiary Texas
Chamblee-Dunwoody Inn, Inc. Subsidiary Georgia
Southwest, Inc. Subsidiary Mississippi
Mid-Atlanta Investment Company Subsidiary(4) Georgia
Penrod Club Subsidiary(3) Texas
The Thicket Club Subsidiary(3) Texas
Limited Service Inns, Inc. of Georgia Subsidiary Georgia
Austin Innkeepers, Inc. Subsidiary Texas
Indian Trail Inn, Inc. Subsidiary Georgia
Memphis Carwash, Inc. Subsidiary Tennessee
Carwash Number 2, Inc. Subsidiary Tennessee
9 Up Club, Inc. Subsidiary(3) Texas
Limited Service Inns, Inc. of Houston Subsidiary Texas
Limited Service Inns, Inc. of Mississippi Subsidiary Mississippi
Limited Service Inns, Inc. of Georgia No. 2 Subsidiary Georgia
Rier Properties Inc. Subsidiary Texas
_____________________
(1) 49% Actual Ownership
(2) 45% Actual Ownership
(3) Beneficial Interest
(4) 75% Owned
- 3 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.3(A)
OPTIONS, WARRANTS OR OTHER RIGHTS,
AGREEMENTS, ARRANGEMENTS OR COMMITMENTS
OF ISSUED OR UNISSUED CAPITAL STOCK
1. Consultant Agreement dated August 13, 1993 between Lawrence Geller and the
Company providing for Mr. Geller's option right to 60,000 shares of common
stock. Mr. Geller has exercised his right to acquire 25,000 shares of
common stock and continues to hold an option right to acquire an
additional 35,000 shares of common stock. A Form S-1 under the Securities
Act of 1933, as amended (the "Act") has been filed registering the 25,000
shares of common stock owned outright and the 35,000 options to purchase
common stock held by Mr. Geller.
2. Option Agreement dated February 11, 1994 between Robert L. Cockroft and
the Company providing for Mr. Cockroft's right to 1000 shares of common
stock under the UII 1993 Stock Incentive Plan as a Director of the
Company.
3. Option Agreement dated February 11, 1994 between Howard W. Loveless and
the Company providing for Mr. Loveless' right to 1000 shares of common
stock under the UII 1993 Stock Incentive Plan as a Director of the
Company.
4. Option Agreement dated February 11, 1994 between Janet C. Virgin and the
Company providing for Ms. Virgin's right to 1000 shares of common stock
under UII 1993 Stock Incentive Plan as a Director of the Company.
- - 4 -
<PAGE>
5. Option Agreement dated February 11, 1994 between Ronald J. Wareham and the
Company providing for Mr. Wareham's right to 1000 shares of common stock
under UII 1993 Stock Incentive Plan as a Director of the Company.
6. Under the terms of the Covenant Agreement dated December 22, 1992 (the
"Covenant Agreement") between Rier Properties Inc. and Texas Commerce Bank
National Association ("TCB"), a subsidiary of the Company, Rier Inn Inc.,
may purchase additional shares of its subsidiary corporation, Rier
Properties Inc., in order to make equity contributions to Rier Properties
Inc. so as to prevent a default under the Covenant Agreement. All such
shares are to be delivered to TCB under the terms of a Pledge and Security
Agreement dated December 22, 1992 (the "Pledge Agreement") between TCB and
Rier Inn Inc. As of the date hereof, three (3) shares of Rier Properties
Inc. had been purchased by Rier Inn Inc. under the terms of the Covenant
Agreement and have been delivered to TCB pursuant to the Pledge Agreement.
7. The Company has adopted and the Shareholders have approved the Company's
1993 Stock Incentive Plan pursuant to which the options disclosed in items
2-5 of this Schedule 4.3(A) were granted. None of such options or the
shares to be issued upon the exercise thereof have been registered under
the Act. It is contemplated that such options for 4,000 shares in the
aggregate will be exercised and tendered into the Offer.
- 5 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.3(B)
MATERIAL OUTSTANDING CONTRACTUAL OBLIGATIONS REGARDING THE SHARES
See Schedule 4.3(A), particularly Item 6
- 6 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.3(C)
SECURITY INTERESTS IN SUBSIDIARIES' STOCK
See Schedule 4.3(A), particularly Item 6
- 7 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.5(A)
VIOLATIONS OF OR LIENS ON ANY NOTE, BOND,
MORTGAGE OR INDENTURE ON THE PROPERTIES OR
ASSETS OF THE COMPANY OR ITS SUBSIDIARIES
LISTING OF MORTGAGES - HOTEL PROPERTY LOCATIONS
N/F 1. Houston Airport - Deed of trust between Houston Airport Inn,
Inc. (Grantor) and Woodmen of the World Life Insurance
Society (Beneficiary), dated August 23, 1977.
N 2. Houston I-10 West Silber - Deed of Trust between Memorial
Katy Inn, Inc. and United Inns Inc. (Mortgagor) and Seventy-
Six Eleven Corporation (Mortgagee), dated December 22, 1980.
Y/F 3. Houston West Loop - Deed of Trust between Scott Inn, Inc. and
The Fidelity Mutual Life Insurance Company, dated December
29, 1977.
N 4. Jackson Downtown - Deed of Trust between Jackson Downtown
Inn, Inc. (Trustor) and Robert J. Conrad (Trustee) and
Prudential Life Insurance Co. (Beneficiary), dated January 6,
1976.
N/F/MD 5. Jackson Southwest - Deed of Trust and Security Agreement
among Jackson Downtown Inn, Inc. and United Inns, Inc.
(Borrower) and First Tennessee Bank, N.A. Memphis (Lender),
dated July 17, 1981; and modified January 1, 1993.
- 8 -
<PAGE>
Y/MD 6. Atlanta Downtown - Deed to Secure Debt and Security Agreement
between Mid-Atlanta Investment Co. (Borrower) and Bell
Atlantic Tricon Leasing Corporation (Lender), dated December
8, 1989.
N/F/MF 7. Atlanta I-20 East - Deed to Secure Debt between I-20 East
Inn, Inc. and Cauble and Company, which later sold its
interest to Washington National Insurance Company, dated June
27, 1973.
N/MD 8. Atlanta Powers Ferry - Security Deed between Northside Hotel
Investors, a Joint Venture, composed of Allied Investments
and Northside Inn, Inc. (Grantor) and The Prudential
Insurance Company of America (Grantee), dated April 15, 1981.
N 9. Deed of Trust between Northside Inn, Inc. (Maker) and the
general partners of Allied Investments (Holder), dated July
29, 1992, with note secured by Allen Road Site.
N/F 10. Houston Medical Center - Deed of Trust between Rier Inn Inc.
(Mortgagor) and First National Bank of Memphis (Mortgagee),
dated August 31, 1972 and later transferred to Southwestern
Life Insurance Co. on April 29, 1974. (See also Texas
Commerce Bank below).
N/MF/MD 11. Chamblee-Dunwoody; Marietta Hampton; Stemmons Brook Hollow;
Hampton Briarwood; Jackson Hampton; and Houston Medical
Center (all of which are hotels) and one closed car wash in
Houston, Texas, and one closed car wash in Dallas, Texas are
part of the collateral under portfolio financing (Rier
Properties Inc./Texas Commerce Bank). The portfolio
financing outline is not indexed herein but an outline is
being provided related to these properties collateralized
under the Texas Commerce Bank portfolio financing.
N/MF/MD 12. Note Purchase and Loan Agreement, Master Note, Mortgage
Document and Security Agreement between Transcontinental
Motor Hotels, Inc. (Santa Barbara, Scottsdale, Dallas Regal
Row), Sepp Hotel Courts, Inc. (Atlanta Airport North),
Haywood Hotel Courts, Inc. (Atlanta Northeast) and Clayton
County Inn, Inc. (Atlanta South) (Grantors); United Inns,
Inc.; and Salomon Brothers and the First National Bank of
Boston (Grantee), dated September 30, 1986.
N 13. Deed of Trust and Security Agreement between Transcontinental
Motor Hotels, Inc. (Unimproved Central Expressway)(Borrower)
and Republic National Life
- 9 -
<PAGE>
Insurance Company (Lender), dated December 19, 1984, with the
current mortgage holder being American General Life Insurance
Co. Mortgage is on a 20'x400' strip of burdened property of
which an 8000 square foot strip is all that remains of the
original parcel that was sold to the City of Dallas/State
Department of Transportation.
N 14. Land Deed of Trust between Limited Service Inns, Inc. of
Mississippi, and McDonalds Corporation (unimproved land
located in Jackson, Mississippi), dated May 27, 1993.
______________________________________________________________
Y = Change of control causes default
N = Change of control does not cause default
F = Loss of franchise creates default
MF = Modification of franchise may create default
MD = Change of control may cause default if corporate structure relating
to ownership and management is not maintained
- 10 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.5(B)
VIOLATIONS OF OR LIENS OR OTHER ENCUMBRANCES
ON ANY CONTRACT, SERVICE AGREEMENT, LEASE LICENSE
OR PERMIT OF THE COMPANY OR ITS SUBSIDIARIES
1. Except as disclosed in (2) below, that the execution, performance and
delivery of the Agreement by the Company will not result in the breach of,
or constitute a default thereunder, or give to others any right to
terminate under the contracts, service agreements, personal property
leases, licenses and permits affecting its properties, where such breach,
default or termination would have a Material Adverse Effect.
2. There are a large number of agreements entered into by the Company and its
subsidiaries relating to the procurement of goods and services for the
operation of the hotel properties such as pest control contracts, none of
which, if terminated, would have a Material Adverse Effect and most of
which are terminable by either party on 30 days prior written notice.
- 11 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.5(C)
VIOLATIONS OF OR LIENS OR OTHER ENCUMBRANCES
ON ANY FRANCHISE OR OTHER INSTRUMENT OR OBLIGATION
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES
The following Franchise Agreements and all instruments related thereto,
including reservation system, sign and other trademark related agreements, may
be terminated by the franchisor in the event that a change in control occurs:
LOCATION DATE OF LICENSE EXPIRATION DATE
- -------- --------------- ---------------
ATLANTA:
H.J. Exp. I-20 East 07-31-91 12-01-2002
H.I. South 06-02-88 09-07-2003
H.I. Airport North 10-28-85 09-12-2000
H.I. Exp. Northeast 07-31-91 03-15-2003
Ramada Downtown 09-17-91 09-17-2001
H.I. Powers Ferry 01-23-81 01-22-2001
H.I. Perimeter/Dunwoody 12-22-92 01-16-2006
Marietta Hampton 12-22-92 07-09-2006
HOUSTON:
Days Inn I-10 East 12-29-89 12-19-2005
H.I. Airport 05-31-85 12-07-2001
H.I. Medical Center 12-22-92 10-22-2003
H.I. West Loop 12-19-80 01-24-1998
H.I. I-10 at Silber 04-02-81 03-15-1995
Hampton Inn 03-20-91 03-19-2011
- 12 -
<PAGE>
LOCATION DATE OF LICENSE EXPIRATION DATE
- -------- --------------- ---------------
JACKSON:
H.I. Downtown 03-05-76 12-15-1994
H.I. Southwest 05-02-79 05-01-1999
H.I. North 06-25-76 06-24-1995
Hampton Inn 12-22-92 10-22-2005
DALLAS:
Days Inn Regal Row 02-07-90 12-31-2005
H.I. Brook Hollow 12-22-92 05-11-2003
ARIZONA:
Flagstaff Days Inn 04-07-89 10-01-1999
H.J. Scottsdale 08-24-93 08-24-2003
CALIFORNIA:
H.I. Santa Barbara 06-18-91 08-20-2003
COLORADO SPRINGS:
H.I. North 09-01-78 08-31-1998
H.I. Exp. Central 06-18-91 12-15-2003
- 13 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.5(D)
REQUIRED CONSENTS, APPROVALS, AUTHORIZATIONS OR ACTIONS
1. See Schedule 4.5(A)
2. See Schedule 4.5(B)
3. See Schedule 4.5(C)
4. In addition to the foregoing, the execution, performance and
delivery of the Agreement by the Company may necessitate consents, approvals,
authorizations or other actions under the contracts, service agreements, leases,
licenses and permits (e.g., liquor permits) affecting its properties. The
failure of the Company to obtain any such consent, approval or authorization or
to take such other actions will not prevent the Company form performing its
obligations under this Agreement and will not have a Material Adverse Effect.
- 14 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.6
LIABILITIES OR OBLIGATIONS NOT INCLUDED ON THE
BALANCE SHEET, NOR CONTEMPLATED BY THE AGREEMENT
NOR INCURRED IN THE ORDINARY COURSE OF BUSINESS
SINCE AUGUST 31, 1994
1. See Schedule 4.12 with respect to the Tennessee Tax Matter.
2. See Items 6-11 on Schedule 4.10(D) with respect to employee severance
payments.
3. See Schedule 4.8(A) with respect to pending claims, actions, suits, etc.
4. Franchise Termination Fees - See Attached Annex.
- 15 -
<PAGE>
ANNEX TO SCHEDULE 4.6
FRANCHISE AGREEMENT TERMINATION CHARGES
Following are general terms under existing franchise agreements concerning
termination provisions. It is possible that arrangements with franchisors can
be negotiated on specific agreements which differ from those set forth herein,
but this is subject to interested parties due diligence.
CONTINUING OPERATIONS:
1. ATLANTA HOLIDAY INN - AIRPORT NORTH - 12 months notice plus 6-1/2 percent
of gross room revenues for the preceding 24 months.
2. ATLANTA HOLIDAY INN - SOUTH (1-75/U.S. 41) - 12 months notice plus 6-1/2
percent of gross room revenues for the preceding 24 months.
3. ATLANTA HOLIDAY INN - CHAMBLEE/DUNWOODY - 6-1/2 percent of gross room
revenues for the preceding 36 months.
4. ATLANTA HOLIDAY INN - POWERS FERRY - 12 months notice plus 8 percent of
gross room revenues for the preceding 24 months.
5. ATLANTA HAMPTON INN - MARIETTA - 12 months notice plus 8 percent of gross
revenues for the preceding 24 months.
6. ATLANTA HOLIDAY EXPRESS - NORTHEAST - 12 months notice plus 6-1/2 percent
of gross room revenues for the preceding 24 months. No fee if terminated
on or before April 30, 1995.
7. ATLANTA RAMADA INN - DOWNTOWN - Greater of $50,000.00 or preceding 12
months of gross room revenues times 3%.
8. ATLANTA HOLIDAY EXPRESS - I-20 EAST - 12 months notice plus 6-1/2 percent
of gross room revenues for the preceding 24 months.
9. DALLAS DAYS INN - REGAL ROW - 12 months of aggregate monthly royalties with
a minimum of $1,000.00 per room (200 rooms).
10. DALLAS HOLIDAY INN - BROOK HOLLOW - Preceding 36 months gross room revenues
times 6-1/2 percent.
11. HOUSTON HAMPTON INN - Preceding 36 months gross room revenues times 8
percent.
- 16 -
<PAGE>
12. HOUSTON DAYS INN - EAST - 12 months of aggregate monthly royalty with a
minimum of $1,000.00 per room (156 rooms).
13. HOUSTON HOLIDAY INN - AIRPORT - 12 months notice plus 6-1/2 percent of
gross room revenues for the preceding 24 months.
14. HOUSTON HOLIDAY INN - WEST LOOP GALLERIA - 12 months notice plus 6-1/2% of
gross room revenues for the preceding 24 months.
15. HOUSTON HOLIDAY INN - I-10 WEST AT SILBER - 12 months notice plus 6-1/2
percent of gross room revenues for the preceding 24 months. No fee if
terminated on or before March 15, 1995, as is presently contemplated.
16. HOUSTON HOLIDAY INN - MEDICAL CENTER - 36 months of gross room revenues
times 6-1/2 percent.
17. JACKSON HOLIDAY INN - DOWNTOWN - No fee if terminated on or before December
15, 1994, as is presently contemplated.
18. JACKSON HOLIDAY INN - NORTH - 6-1/2 percent of last months' gross revenue
times remaining term under agreement.
19. JACKSON HOLIDAY INN - SOUTHWEST - 12 months notice plus 6-1/2 percent of
gross room revenues for the preceding 24 months.
20. JACKSON HAMPTON INN - BRIARWOOD - 12 months notice plus 6-1/2 percent of
gross room revenues for the preceding 24 months.
21. SANTA BARBARA HOLIDAY INN - 12 months notice plus 6-1/2 percent of gross
room revenues for the preceding 24 months.
22. SCOTTSDALE HOWARD JOHNSON - Licensee may terminate from 9-1-95 through
8-31-96 with no fee.
23. FLAGSTAFF DAYS INN - 12 months of aggregate monthly royalties with a
minimum of $1,000.00 per room (157 rooms).
24. COLORADO SPRINGS HOLIDAY EXPRESS - CENTRAL - 12 months notice plus 6-1/2
percent of gross room revenues for the preceding 24 months. No fee if
terminated on or before April 30, 1995.
- 17 -
<PAGE>
25. COLORADO SPRINGS HOLIDAY INN - NORTH - 12 months notice plus 6-1/2 percent
of gross room revenues for the preceding 24 months. No fee if terminated
on or before April 30, 1995.
Schedule does not include Dallas Howard Johnson - Downtown Agreement.
Negotiations regarding the possible amendment of this lease or the entering into
of a management agreement are ongoing, but it is uncertain whether agreement can
be reached. No fee is payable if the franchise is terminated on or before
November 30, 1994.
- 18 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.7
CERTAIN CHANGES OR EVENTS SINCE AUGUST 31, 1994
1. See Schedule 4.8(A) with respect to pending claims, actions, suits, etc.
2. See Item 3 on Schedule 4.15
- 19 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.8(A)
PENDING CLAIMS, ACTIONS, SUITS, PROCEEDINGS OR INVESTIGATIONS
(NOT OTHERWISE DISCLOSED IN SEC REPORTS)
GENERAL COMMENTS
1. The Company self-insures for the first $250,000 per occurrence under each
policy.
2. The estimated liability on none of the claims or lawsuits described in this
Schedule 4.8(A), including the Annex, exceeds the self-insurance amount
plus applicable insurance coverage.
3. There are worker's compensation and other general liability claims incurred
in the ordinary course of business, which are not listed. The Company will
provide information regarding those claims on request. The Company
believes that the estimated liability with respect to each such claim is
within the self-insurance amount plus applicable insurance coverage.
4. Detailed Loss Runs for claims and lawsuits for the previous three (3) years
are available for inspection.
5. See attached Annex for current lawsuits as well as claims not in the
ordinary course of business.
- 20 -
<PAGE>
ANNEX TO SCHEDULE 4.8(A)
CURRENT LAWSUITS AGAINST VARIOUS ENTITIES IN
UNITED INNS SYSTEM -- INSURED; OTHER CLAIMS
<TABLE>
<CAPTION>
DATE OF
INCIDENT AMOUNT OF
NAME OF ON WHICH DEMAND MADE DESCRIPTION OF
CLAIMANT OR CLAIM IS IN COMPLAINT BI OR PD OPEN TOTAL CUMULATIVE BASIS OF
PLAINTIFF COMPANY DEFENDANT BASED OR LETTER RESERVES RESERVES RESERVES SUMS PAID LAWSUIT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Burnett et al. Stagner Hotel 09-Jun-90 No specific $31,000.00 $45,894.00 $106,020.00 $60,126.00 Three
Courts, Inc. et liquidated plaintiffs
al. demand claim to have
been mugged
while
unloading
vehicle at
hotel
Busbice, Rier Properties 13-Aug-90 No specific $5,000.00 $8,245.00 $20,000.00 $11,754.00 Plaintiff
Tommie Inc. d/b/a liquidated claims to have
Houston Medical demand suffered
Center injuries
acquired when
she sat on arm
rest that did
not have
padding and
metal exposed
Ciprotti, United Inns Inc. 25-Nov-89 $450,000.00 No reserves No reserves No reserves No reserves Is bringing a
Laura of Tennessee and set up set up set up set up third lawsuit
Northside Inn, pro se against
Inc. hotel; still
seeks money
for false
arrest and
other theories
even though
limitation
problems; two
lawsuits have
previously
been dismissed
on basically
the same
theories
either through
appeal or on
her own motion
Cortez, Jose T. United Inns Inc. 10-Jan-93 No specific No reserves No reserves No reserves No reserves Mr. Pride
of Tennessee liquidated available available available available truck in
d/b/a Mr. Pride demand Louisiana
Car Wash struck Cortez
car after
Cortez car had
gone out of
control; at or
near the
commencement
of the suit
USF&G adjuster
told me that
she has
reserved for
$15,000
Couey, Richard Memorial Katy 02-Mar-92 Less than $10,000.00 $17,933.00 $30,000.00 $12,067.00 Plaintiff
Inn, Inc. and $100,000 mugged by two
Stanley Smith assailants in
Security parking lot of
hotel
Curry, Jack Jackson Downtown 12-Jul-91 $750,000.00 $15,000.00 $21,019.00 $35,000.00 $13,980.00 Plaintiff
Inn, Inc. d/b/a claims
Jackson North injuries after
he slipped and
fell in public
restroom of
hotel
Flores, Gloria Houston Inns 05-Nov-88 No specific $75,000.00 $88,074.00 $235,000.00 $146,925.00 Claims one and
et al. Service Company, liquidated a half years
The Petals demand later her
Restaurant, husband died
Holiday Inns, from
Inc. et al. salmonella
poisoning from
oysters served
</TABLE>
- 21 -
<PAGE>
ANNEX TO SCHEDULE 4.8(A)
CURRENT LAWSUITS AGAINST VARIOUS ENTITIES IN
UNITED INNS SYSTEM -- INSURED; OTHER CLAIMS
<TABLE>
<CAPTION>
DATE OF
INCIDENT AMOUNT OF
NAME OF ON WHICH DEMAND MADE DESCRIPTION OF
CLAIMANT OR CLAIM IS IN COMPLAINT BI OR PD OPEN TOTAL CUMULATIVE BASIS OF
PLAINTIFF COMPANY DEFENDANT BASED OR LETTER RESERVES RESERVES RESERVES SUMS PAID LAWSUIT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Foster, Delia United Inns, Inc. 15-Aug-91 $346,218.45 $15,000.00 $22,394.00 $25,000.00 $2,606.00 Plaintiff
of Tennessee claims
d/b/a Holiday Inn injuries after
Downtown, Jackson she slipped
and fell in
hotel
restaurant
Goelz, Rier Properties 11-May-92 $250,000.00 $5,000.00 $7,474.00 $7,500.00 $25.00 Plaintiff
Jeffrey W. and Inc. d/b/a Goelz shot in
Kenneth Rivi Hampton Marietta, parking lot by
PRGV, Inc. d/b/a person from a
King's Head Pub, lounge they
and David Michael had just
Breeden returned from;
Rivi is
claiming
hedonistic
type damages
Hughes, United Inns of 21-Nov-91 No specific $130,000.00 $130,160.00 $140,000.00 $9,840.00 Plaintiff
Dorothy and Colorado, Inc. liquidated slipped and
Mutual of d/b/a Holiday Inn demand fell on ice on
Omaha North sidewalk at
Insurance hotel,
Company claiming
multiple
injuries
Lambert, R.W. Lammons Hotel 29-Jul-93 $1,000,000.00 $10,000.00 $14,130.00 $20,050.00 $5,920.00 Plaintiffs
and Vink, Courts, Inc. claim they
Peter d/b/a Ramada were kidnapped
Hotel Downtown from hotel
Nelson, Tom A. Houston Days Inn 17-Nov-91 $90,000.00 $20,000.00 $27,075.00 $27,500.00 $425.00 Plaintiffs had
and Crystal I-10 East belongings and
rental truck
stolen while
at hotel;
claim of PD
and personal
damages
Reyna, Maria Rier Properties 30-Jul-93 No specific $5,000.00 $5,200.00 $5,200.00 $0.00 Plaintiff
Inc. d/b/a liquidated claims she was
Holiday Inn demand injured when
Medical Center the automatic
door closed on
her while
exiting
Nancy Holiday Inn 07-Jan-93 No specific $5,000.00 $7,985.00 $15,000.00 $7,104.00 Plaintiff and
Rodriguez Airport & liquidated hotel van
K. Anderson demand driver dispute
who had the
green light
when
proceeding
through an
intersection
Shaw, Marie Sepp Hotel 16-Nov-91 No specific $10,000.00 $28,412.00 $30,000.00 $1,587.00 Claims she was
Courts, Inc. liquidated injured when
d/b/a Holiday Inn demand her car and
Airport North hotel van
sideswiped
each other at
the airport
</TABLE>
- 22 -
<PAGE>
ANNEX TO SCHEDULE 4.8(A)
CURRENT LAWSUITS AGAINST VARIOUS ENTITIES IN
UNITED INNS SYSTEM -- INSURED; OTHER CLAIMS
<TABLE>
<CAPTION>
DATE OF
INCIDENT AMOUNT OF
NAME OF ON WHICH DEMAND MADE DESCRIPTION OF
CLAIMANT OR CLAIM IS IN COMPLAINT BI OR PD OPEN TOTAL CUMULATIVE BASIS OF
PLAINTIFF COMPANY DEFENDANT BASED OR LETTER RESERVES RESERVES RESERVES SUMS PAID LAWSUIT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Spears, Edith Houston Airport 26-Mar-91 No specific $50,000.00 $56,208.00 $65,000.00 $8,791.00 Plaintiff
Inn, Inc. d/b/a liquidated mugged in
Holiday Inn demand parking lot of
Intercontinental hotel.
Airport
Sylvester, Holiday Inn 23-Apr-94 $15,000,000.00 $10,000.00 $45,211.00 $50,000.00 $4,788.00 Lawsuit filed
Sheila et al. (Jackson after their
Mississippi), The daughter was
Salvation Army, found in the
and Pendleton bottom of the
Detectives of MS, pool
Inc. et al.
Lestin, Eric Croswell Inn, 01-May-91 Specific Uninsured Uninsured Uninsured Uninsured Defendant has
H. Inc. performance claim; no claim; no claim; no claim; no filed
and other reserves reserves reserves reserves counterclaim
contract available available available available against
remedies defendant for
specific
performance of
alleged oral
agreement for
purchase of
property owned
by Croswell
Inn, Inc.
Rader, Transcontinental Not all'd No specific Uninsured Uninsured Uninsured Uninsured Plaintiff
Homer J., Jr. Motor Hotels, liquidated claim; no claim; no claim; no claim; no claims hotel
Inc. (Howard demand reserves reserves reserves reserves breached its
Johnson Hotel available available available available lease when
Downtown) hotel among
other things
changed
franchises
Rothschild's Rier Properties 03-Mar-93 $50,145.00 Uninsured Uninsured Uninsured Uninsured Claims front
Inc. d/b/a claim; no claim; no claim; no claim; no desk lost box
Holiday Inn reserves reserves reserves reserves of artificial
Perimeter available available available available limbs after
Mall/Dunwoody the box had
area been left at
front desk
Gerl Brandon Houston Airport 28-Oct-92 $95,000 Served too Served too Served too Served too Plaintiff
Inn, Inc. dba recently recently recently recently claims injury
Holiday Inn for any for any for any for any when she fell
Airport reserve reserve reserve reserve out of company
figures figures figures figures vehicle
</TABLE>
- 23 -
<PAGE>
ANNEX TO SCHEDULE 4.8(A)
CURRENT LAWSUITS AGAINST VARIOUS ENTITIES IN
UNITED INNS SYSTEM -- INSURED; OTHER CLAIMS
<TABLE>
<CAPTION>
DATE OF
INCIDENT AMOUNT OF
NAME OF ON WHICH DEMAND MADE DESCRIPTION OF
CLAIMANT OR CLAIM IS IN COMPLAINT BI OR PD OPEN TOTAL CUMULATIVE BASIS OF
PLAINTIFF COMPANY DEFENDANT BASED OR LETTER RESERVES RESERVES RESERVES SUMS PAID LAWSUIT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cyprian Peter Cruckshank, --- $16 Billion Served too Served too Served too Served too Plaintiff's
Mammah, G.M., Holiday recently recently recently recently claim is
President, Inn, Inc. Med. for any for any for any for any extremely
Olympic Ctr.; Wilbert reserve reserve reserve reserve ambiguous to
Executive Limo Lee, night figures figures figures figures the point that
auditor, Holiday it appears he
Inn Incorporated is failing to
Med. Ctr.; Rier state a claim
Inn, Inc.; upon which
Holiday Inn; and relief can be
other Defendants granted. He
is alleging
that somehow
there is a
conspiracy
against him by
a number of
hotels in the
Med. Ctr. area
and various
Houston City
depts. because
of some ticket
he received.
At this time,
this is
considered to
be no more
than a
frivolous
claim.
Houston Colony Dotson Inc. - ______ $155,000 Uninsured Uninsured Uninsured Uninsured Claim (not
Ltd. Friscia Inn Inc. claim; no claim; no claim; no claim, no lawsuit)
(former Hotel in reserves reserves reserves reserves alleging that
Houston) available available available available seller
violated the
Texas
Deceptive
Trade
Practices Act
in selling
hotel to
purchaser on
June 27, 1994.
Hotel had been
closed since
January 22,
1988.
Purchaser
alleges seller
had stated
that
Certificate of
Occupancy had
remained in
effect.
State of Texas Holiday Inn West Pending ______ ______ ______ ______ ______ Intent of
Highway Dept. Loop Texas State
Highway Dept.
to take a
significant
portion of
property for
highway
development of
Loop 610 and
Highway 59 in
Houston
</TABLE>
- 24 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.8(B)
OUTSTANDING COURT ORDERS
The State of California has filed an injunction against Transcontinental Motor
Hotels (doing business as Holiday Inn and Pelican's Restaurant), a wholly-owned
subsidiary of the Company (the "Defendant"), enjoining the Defendant in Santa
Barbara County, California from operating its restaurant business until it
substantially complies with the County Health and Safety Code.
- 25 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.9
LIST OF ALL MATERIAL EMPLOYEE BENEFIT PLANS AND ERISA
"PROHIBITED TRANSACTIONS" - "REPORTABLE EVENTS"
1. United Inns, Inc. Retirement and Savings Plan (401(K) Plan) effective as
of January 1, 1992.
2. United Inns, Inc. Comprehensive Major Medical Benefits, Group Life
Insurance, Accidental Death and Dismemberment Insurance and Accident and
Sickness Benefits Plans effective as of December 1, 1961.
3. United Inns, Inc. 1993 Stock Incentive Plan effective as of February 11,
1994.
4. Executive Bonus Plan effective as of September 30, 1973.
5. Employee Severance Pay Policy effective as of September 16, 1994 for
Memphis and Regional Office employees. Estimated cost is $256,000.
6. Employment Continuation Bonus Plan for Memphis and Regional Office
critical position employees effective as of September 16, 1994. Estimated
cost is $412,000.
7. Employment Continuation Agreement for Mr. Pride Houston critical position
employees dated June 8, 1993. Estimated cost is $13,350.
- 26 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.10(A)
COLLECTIVE BARGAINING AGREEMENTS
1. Agreement between Holiday Inn of Santa Barbara (the "Santa Barbara
Employer") and the Culinary Alliance and Bartenders, Hotel and Motel
Service Workers Union Local 498 (the "Union"). There are 17 employees
covered under this collective bargaining agreement. Negotiations are in
process with regard to the terms of a new agreement.
2. Agreement between the Santa Barbara Employer, Holiday Inn San Jose Airport
(the "Employer") and the Union, Hotel Employees and Restaurant Employees.
This contract was scheduled to expire on October 31, 1994; however, the
Santa Barbara Employer closed the hotel on September 26, 1994, and
terminated all employees covered by this collective bargaining agreement
on or prior to September 26, 1994. There were 7 employees covered by this
collective bargaining agreement on September 1, 1994. The Company has
made all payments to the employees of the Union as required by the
collective bargaining agreement, and the Union has no disagreement with
the Company in regard to the final payments to the employees.
3. Agreement between Holiday Inn San Jose (the "San Jose Employer") and
Freight Checkers and Helpers Union Local No. 856 (the "Freight Union").
This contract, was scheduled to expire on April 30, 1994 but was extended
pending renegotiation of the contract; however, the San Jose Employer
closed the hotel on September 26, 1994, and
- 27 -
<PAGE>
terminated all employees covered by this collective bargaining agreement
on or prior to September 26, 1994. There were 15 employees covered by
this collective bargaining agreement on September 1, 1994. The Company
has made all payments to the employees of the Freight Union as required by
the collective bargaining agreement, and the Freight Union has no
disagreement with the Company in regard to the final payment to the
Freight Union members.
4. The Company has received notice from the National Labor Relations Board
that a Petition has been filed by the United Steel Workers of America,
AFL-CIO (the "AFL-CIO"), requesting recognition as the Bargaining
Representative for the majority of the employees at the Atlanta Airport
Holiday Inn located at 1380 Virginia Avenue, East Point, Georgia. An
election was held on October 26, 1994, and there were not enough votes for
the AFL-CIO to be entitled to become the Bargaining Representative for the
hotel's employees. The AFL-CIO has filed objections to the election. It
is too early to determine what if any effect the objections will have on
the election.
- 28 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.10(B)
COMPLIANCE WITH OBLIGATIONS UNDER
THE NATIONAL LABOR RELATIONS ACT, ETC.
1. The Holiday Inn Airport located at 1380 Virginia Avenue, East Point,
Georgia, has received a Notice of Charge of Discrimination from the Equal
Employment Opportunity Commission (the "EEOC"). The charging party has
alleged that the hotel, in failing to hire the party, discriminated
against him because of his race in violation of Title VII of the Civil
Rights Act of 1965 ("Title VII"). The charge is without merit and will in
all probability either be no-caused by the EEOC or settled for a nominal
amount. The Company has offered to settle this matter for $250.
2. The Hampton Inn I-10 East located at 828 Mercury Drive, Houston, Texas,
has received a Notice of Charge of Discrimination from the EEOC. The
charging party has alleged that the hotel, in terminating the party's
employment, discriminated against her because of her national origin in
violation of Title VII. The charge is without merit and will in all
probability either be no-caused by the EEOC or settled for a nominal
amount. The Company has offered to settle this matter for $500.
3. The Holiday Inn Airport at 1380 Virginia Avenue, Atlanta, Georgia has
received a letter from an attorney representing a former employee who
alleges that she was wrongfully terminated and has offered to enter into a
pre-litigation settlement agreement. The monetary
- 29 -
<PAGE>
damages claimed are for damages, back wages and pay for a professional
outplacement services. The attorney is asking for 52 weeks of pay
totalling $21,226 plus $3,000 for outplacement services. The claim is
without merit and should be settled for a reasonable sum.
- 30 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.10(C)
CONSENT OF THE UNIONS
None
- 31 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.10(D)
LIST OF ALL MATERIAL EMPLOYMENT,
CONSULTING AND SEVERANCE AGREEMENTS
1. Consulting Agreement between the Company and Geller and Co. dated August
13, 1993. Estimated cost (excluding stock and Geller's shares of
Paragraphs 2 and 3) is $0.
2. Consulting Agreement between the Company and Smith Barney, Inc., dated
July 11, 1994, as amended on September 1, 1994.
3. Compensation Agreement between the Company, Smith Barney, Inc., Geller and
Co., and Laurence Geller, individually, dated August 31, 1994.
The Company's maximum liability under the Agreements set forth Paragraph 2
and this Paragraph 3 is approximately $2,100,000.
4. Consulting Agreement between the Company and Michael McNulty dated July
15, 1994. Estimated cost is approximately $174,500.
5. Ronald J. Wareham is retained by the Company from time to time to provide
consulting services on a time and expenses basis.
6. Severance Agreement between the Company and John M. Dollar dated June 1,
1987. Estimated cost is approximately $231,400 for two years salary, plus
an additional amount for benefits.
- 32 -
<PAGE>
7. Severance Agreement between the Company and J. Don Miller dated June 1,
1987. Estimated cost is approximately $174,300 for two years salary, plus
an additional amount for benefits.
8. Severance Agreement between the Company and Augustus B. Randle III dated
June 1, 1987. Estimated cost is approximately $168,300 for two years
salary, plus an additional amount for benefits.
9. Employee Severance Pay Policy for Memphis and Regional Office employees
effective September 16, 1994. Estimated cost is $256,000.
10. Employment Continuation Agreement for Mr. Pride Houston critical position
employees dated June 8, 1993. Estimated cost is $13,500.
11. Employment Continuation Bonus Plan for Memphis and Regional Office
critical position employees effective September 16, 1994. Estimated cost
is $412,000.
12. Agreement to transfer Company vehicle to Don William Cockroft upon
termination from the Company.
13. Agreement to transfer Company vehicle to Augustus B. Randle III upon
termination from the Company.
14. Agreement to transfer Company vehicle to J. Don Miller upon termination
from the Company.
15. Agreement to transfer Company vehicle to John M. Dollar upon termination
from the Company.
16. Indemnification Agreements between the Company and each of its Directors
and the following Officers: Augustus B. Randle, III, J. Don Miller and
John M. Dollar.
- 33 -
<PAGE>
MICHAEL S. MCNULTY
4401 Rheimes
DALLAS, TEXAS 75205
November 14, 1994
Mr. Don Wm. Cockroft
United Inns, Inc. 5100 Poplar Avenue
Suite 2300
Memphis, Tennessee 38137
Dear Don:
This will memorialize our agreement that United Inns, Inc. will agree to pay
fees equal to $124,000 under the Letter Agreements dated July 15, 1994,
October 4, 1994 and an additional incentive bonus of $50,000 upon completion of
the tendered offer by Hampstead/Harvey.
Sincerely yours,
Michael S. McNulty
AGREED TO BY: UNITED INNS, INC.
_________________________________
Don Wm. Cockroft
President
- 34 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.12
MATERIAL DEFICIENCIES AND WAIVER
WITH RESPECT TO TAXES
The Tennessee Department of Revenue ("DOR") has requested that the Company
provide information regarding its operations, pertaining to certain franchise
and/or excise taxes that may be payable (the "Tennessee Tax Matter"). The DOR
contends that the Company has not filed returns required to be filed and has not
paid taxes which would have been payable if such filings had been made. The DOR
has not indicated the amount in question or the years affected and no assessment
has been made. The Company has requested that its legal counsel and auditors
develop the requested information and analyze the issues raised by the DOR's
inquiry in order to quantify the Company's exposure, if any, to the DOR for back
taxes. This analysis is underway.
At this time, the Company cannot predict the outcome of the DOR information
request.
- 35 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.13(A)
ENVIRONMENTAL AUDITS AND REPORTS
PHASE I ENVIRONMENTAL SITE ASSESSMENT REPORTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SITE REPORT PREPARER DATE OF REPORT
- --------------------------------------------------------------------------------
Holiday Inn/Perimeter Dunwoody(1) Viro Group August 22, 1994
4386 Chamblee-Dunwoody Road
Atlanta, GA
- --------------------------------------------------------------------------------
Holiday Inn/Airport North(2) Viro Group August 22, 1994
1380 Virginia Avenue
Atlanta, GA
- --------------------------------------------------------------------------------
Holiday Inn/Powers Ferry(2) Viro Group August 22, 1994
6345 Powers Ferry Rd.
Atlanta, GA
- --------------------------------------------------------------------------------
____________________
(1) Report of Survey to Identify Asbestos-Containing Materials prepared by Law
Associates, Inc. dated October 20, 1989.
(2) Limited asbestos survey also conducted.
- 36 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SITE REPORT PREPARER DATE OF REPORT
- --------------------------------------------------------------------------------
Holiday Inn Express/I-20 East(2) Viro Group August 22, 1994
4300 Snapfinger Woods Way
Decatur, GA
- --------------------------------------------------------------------------------
Holiday Inn Express/Northeast(2) Viro Group August 22, 1994
4422 Northeast Freeway
Doraville, GA
- --------------------------------------------------------------------------------
Downtown Ramada Inn(3) ATEC July 27, 1989
175 Piedmont Road, N.E.
Atlanta, GA
- --------------------------------------------------------------------------------
Hampton/Marietta(4) Viro Group August 22, 1994
455 Franklin Rd.
Marietta, GA
- --------------------------------------------------------------------------------
Holiday Inn/South(2) Viro Group August 22, 1994
6288 Old Dixie Highway
Jonesboro, GA
- --------------------------------------------------------------------------------
Out Parcel No. 1 Viro Group August 22, 1994
455 Franklin Road
Marietta, GA
- --------------------------------------------------------------------------------
Out Parcel No. 2 Viro Group August 22, 1994
455 Franklin Road
Marietta, GA
- --------------------------------------------------------------------------------
Former Mr. Pride Carwash(2) ATEC September 14, 1994
2081 Northlake Parkway
Tucker, GA
- --------------------------------------------------------------------------------
Days Inn Motor Hotel(2) ATEC August 8, 1994
1575 Regal Row
Dallas, TX
- --------------------------------------------------------------------------------
Holiday Inn Brookhollow(2) ATEC August 8, 1994
7050 Stemmons Freeway
Dallas, TX
- --------------------------------------------------------------------------------
________________________
(3) Also conducted an asbestos survey; Supplemental Asbestos Bulk Survey
conducted on October 4, 1989.
(4) Phase I Environmental Site Assessment Asbestos Survey also prepared for
location dated September 20, 1994.
- 37 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SITE REPORT PREPARER DATE OF REPORT
- --------------------------------------------------------------------------------
7.75 Acres of Land(5) ATEC September 26, 1994
4070 North Central Expressway
Dallas, TX
- --------------------------------------------------------------------------------
5 Acres Vacant Land Environmental August 29, 1994
In a Corner of I-40 and Country Engineering
Club Drive Consultants, Inc.
Flagstaff, AZ
- --------------------------------------------------------------------------------
Howard Johnson(2) Environmental July 22, 1994
5101 North Scottsdale Rd. Engineering
Scottsdale, AZ Consultants, Inc.
- --------------------------------------------------------------------------------
Mr. Pride Carwash(2) ATEC September 9, 1994
Sharpstown
7585 Bellaire Blvd.
Houston, TX
- --------------------------------------------------------------------------------
Days Inn, I-10 East(2) ATEC August 18, 1994
1055 East Freeway
Houston, TX
- --------------------------------------------------------------------------------
Hampton Inn(2) ATEC August 18, 1994
828 Mercury Drive
Houston, TX
- --------------------------------------------------------------------------------
Holiday Inn Medical Center(2) ATEC August 18, 1994
6701 South Main St.
Houston, TX
- --------------------------------------------------------------------------------
Holiday Inn West Loop(2) ATEC August 18, 1994
3131 West Loop South
Houston, TX
- --------------------------------------------------------------------------------
Holiday Inn - Airport(2)(6) ATEC August 18, 1994
3702 North Sam Houston Parkway
Houston, TX
- --------------------------------------------------------------------------------
________________________
(5) Asbestos survey performed by ATEC at former hotel facility located on site
on July 8, 1992.
(6) A waste treatment facility is located on the hotel property and notices of
violation from the Harris County Pollution Control Department have been
received, each of which have been remedied. The last such notice was
received on May 22, 1990.
- 38 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SITE REPORT PREPARER DATE OF REPORT
- --------------------------------------------------------------------------------
Holiday Inn I-10 West(2) ATEC August 18, 1994
7611 Katy Freeway
Houston, TX
- --------------------------------------------------------------------------------
Mr. Pride Carwash(2) ATEC September 21, 1994
1219 East Pioneer Parkway
Arlington, TX
- --------------------------------------------------------------------------------
Holiday Inn Santa Barbara(2) Fugro West, Inc. August, 1994
5650 Calle Road
Goleta, CA
- --------------------------------------------------------------------------------
Vacant Lot Fronting Environmental August, 1994
Holiday Inn Southwest Protection Systems
2649 U.S. Highway 80 West
Jackson, MS
- --------------------------------------------------------------------------------
Holiday Inn North(2) ATEC October 5, 1994
3125 Sinton Road
Colorado Springs, CO
- --------------------------------------------------------------------------------
Holiday Inn North(2) Environmental August, 1994
5075 I-55 North Protection Systems
Jackson, MS
- --------------------------------------------------------------------------------
Hampton Inn(2)(7) Environmental August, 1994
465 Briarwood Drive Protection Systems
Jackson, MS
- --------------------------------------------------------------------------------
Holiday Inn Downtown(2) Environmental August, 1994
200 East Amite Street Protection Systems
Jackson, MS
- --------------------------------------------------------------------------------
Holiday Inn Southwest(2) Environmental August, 1994
2649 U.S. Highway Southwest Protection Systems
Jackson, MS
- --------------------------------------------------------------------------------
Vacant Land - ATEC September 9, 1994
Holiday Inn Medical Center
6703-6719 South Main Street
Houston, TX
- --------------------------------------------------------------------------------
____________________
(7) Includes Report of Soil and Ground Water Investigation of former McDonald's
site, owned by the Company.
- 39 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SITE REPORT PREPARER DATE OF REPORT
- --------------------------------------------------------------------------------
6.30 Acres - Vacant Land ATEC September 9, 1994
3800 Block of North Sam Houston
Parkway
Houston, TX
- --------------------------------------------------------------------------------
Mr. Pride Carwash ATEC October 25, 1994
Westheimer Site
5320 Westheimer
Houston, TX
- --------------------------------------------------------------------------------
Former Mr. Pride Car Wash(2) ATEC September 9, 1994
7211 South Loop East
Houston, TX
- --------------------------------------------------------------------------------
Holiday Inn Express(2) ATEC October 5, 1994
725 West Cimmaron Street
Colorado Springs, CO
- --------------------------------------------------------------------------------
Days Inn(2) American September 30, 1994
1000 West U.S. Highway 66 Environmental Network
Flagstaff, AZ
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- 40 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.13(B)
GOVERNMENTAL INVESTIGATIONS OR PROCEEDINGS
REGARDING ENVIRONMENTAL MATTERS
The Company calls to your attention new OSHA regulations which require
employers to give notice to employees working in buildings that may be asbestos-
contaminated. The Company is in the process of evaluating these regulations.
- 41 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.13(C)
UNDERGROUND STORAGE TANKS
A 550-gallon diesel petroleum underground storage tank used as a holding tank
for the emergency power generator for the Holiday Inn/Perimeter Dunwoody hotel
location.
- 42 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.13(D)
UNDERGROUND STORAGE TANKS -- CLAIMS
See attached Annex
- 43 -
<PAGE>
ANNEX TO SCHEDULE 4.13(D)
UNDERGROUND STORAGE TANKS -- CLAIMS
MR. PRIDE CAR WASH SITES
UPDATED AS OF 10/29/94
<TABLE>
<CAPTION>
TTL TTL
ANTICIPATED PAID REIMBURSEMENT REIMBURSEMENT ADMINISTRATIVE
COST TO DATE TO DATE ANTICIPATED STATUS(8)
<S> <C> <C> <C> <C> <C>
ATLANTA
(2) Chamblee Unit $53,034 $53,034 $29,274 $29,274 Closure
(2, 6) Roswell City $128,761 $128,761 $101,294 $101,294
Sandy Springs $131,393 $131,393 $101,062 $101,062 Closure
(2) Cobb Parkway $73,306 $73,306 $45,622 $45,622 Closure
(2) Roswell Road (Buckhead) $103,142 $103,142 $68,337 $68,337 Closure
Northlake Unit $60,554 $60,554 $37,670 $37,670 Closure
--------------------------------------------------------
SUB-TOTAL $550,190 $550,190 $383,259 $383,259
HOUSTON
Memorial Drive $191,427 $191,427 $1,424 $134,262 Closure
(3) Meyerland (Beechnut) $150,000 $142,734 $126,279 $135,000
Sharpstown $100,000 $37,665 $0 $56,000
Gulfgate $68,164 $68,164 $61,060 $61,060 Closure
Westheimer $40,000 $18,756 $0 $15,000
--------------------------------------------------------
SUB-TOTAL $509,591 $439,990 $188,763 $386,322
DALLAS
North Richland Hills $39,541 $39,541 $36,778 $36,778 Closure
Mid-Cities Unit $48,251 $48,251 $5,525 $25,581 Closure
Irving Unit $21,840 $21,840 $0 $0 Closure
--------------------------------------------------------
SUB-TOTAL $109,632 $109,632 $42,303 $62,359
- 44 -
<PAGE>
ANNEX TO SCHEDULE 4.13(D) - CONTINUED
UNDERGROUND STORAGE TANKS -- CLAIMS
<CAPTION>
TTL TTL
ANTICIPATED PAID REIMBURSEMENT REIMBURSEMENT ADMINISTRATIVE
COST TO DATE TO DATE ANTICIPATED STATUS(8)
<S> <C> <C> <C> <C> <C>
MEMPHIS(7)
(4) Park Avenue $150,000 $120,830 $54,391 $120,000
(4) Union Avenue $347,816 $299,061 $214,645 $304,577
Poplar Avenue $100,962 $100,962 $21,574 $22,569 Closure
(5) Whitehaven $281,500 $150,931 $91,927 $247,500
(4) Summer Avenue $281,500 $138,005 $81,115 $222,500
(7) Mt. Moriah $41,000 $40,036 $0 $0 Closure
----------------------------------------------------------
SUB-TOTAL $1,202,778 $849,825 $463,652 $917,146
TOTAL $2,372,191 $1,949,638 $1,068,945 $1,749,086
<FN>
NOTES
(1) All numbers rounded to the nearest dollar.
(2) Paid To Date has been adjusted to included work outside the Corrective
Action Plan requirements which was subsequently reimbursed by the
purchaser of the site. The reimbursement has also been reflected in the
Reimbursement To Date column.
(3) Water remediation has been placed on hold by state. Will have quarterly
monitoring of water chemistry at approximately $2,400.
(4) Water remediation in progress.
(5) Water remediation will be required.
(6) Not in Schedule. $65,000 held in escrow to be delivered to the Company by
the purchaser of the Roswell City location upon completion of the
remediation of the site.
(7) Not in Schedule. $150,000 held in escrow to be delivered to the Company
by the purchaser of the Memphis carwash sites upon completion of the
remediation of the sites.
(8) Indicates that the Company has received closure letters from appropriate
regulatory authorities indicating acceptance of the site under current
laws and regulations.
</TABLE>
- 45 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 4.15
BREACHES, VIOLATIONS AND DEFAULTS
1. The Company has received notice from Holiday Inn that the $250,000
deductible under the Company's general liability insurance policy is
excessive. The Company is negotiating a resolution of this issue either by
obtaining a waiver from Holiday Inn or by posting cash of $250,000 with
insurer to cover the deductible.
2. The Company has failed to meet the "Minimum Cash Flow Coverage Ratio" with
respect to the loan on the Holiday Inn Southwest located in Jackson,
Mississippi. If such failure continues through December 31, 1994, the
Company will be in default under the Loan Agreement.
3. Hotel properties that have failed Quality Inspection along with date of
Quality Inspection Report:
(a) Holiday Inn Airport North, Atlanta - 9/29/93
(b) Holiday Inn South, Atlanta - 7/28/94
(c) Holiday Inn Express - I-20 East, Atlanta - 11/3/93
(d) Holiday Inn Brook Hollow, Dallas - 7/7/94
(e) Holiday Inn West Loop near Galleria, Houston - 7/21/94
(f) Holiday Inn North, Jackson - 8/4/94
(g) Holiday Inn Southwest, Jackson - 8/3/94
(h) Holiday Inn Downtown, Jackson - 5/18/94
- 46 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 5.1(A)
DISPOSITION OF ASSETS AND PROPERTIES
NONE
- 47 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 5.1(B)
CONTRACTS AND AGREEMENTS
1. Execution of Management Agreement or Amendment of Lease Agreement related
to the Atlanta Downtown Ramada Hotel.
2. Execution of documents relating to extension of the Note and Mortgage of
the Ramada Downtown Hotel, Atlanta.
3. Execution of Management Agreement or Amendment of Lease Agreement related
to the Dallas Downtown Howard Johnson Hotel.
4. Execution of Application and related documents for Radisson Hotel related
to the Holiday Inn Downtown in Jackson, Mississippi, which is scheduled to
be removed from the Holiday Inn System on December 15, 1994. The
Application has been executed and delivered to Radisson.
5. Execution of Application and related documents to renew the License for the
Holiday Inn located at 5075 I-55 N. Frontage Road, Jackson, Mississippi.
Holiday Inn has denied the Application and the Company is considering
whether to appeal the decision.
6. An Agreement to lease Building "D," consisting of approximately 96 rooms
and approximately five (5) meeting rooms which were formerly a part of the
Holiday Inn Airport in Houston, Texas to Continental Airlines for a period
of three (3) years has been executed.
- 48 -
<PAGE>
7. Execution of Application and related documents for Ramada Hotel relating to
the Holiday Inn Silber in Houston, Texas which is scheduled to be removed
from the Holiday Inn System on March 15, 1995.
8. Termination of Sublease Agreement between Glenjon Inc. and Market Center
Hotel Company dated December 19, 1985 related to land and building used as
a storage area in Dallas, Texas.
9. See also Schedule 5.1(A).
- 49 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 5.1(C)
NEW CAPITAL EXPENDITURES
Although the Company had not anticipated any capital expenditures outside
of the ordinary course of business, the Company may, with the prior written
consent of Purchaser, make substantial capital expenditures to correct notices
of defect with respect to the Holiday Inn Downtown and the Holiday Inn North in
Jackson, Mississippi listed in Item 3 on Schedule 4.15.
- 50 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 5.1(D)
AMENDMENT TO CONTRACTS, AGREEMENTS,
COMMITMENTS OR ARRANGEMENTS
See Schedule 5.1(B) and Schedule 5.1(C)
- 51 -
<PAGE>
ANNEX IV
DISCLOSURE SCHEDULE
TO
AGREEMENT AND PLAN OF MERGER
AMONG UNITED/HARVEY HOLDINGS, L.P.,
UNITED/HARVEY HOTELS, INC.,
UNITED/HARVEY SUB, INC.
AND
UNITED INNS, INC.
DATED AS OF NOVEMBER 14, 1994
SCHEDULE 5.1(E)
INCREASE IN COMPENSATION OR GRANTS OR
PAYMENTS OF SEVERANCE OR TERMINATION PAY
None
- 52 -
<PAGE>
EXHIBIT 2
NEWS RELEASE
UNITED INNS, INC., 2300 CLARK TOWER, 5100 POPLAR AVE., MEMPHIS, TN 38137,
(901) 767-2880
ONE OF THE NATION'S
LARGEST LICENSEES OF
HOLIDAY INN ROOMS
FOR IMMEDIATE RELEASE
NOVEMBER 1, 1994
[UNITED INNS, INC. IS NEGOTIATING A POSSIBLE BUSINESS COMBINATION]
MEMPHIS, TENNESSEE - UNITED INNS, INC. (NYSE: UI) ANNOUNCED TODAY THAT IT HAS
ENTERED INTO NEGOTIATIONS WITH A PARTY REGARDING A PROPOSED BUSINESS COMBINATION
PURSUANT TO WHICH ITS SHAREHOLDERS WOULD BE OFFERED CASH FOR THEIR SHARES. THE
PURPOSE OF THESE NEGOTIATIONS IS TO DETERMINE WHETHER THE PARTIES CAN AGREE TO A
DEFINITIVE AGREEMENT, WHICH WOULD BE SUBJECT TO APPROVAL BY THE BOARD OF
DIRECTORS OF UNITED INNS. THERE CAN BE NO ASSURANCE THAT A DEFINITIVE AGREEMENT
CAN BE AGREED TO OR THAT THE BOARD OF DIRECTORS WOULD RECOMMEND APPROVAL OF A
PROPOSED DEFINITIVE AGREEMENT OR THAT ALL THE CONDITIONS TO A PROPOSED BUSINESS
COMBINATION CAN BE SATISFIED.
SMITH BARNEY INC., THE FINANCIAL ADVISOR TO THE COMPANY, WILL ASSIST THE COMPANY
IN THE NEGOTIATIONS OF ANY DEFINITIVE AGREEMENT WHICH MIGHT BE PROPOSED TO THE
BOARD OF DIRECTORS.
UNITED INNS OWNS, OPERATES AND MANAGES 26 FRANCHISED HOTELS UNDER HOLIDAY INN,
HAMPTON INN, DAYS INNS, AND HOWARD JOHNSON'S NAMES WITH LOCATIONS IN SIX STATES.
COMPANY CONTACT: AUGUSTUS B. RANDLE, III
UNITED INNS, INC.
(901) 767-2880
<PAGE>
EXHIBIT 3
NEWS RELEASE
UNITED INNS, INC., 2300 CLARK TOWER, 5100 POPLAR AVE., MEMPHIS, TN 38137,
(901) 767-2880
ONE OF THE NATION'S
LARGEST LICENSEES OF
HOLIDAY INN ROOMS
FOR IMMEDIATE RELEASE
NOVEMBER 4, 1994
[UNITED INNS, INC. ENTERS INTO EXCLUSIVE NEGOTIATION AGREEMENT]
MEMPHIS, TENNESSEE - UNITED INNS, INC. (NYSE: UI) ANNOUNCED TODAY THAT IT HAS
ENTERED INTO AN EXCLUSIVE NEGOTIATION AGREEMENT WITH ONE OF THE PARTIES WITH
WHICH IT HAS BEEN CONDUCTING THE PREVIOUSLY ANNOUNCED NEGOTIATIONS REGARDING A
PROPOSED BUSINESS COMBINATION.
THIS AGREEMENT PROVIDES THAT THE COMPANY, SUBJECT TO ITS FIDUCIARY OBLIGATIONS
UNDER APPLICABLE LAW, WILL NEGOTIATE EXCLUSIVELY WITH SUCH PARTY TO DETERMINE
WHETHER UNITED AND SUCH PARTY CAN AGREE TO A DEFINITIVE AGREEMENT.
FURTHER, IN CERTAIN CIRCUMSTANCES, THIS AGREEMENT ALSO PROVIDES FOR THE PAYMENT
BY UNITED OF SUCH PARTY'S REASONABLE OUT-OF-POCKET EXPENSES IN CERTAIN
CATEGORIES AND ALSO PROVIDES FOR A PAYMENT OF A TERMINATION FEE TO SUCH PARTY
WHICH ESCALATES OVER TIME. THE PERIOD DURING WHICH UNITED WILL NEGOTIATE
EXCLUSIVELY WITH SUCH PARTY EXPIRES ON THE EARLIER OF THE SIGNING OF A
DEFINITIVE AGREEMENT, BUT NOT LATER THAN JANUARY 31, 1995.
SMITH BARNEY INC., THE FINANCIAL ADVISOR TO THE COMPANY, IS ASSISTING THE
COMPANY IN THE NEGOTIATIONS.
UNITED INNS OWNS, OPERATES AND MANAGES 26 FRANCHISED HOTELS UNDER HOLIDAY INN,
HAMPTON INN, DAYS INNS, AND HOWARD JOHNSON'S NAMES WITH LOCATIONS IN SIX STATES.
COMPANY CONTACT: AUGUSTUS B. RANDLE, III
UNITED INNS, INC.
(901) 767-2880
<PAGE>
EXHIBIT 4
NEWS RELEASE
UNITED INNS, INC., 2300 CLARK TOWER, 5100 POPLAR AVE., MEMPHIS, TN 38137,
(901) 767-2880
ONE OF THE NATION'S
LARGEST LICENSEES OF
HOLIDAY INN ROOMS
FOR IMMEDIATE RELEASE
NOVEMBER 14, 1994
[UNITED INNS, INC. AND UNITED/HARVEY HOLDINGS, L.P. SIGN MERGER AGREEMENT;
UNITED INNS STOCKHOLDERS TO RECEIVE $25.00 PER SHARE IN CASH]
MEMPHIS, TENNESSEE - UNITED INNS, INC. (NYSE: UI) AND UNITED/HARVEY HOLDINGS,
L.P., A PRIVATELY HELD LIMITED PARTNERSHIP, TODAY JOINTLY ANNOUNCED THAT THEY
HAVE SIGNED A DEFINITIVE MERGER AGREEMENT PROVIDING FOR THE ACQUISITION OF
UNITED INNS BY UNITED/HARVEY HOLDINGS.
THE DEFINITIVE MERGER AGREEMENT PROVIDES FOR A CASH UNDER OFFER BY UNITED/HARVEY
HOLDINGS FOR $25.00 FOR EACH SHARE OF UNITED INNS COMMON STOCK, SUBJECT TO THE
SATISFACTION OF CERTAIN CONDITIONS. UNITED INSS HAS 2,704,899 OUTSTANDING
SHARES ON A FULLY DILUTED BASIS. THE TENDER OFFER WILL COMMENCE NO LATER THAN
MONDAY, NOVEMBER 21, 1994, AND WILL BE FOLLOWED BY A CASH MERGER IN WHICH ANY
SHARES NOT PURCHASED IN THE TENDER OFFER WILL BE ACQUIRED AT THE SAME PRICE.
UNITED/HARVEY HOLDINGS HAS INFORMED UNITED THAT, DEPENDING ON THE NUMBER OF
UNITED SHARES TENDERED PURSUANT TO THE TENDER OFFER AND OTHER FACTORS, NON-
TENDERING UNITED STOCKHOLDERS MAY ALSO BE GIVEN THE OPPORTUNITY TO ELECT
IN THE MERGER TO RECEIVE IN LIEU OF $25.00 PER SHARE IN CASH, COMMON STOCK OF A
NEW COMPANY TO BE FORMED AFTER THE TENDER OFFER TO HOLD THE BUSINESSES OF UNITED
AND OF HARVEY HOTEL COMPANY, A TEXAS-BASED COMPANY WHICH OWNS 8 HOTELS IN
DALLAS AND HOUSTON WHICH ARE OPERATED UNDER THE NAME "HARVEY."
THE UNITED INNS BOARD HAS CONCLUDED THAT THE TRANSACTION IS FAIR TO AND IN THE
BEST INTEREST OF THE UNITED INNS STOCKHOLDERS. IN THE EVENT THAT LESS THAN ALL
OF THE SHARES ARE TENDERED, UNITED INNS HAS AGREED TO PROCEED WITH A SPECIAL
MEETING OF STOCKHOLDERS, IF NECESSARY, TO VOTE ON THE MERGER, IN WHICH CASE THE
MERGER MAY BE CONSUMMATED IF A MAJORITY OF THE COMPANY'S OUTSTANDING SHARES VOTE
IN FAVOR OF THE MERGER.
UNDER THE TERMS OF THE MERGER AGREEMENT, UNITED/HARVEY WILL BE ENTITLED TO
RECEIVE A TERMINATION FEE UPON THE OCCURRENCE OF CERTAIN EVENTS. IN ADDITION,
UNDER THOSE CIRCUMSTANCES, UNITED/HARVEY WILL BE ENTITLED TO RECEIVE
REIMBURSEMENT FOR ITS REASONABLE OUT-OF-POCKET EXPENSES.
SMITH BARNEY INC., THE FINANCIAL ADVISOR TO UNITED INNS, ASSISTED THE COMPANY IN
THESE NEGOTIATIONS.
UNITED INNS OWNS, OPERATES AND MANAGES 26 FRANCHISED HOTELS UNDER HOLIDAY INN,
HAMPTON INN, DAYS INNS, AND HOWARD JOHNSON'S NAMES WITH LOCATIONS IN SIX STATES.
UNITED INNS CONTACT: AUGUSTUS B. RANDLE, III
UNITED INNS, INC.
(901) 767-2880
UNITED/HARVEY CONTACT: J. PETER KLINE
UNITED/HARVEY HOLDINGS, L.P.
(214) 980-4170
<PAGE>
EXHIBIT 5
United Inns(INC.)
Suite 2300, Clark Tower
5100 Poplar Avenue
Memphis, TN 36137
Phone (901) 767-2880
Don Wm. Cockroft CONFIDENTIALITY AGREEMENT
President
July 14, 1994
It is our understanding that HAMPSTEAD INVESTMENTS, INC. are interested in
evaluating a possible investment with United Inns, Inc. (the "Company"). We are
prepared to provide you with further information concerning the operations and
business of the Company. You understand that such information and any
additional materials that the Company may provide in connection with your
evaluation will contain confidential and proprietary information about the
business of the Company and/or its affiliates (any such materials or information
contained in or developed from such materials by us or by you, in either written
or verbal form shall hereinafter be collectively referred to as the "Evaluation
Materials", but such term shall not include any information which is publicly
available or is obtained by the undersigned from sources not bound by a similar
confidentiality agreement.) This letter sets forth your agreement to maintain
the confidentiality of the Evaluation Materials, and by signing this letter and
returning it to us, HAMPSTEAD INVESTMENTS, INC. agree to be bound by its terms.
By execution of this Agreement, you acknowledge that the Evaluation Materials
are the valuable confidential property of the Company and agree:
a. To use the Evaluation Materials solely for the purpose of evaluating
a possible investment/franchise in the Company, and to refrain from
allowing such information to be used in any way for private use of
commercial purpose by you or any other party;
<PAGE>
b. To take all appropriate measures to safeguard the confidentiality
of the Evaluation Materials and to discuss them only with those
employees and outside advisors or financing sources to whom
disclosure is required for your analysis;
c. Prior to showing the Evaluation Materials to, or discussing
them with, any of the individuals described in paragraph (b) above,
to advise such individuals of the confidentiality of the
Evaluation Materials and to require that such individuals agree to
and maintain the confidentiality of the Evaluation Materials.
d. Upon written request from the Company, to return all of the
Evaluation Materials to the Company and to destroy all notes,
reports, analyses, compilations, abstracts, studies and other
materials prepared by or for you based upon the Evaluation
Materials, and to provide the Company with written confirmation
that all such materials have been returned or destroyed.
e. It is also agreed that HAMPSTEAD INVESTMENTS, INC. or any
principals of THIS COMPANY decline to actively engage in the
purchase of sale or United Inns, Inc. publicly traded
Common Shares on the open market without prior approval from
United Inns, Inc. General Counsel.
f. Without written approval from the Company, you are not to
contact any mortgagee, note holder, bond holder, Lessor or Hotel
Franchisor of the Company.
You understand and agree that the Company might be irreparably harmed by
violation of this agreement, and that the use of the Evaluation Materials for
the business purpose of any party other than the Company (or its related
entities conducting its business) could enable such a party to compete unfairly
with the Company. In the event that you become aware of any breach of the
confidentiality of, or the misappropriation of, any of the Evaluation
Materials, you agree to promptly give notice thereof to the Company. In
addition you agree that the Company shall be entitled to injunctive relief and
to enforcement by specific performance of this agreement in addition to any
other relief to which it may be entitled at law and in equity.
<PAGE>
You understand and agree that neither this agreement nor the disclosure to you
of the Evaluation Materials shall confer upon you any license to or any other
right, title or interest in, or ownership of, any portion of the Evaluation
Materials.
You understand and agree that your agreement to maintain the confidentiality of
the Evaluation materials shall survive for a period of three years from the date
of this agreement.
You understand and agree that the Company and its representative make no
representation or warranty as to the accuracy or completeness of the Evaluation
Materials and you further agree, to the extent permitted by law, that neither
the Company nor any of its representatives shall have any liability to you as a
result of our participation in the evaluation of the confidential material.
Only those particular representations or warranties which may be made in a
definitive agreement when, and if executed, and subject to such limitations and
restrictions as may be specified therein, shall have any legal effect and only
the parties to such definitive agreement shall have any rights with respect
thereto.
The agreement shall be binding upon you, your successors and assigns and you
agree that it shall be governed by and construed in accordance with the law of
the State of Tennessee.
Sincerely,
UNITED INNS, INC. (COMPANY)
By: /s/ Don Wm. Cockroft
--------------------------
Don Wm. Cockroft
DATE: 7/14/94
------------------------
Confirmed & Agreed To:
HAMPSTEAD INVESTMENTS, INC.
By: /s/ Donald J. McNamara
--------------------------
Donald J. McNamara,
Chairman
DATE: 8/1/94
------------------------
<PAGE>
EXHIBIT 6
United Inns, Inc.
c/o Smith Barney, Inc.
1343 Avenue of The Americas
New York, New York 10007
November 4, 1994
United/Harvey Holdings, L.D.
c/o The Hampstead Group, Inc.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, TX 75201
Attention: Robert Whitman
Harvey Hotel Company, Ltd.
14400 Dallas Parkway
Suite 400
Dallas, TX 75240
Attention: J. Peter Kline
Ladies and Gentlemen:
In connection with your proposal to us dated October 31, 1994, as amended
on the date hereof ("Your Proposal"), we are pleased to advise you that we will
enter into exclusive negotiations with you regarding the definitive terms of a
business combination between the two parties based upon Your Proposal. This
will confirm that we expect to proceed immediately to negotiate the definitive
documentation in order to arrive at definitive documentation acceptable to each
of us.
In order to induce you to commence negotiations to arrive at the
definitive documentation, United agrees to the following:
1. NO SHOP, ETC.
From and after the execution of this letter United shall
immediately cease and cause to be
<PAGE>
terminated any existing negotiations, or prior negotiations with any
party previously conducted, with respect to a business combination
or a change in control (a "Change in Control Transaction").
Further, from and after the execution of this letter, United
shall not, and will cause it respective representatives not to,
solicit any offers from any other party relating to a Change of
Control Transaction during the period preceding the signing of a
definitive agreement, but not later than January 31, 1995 (the
"Exclusivity Period").
In addition, except as may otherwise be required by fiduciary
obligations under applicable law, as advised by counsel, in respect
of an Unsolicited Proposal (as defined below), United shall, during
the Exclusivity Period, exclusively negotiate with you in good faith
to reach a definitive agreement and to enter into definitive
documentation relating to a business combination.
Subject to applicable legal requirements including our
obligations under the various State and Federal securities acts and
the Rules of the New York Stock Exchange, the contents of this
letter and the transactions contemplated hereby and all negotiations
related hereto and thereto will be held confidential and not
disclosed by
<PAGE>
United without your prior approval (which approval will not be
unreasonably withheld). We call to your attention that, because
United has filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission covering the sale of 60,000
shares of stock, we believe that additional disclosure regarding a
business combination, which may include disclosure of the existence
of, and some terms of, this letter, may be required.
2. UNSOLICITED PROPOSALS.
In the event that, after execution of this agreement and
during the Exclusivity Period, United receives an unsolicited
proposal providing for a Change in Control Transaction from any
person or entity who or which was not given an opportunity prior to
the date hereof to propose a Change in Control Transaction, which
unsolicited proposal is on financial and legal terms more favorable
to United than those in Your Proposal (an "Unsolicited Proposal"),
United will notify you in writing of each such Unsolicited Proposal.
Such notice ("Proposal Notice") will state the terms and conditions
of such Unsolicited Proposal and the identity of the person or
entity making it (together with a copy of such Unsolicited
Proposal), by 5:00 p.m. Eastern Time on the
<PAGE>
business day next following the business day on which it receives
the Unsolicited Proposal.
If United, in the exercise of its fiduciary duties under
applicable law, elects to commence negotiations with respect to such
Unsolicited Proposal (which election shall be made promptly after
receipt of the Unsolicited Proposal, and which election shall be
communicated to you by facsimile transmission prior to commencement
of such negotiations), you shall have the option to terminate your
negotiations with United, whereupon you shall be entitled to your
expenses as provided in Section 3 hereof and your applicable
termination fee as provided in Section 4 hereof.
If you elect to terminate negotiations with us, you shall, as
soon as practicable, advise us of such decision by delivery of a
facsimile transmission.
3. REIMBURSEMENT OF EXPENSES IN CERTAIN CIRCUMSTANCES.
If (i) you elect to terminate our negotiations as set forth in
Section 2 or (ii) United enters into an agreement providing for a
Change in Control Transaction with any person other than you (or
your affiliates) prior to January 31, 1995, United agrees to
reimburse you for all your reasonable, out-of-pocket expenses
<PAGE>
incurred, from and after October 26, 1994, relating to the matters
contemplated in Your Proposal, but only as they relate to United's
assets and the documentation with United, in an amount not to exceed
$500,000. We contemplate that such expenses will include Phase I
and Phase II Environmental audits and structural engineering audits
of United's assets, accounting and legal fees relating to an
analysis of the Tennessee franchise and excise tax situation and
attorneys' fees arising from the documentation of, and other
reasonable out-of-pocket expenses relating to, any business
combination relating to United only.
4. TERMINATION FEE.
If (i) you elect to terminate our negotiations as set forth in
Section 2 or (ii) United enters into an agreement providing for a
Change in Control Transaction with any person other than you (or
your affiliates) prior to January 31, 1995. United agrees to pay
you a fee, which is in addition to reimbursing you for expenses
under Section 3 above, in the amount of $500,000 if the Proposal
Notice is delivered to you, or such agreement is entered into, on or
before November 10, 1994; in the amount of $1,000,000 if the
Proposal Notice is delivered to you, or such agreement is entered
into, after November 10 and on or before November 20, 1994;
<PAGE>
and in the amount of $1,500,000 if the Proposal Notice is delivered
to you, or such agreement is entered into, after November 20, 1994
and during the balance of the Exclusivity Period.
5. INDEMNITY.
United will, upon your request, indemnify and hold you and
your respective affiliates and representatives, harmless for any
loss, cost, damage, expense (including reasonable attorneys' fees
and charges) or liability relating to, resulting from or arising out
of any action, suit or proceeding initiated by any shareholder,
other security holder or lender of United, any employee or former
employee of United or by any other person or entity (including any
other potential bidder and any governmental authority) based upon or
relating to, in whole or in part, facts arising out of our
negotiations during the Exclusivity Period or relating to this
letter agreement.
Sincerely,
UNITED INNS, INC.
By: /s/ Don Wm. Cockroft
--------------------
Don Wm. Cockroft
President
<PAGE>
Accepted and agreed to
as of the date first
above written:
UNITED/HARVEY HOLDINGS, L.P.
By: /s/ Donald J. McNamara
-------------------------
Donald J. McNamara
Duly Authorized
HARVEY HOTEL CO., LTD.
By: /s/ J. Peter Kline
--------------------------
J. Peter Kline
Duly Authorized
<PAGE>
EXHIBIT 7
UNITED/HARVEY HOLDINGS, L.P.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
November 21, 1994
Cockroft Consolidated Corporation
5100 Poplar Avenue, Suite 2200
Memphis, Tennessee 38137
Ladies and Gentlemen:
This letter sets for the agreement of the parties with respect to certain
matters involving the Agreement and Plan of Merger (the "Agreement") among
United/Harvey Holdings, L.P. and certain of its affiliates and United Inns, Inc.
Terms used herein with initial capital letters which are defined in the
Agreement are used herein as so defined.
1. UNDERTAKINGS BY PURCHASER. The expiration date of the Offer will occur
in January of 1995, subject to extension only as provided in the Agreement. The
language relating to the completion of the Merger will be revised to read as set
forth on page 1 of the attached revised draft of the Offer to Purchase.
2. AGREEMENT TO TENDER. Not later than November 29, 1994, Cockroft
Consolidated Corporation ("Stockholder") will validly tender and not withdraw
all 1,209,214 shares of Company Common Stock owned by it (the "Stockholder
Shares") pursuant to and in accordance with the Offer.
3. OPTION. Stockholder grants to Purchaser an irrevocable option (the
"Option") to purchase all (but not less than all) the Stockholder Shares. The
price per share payable upon the exercise of the Option is the greater of (i)
the Per Share Amount (presently $25.00 per share) or (ii) the per share amount
of any competing cash offer made by another person which the Company's Board of
Director determines it is required, in the exercise of its fiduciary duties, to
consider under Section 6.4(b) of the Agreement and which gives Purchaser a right
to terminate the Agreement under Section 8.1(e) thereof. The Option will be
exercisable upon written notice given on or after January 1, 1995 and on or
prior to March 31, 1995 provided that one of the events referred to in Paragraph
(d) or (e) of Annex 1 to the Agreement has occurred. Upon Purchaser's exercise
of the Option, Stockholder will deliver to Purchaser, against payment by
Purchaser to Stockholder of the aggregate purchase price therefor, certificates
representing all of the Stockholder Shares, duly endorsed for transfer to
Purchaser or accompanied by duly executed stock powers, such delivery to be made
at the Company's headquarters on a date specified by purchaser within five
business days of the date of notice.
4. REPRESENTATIONS AND WARRANTIES. Stockholder represents and warrants to
Purchaser that (a) this Agreement has been duly authorized, executed and
delivered by
<PAGE>
Cockroft Consolidated Corporation
November 21, 1994
Page 2
Stockholder and constitutes a legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms, and
(b) Stockholder has (i) good and valid title to all of the Stockholder Shares,
free and clear of all liens or other encumbrances or adverse interests
(collectively, "Encumbrances") and (ii) sole and unrestricted voting and
disposition power with respect to all of the Stockholder Shares, subject in each
case only to the rights of Purchaser hereunder.
5. CERTAIN RESTRICTIONS. Except as expressly provided herein, during the
period from the date hereof until the expiration of the Option, Stockholder will
not, directly or indirectly, (a) sell or transfer, offer for sale or transfer,
subject to any Encumbrance or grant any proxy (other than to Purchaser) with
respect to or otherwise limit its right to vote in any manner any Stockholder
Shares; (b) take or omit to take any action that would be reasonably likely to
(i) cause any representation or warranty of Stockholder herein to be untrue or
incorrect or (ii) prevent the performance by Stockholder of any covenant herein;
or (c) exercise any voting or consent rights with respect to any of the
Stockholder Shares in any manner inconsistent with the intent and purposes of
the Agreement or this agreement.
6. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto will execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to effectuate fully the intent and purposes hereof.
7. MISCELLANEOUS. This agreement (a) contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements with respect thereto; (b) will be governed by and construed in
accordance with New York Law, without regard to conflict of laws principles; and
(c) may be executed in any number of counterparts, each of which will be deemed
to be an original but all of which together will constitute but one instrument.
Very truly yours,
UNITED/HARVEY HOLDINGS, L.P.
By: Hampstead Genpar, L.P.,
its General Partner
By: HH Genpar Partners,
its General Partner
<PAGE>
Cockroft Consolidated Corporation
November 21, 1994
Page 3
By: Hampstead Associates, Inc.
its General Partner
By: /s/ Robert A. Whitman
----------------------------------
Name: Robert A. Whitman
-------------------------
Title:
------------------------
ACCEPTED AND AGREED TO:
COCKROFT CONSOLIDATED CORPORATION
By: /s/ Don Wm. Cockroft
-----------------------------------
Name: Don Wm. Cockroft
------------------------------
Title: President
-----------------------------
<PAGE>
EXHIBIT 8
United Inns(INC.)
Suite 2300, Clark Tower
5100 Poplar Avenue
Memphis, TN 38137
Phone (901) 767-2880
Don Wm. Cockroft
President
June 1, 1987
Mr. Augustus B. Randle III
c/o United Inns, Inc.
5100 Poplar Ave., Suite 2300
Memphis, TN 38137
Dear Gus:
This is to reduce to writing our previous agreement concerning the
security of your employment with United Inns, Inc. (the "Company").
You are a very valuable member of the management team of the Company. We
realize that you have been concerned about the possible change in the ownership
or control of the Company and as an incentive and to encourage your continued
employment, it is agreed that if there is a change in the effective control and
management of the Company and your employment with the Company is terminated for
any reason (including a voluntary resignation by you), you will be entitled to
termination pay (in addition to any pension benefits) of two times your base
compensation (excluding bonuses and non-taxable employee benefits) received by
you for the previous twelve months prior to your termination. This termination
fee will be paid to you in cash on the effective date of your termination. This
termination fee will be reduced by 1/24th each month you continue in the
services of the Company after six months from the date of change in the
management of the Company. Notwithstanding anything herein to the contrary, the
amount of termination pay will not be an amount that exceeds three times the
basic amount as determined under the Internal Revenue Code Section 280G so that
no portion of the payment will be considered to be "excess parachute payment" as
defined by the Code.
Nothing in this agreement will be considered to be a contract of
employment or a guaranty of employment for any period, and will only be
applicable if there is a change in the effective control and management of the
Company while you are still an employee of the Company.
<PAGE>
If the Company fails to pay promptly the termination fee as provided
herein, the Company shall also pay reasonable attorney fees and all other costs
incurred by you in the collection of the amounts due to you under this
Agreement.
Yours very truly,
UNITED INNS, INC.
By: /s/Don W. Cockroft
------------------------------
Don W. Cockroft, President
/s/Augustus B. Randle III
- -------------------------
Augustus B. Randle III
<PAGE>
EXHIBIT 9
United Inns(INC.)
Suite 2300, Clark Tower
5100 Poplar Avenue
Memphis, TN 38137
Phone (901) 767-2880
Don Wm. Cockroft
President
June 1, 1987
Mr. Don Miller
c/o United Inns, Inc.
5100 Poplar Ave., Suite 2300
Memphis, TN 38137
Dear Don:
This is to reduce to writing our previous agreement concerning the
security of your employment with United Inns, Inc. (the "Company").
You are a very valuable member of the management team of the Company. We
realize that you have been concerned about the possible change in the ownership
or control of the Company and as an incentive and to encourage your continued
employment, it is agreed that if there is a change in the effective control and
management of the Company and your employment with the Company is terminated for
any reason (including a voluntary resignation by you), you will be entitled to
termination pay (in addition to any pension benefits) of two times your base
compensation (excluding bonuses and non-taxable employee benefits) received by
you for the previous twelve months prior to your termination. This termination
fee will be paid to you in cash on the effective date of your termination. This
termination fee will be reduced by 1/24th each month you continue in the
services of the Company after six months from the date of change in the
management of the Company. Notwithstanding anything herein to the contrary, the
amount of termination pay will not be an amount that exceeds three times the
basic amount as determined under the Internal Revenue Code Section 280G so that
no portion of the payment will be considered to be "excess parachute payment" as
defined by the Code.
Nothing in this agreement will be considered to be a contract of
employment or a guaranty of employment for any period, and will only be
applicable if there is a change in the effective control and management of the
Company while you are still an employee of the Company.
<PAGE>
If the Company fails to pay promptly the termination fee as provided
herein, the Company shall also pay reasonable attorney fees and all other costs
incurred by you in the collection of the amounts due to you under this
Agreement.
Yours very truly,
UNITED INNS, INC.
By: /s/Don W. Cockroft
------------------------------
Don W. Cockroft, President
/s/Don Miller
- ------------------------
Don Miller
<PAGE>
EXHIBIT 10
[UNITED LETTERHEAD]
NOVEMBER 23, 1994
Dear Stockholder:
I am pleased to inform you that on November 14, 1994, United Inns, Inc., a
Delaware corporation (the "Company"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") with United/Harvey Holdings, L.P., a Delaware
limited partnership ("Purchaser"), United/Harvey Hotels, Inc., a Delaware
corporation ("United/Harvey"), and United/Harvey Sub, Inc., a Delaware
corporation. Pursuant to the Merger Agreement, on November 21, 1994, Purchaser
commenced a tender offer (the "Offer") to purchase all of the outstanding shares
of the Company's Common Stock (the "Shares") at a cash price of $25.00 per
Share. In this regard, you should have received Purchaser's Offer to Purchase
and related materials, including a Letter of Transmittal, which set forth in
detail the terms and conditions of the Offer and provide instructions on how to
tender your Shares. The Merger Agreement provides that, subject to the
fulfillment of certain conditions, the Offer will be followed by a merger in
which those Shares that are not acquired in the Offer will be converted into the
right to receive in cash the price paid per Share in the Offer (the "Merger").
THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY (I) DETERMINED THAT THE
OFFER AND THE CASH MERGER ARE IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, (II) APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE CASH MERGER, AND (III)
RECOMMENDS THAT YOU ACCEPT THE OFFER AND TENDER YOUR SHARES IN THE OFFER.
In arriving at its recommendation, the Company's Board of Directors
considered, among others, the various factors described in the enclosed Schedule
14D-9. These factors include the opinion of the Company's financial advisor,
Smith Barney Inc., to the effect that, as of the date of such opinion and based
upon and subject to certain matters stated therein, the cash consideration to be
received by holders of Shares in the Offer and the Merger was fair to such
stockholders from a financial point of view. Additional information with respect
to the Offer and the Merger is contained in the enclosed Schedule 14D-9.
The Schedule 14D-9 includes an Information Statement containing certain
information regarding the officers and directors of the Company as well as the
nominees of Purchaser that are expected to become the sole members of the
Company's Board of Directors upon Purchaser's acquisition of a majority of the
outstanding Shares.
As described in the enclosed Schedule 14D-9, Purchaser has reserved the
right following the consummation of the Offer to cause the Merger Agreement to
be amended to provide nontendering stockholders the option (the "Cash/Stock
Option") to elect to receive in exchange for each Share converted in the Merger
either (i) cash in an amount at least equal to the price paid per Share in the
Offer or (ii) common stock of United/Harvey. However, the Offer to Purchase
states that whether or not Purchaser makes the Cash/Stock Option available to
nontendering stockholders will depend upon a number of factors and will be
subject to certain conditions, and that no assurance can be given as to whether
the Cash/Stock Option will be made available or, if so, the timing thereof. THE
COMPANY'S BOARD OF DIRECTORS (I) HAS NOT MADE AND DOES NOT INTEND TO MAKE ANY
DETERMINATION WITH RESPECT TO THE CASH/STOCK OPTION OR ANY AMENDMENT TO THE
MERGER AGREEMENT WITH RESPECT THERETO, (II) HAS NOT APPROVED AND DOES NOT INTEND
TO APPROVE THE CASH/STOCK OPTION OR ANY AMENDMENT TO THE MERGER AGREEMENT WITH
RESPECT THERETO, AND (III) HAS NOT MADE AND DOES NOT INTEND TO MAKE ANY
RECOMMENDATION TO ITS STOCKHOLDERS WITH RESPECT TO THE CASH/STOCK OPTION OR ANY
AMENDMENT TO THE MERGER AGREEMENT WITH RESPECT THERETO.
The Board of Directors believes that the Offer provides significant value to
the Company's stockholders. We urge you to read the enclosed materials carefully
in making your decision with respect to tendering your Shares.
On behalf of the Board of Directors, management and employees of the
Company, I thank you for your support and encouragement.
Sincerely yours,
Don Wm. Cockroft
PRESIDENT, CHIEF EXECUTIVE
OFFICER AND DIRECTOR
<PAGE>
SMITH BARNEY
- ------------
November 14, 1994
United Inns, Inc.
5100 Poplar Avenue
Suite 2300
Memphis, Tennessee 38137
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock of United Inns, Inc. ("United Inns") of
the consideration to be received by such holders pursuant to the terms and
subject to the conditions set forth in the Agreement and Plan of Merger, dated
as of November 14, 1994 (the "Merger Agreement"), by and among United Inns,
United Harvey/Holdings, L.P. ("U/H Holdings"), United/Harvey Sub, Inc.
("Merger Sub") and United Inns. As more fully described in the Merger
Agreement, (i) U/H Holdings will make a tender offer to purchase all of the
outstanding shares of the common stock, par value $1.00 per share, of United
Inns (the "UI Common Stock") at a purchase price per share of $25.00, not to the
seller in cash (the "Tender Offer") and (ii) subsequent to the Tender Offer,
Merger Sub will be merged with and into United Inns (the "Merger" and, together
with the Tender Offer, the "Transaction") and each outstanding share of UI
Common Stock not previously tendered will be converted in the Merger into the
right to receive $25.00 in cash.
In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of United Inns and certain senior officers and other
representatives and advisors of U/H Holdings concerning the business, operations
and prospects of United Inns. We examined certain publicly available business
and financial information and other data relating to United Inns which were
provided to us by the management of United Inns. We reviewed the financial
terms of the Transaction as set forth in the Merger Agreement in relation to,
among other things: current and historical market prices and trading volumes of
the UI Common Stock; the historical earnings of United Inns; and the
capitalization and financial condition of United Inns. We also considered, to
the extent publicly available, the financial terms of certain other similar
transactions recently effected which we considered comparable to the Transaction
and analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose operations we
considered comparable to those of United Inns. In addition to the foregoing, we
conducted such other analyses and examinations and considered such other
financial, economic and market criteria as we deemed necessary to arrive at our
opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information publicly available or furnished to or
<PAGE>
The Board of Directors
United Inns, Inc.
November 14, 1994
Page 2
otherwise reviewed by or discussed with us. With respect to financial and other
information and data provided to or otherwise reviewed by or discussed with us,
including, without limitation, estimates of liability for environmental, tax
and other matters, reserves established with respect thereto and estimates of
expenses in connection therewith, we have been advised by the management of
United Inns that such financial and other information and data were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management and other representatives of United Inns. Except
for an evaluation prepared by legal and accounting advisors for United Inns as
to certain tax matters, we have not made or been provided with an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of United Inns. In connection with our engagement, we approached, and held
discussions with, certain third parties to solicit indications of interest in a
possible acquisition of United Inns. Our opinion is necessarily based upon
information available to us, and financial, stock market and other conditions
and circumstances existing and disclosed to us, as of the date hereof.
Smith Barney has been engaged to render financial advisory services to United
Inns in connection with the Transaction and will receive a fee for our services,
a significant portion of which is contingent upon the consummation of the
Transaction. We also will receive a fee upon the delivery of this opinion. In
the ordinary course of our business, we may actively trade the equity securities
of United Inns for our own account or for the account of our customers and,
accordingly, may at any time hold a long or short position in such securities.
Our advisory services and the opinion expressed herein are provided solely for
the use of the Board of Directors of United Inns in its evaluation of the
proposed Transaction and are not on behalf of, and are not intended to confer
rights or remedies upon, U/H Holdings, or is affiliates, any stockholder of
United Inns, U/H Holdings or their respective affiliates, or any person other
than the Board of Directors of United Inns. Our opinion may not be published or
otherwise used or referred to, nor shall any public reference to Smith Barney be
made, without our prior written consent.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the cash consideration to be received by
holders of UI Common Stock in the Transaction is fair, from a financial point of
view, to such holders.
Very truly yours,
/s/ Smith Barney Inc.
SMITH BARNEY INC.
