SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) July 18, 1999
VISTANA, INC.
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(Exact Name of Registrant as Specified in its Charter)
Florida 0-29114 59-3415620
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
8801 Vistana Centre Drive, Orlando, Florida 32821
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(Address of Principal Executive Offices) (Zip Code)
(407) 239-3000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, If Changed Since Last Report.)
858284.3
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ITEM 5. Other Events.
Vistana, Inc. ("Vistana" or the "Registrant"), Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation ("Starwood"), and Fire
Acquisition Corp., a Florida corporation and a wholly owned subsidiary of
Starwood ("Fire Acquisition"), have executed a definitive Agreement and Plan of
Merger, dated as of July 18, 1999 (the "Merger Agreement"), a copy of which is
attached hereto as Exhibit 2.1 and the full text of which is incorporated by
reference herein, providing for the acquisition of Vistana by Starwood pursuant
to a merger of Vistana with and into Fire Acquisition (the "Merger").
The Merger is structured to provide holders of shares of common
stock, $.01 par value per share ("Common Stock"), of Vistana with consideration
valued at $19.00 per share, assuming that Starwood's average share price for the
twenty-day trading period prior to the fifth day preceding the closing date of
the Merger (the "Market Price") is between $30.00 and $36.00 per share. In
particular, the Merger Agreement provides that, upon consummation of the Merger,
holders of shares of Common Stock would be entitled to receive, for each share
of Common Stock, consideration consisting of (i) $5.00 in cash and (ii) such
number of units of Starwood stock ("Starwood Units") determined by multiplying
each share of Common Stock by the Exchange Ratio (as hereinafter defined). The
"Exchange Ratio" shall equal (x) $14.00 divided by (y) the Market Price of a
Starwood Unit; provided that in no event shall the Exchange Ratio be (A) less
than an amount equal to $14.00 divided by $36.00 or (B) greater than an amount
equal to $14.00 divided by $30.00.
The Board of Directors of Vistana unanimously approved the Merger
Agreement on July 18, 1999 and the principal shareholders of Vistana, who hold
an aggregate of approximately 53% of the outstanding shares of Common Stock,
have executed written consents to approve the Merger and therefore the required
shareholder approval under Florida law has been obtained and no further meeting
of shareholders will be held. The Merger is subject to customary closing
conditions, including the expiration or other termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended. Either Starwood or Vistana may terminate the Merger Agreement upon
certain events, including if the Market Price of the Starwood Units is less than
$23.00 on the day immediately preceding the closing date. The Merger Agreement
is also terminable by Starwood or Vistana if the Merger has not been effected on
or prior to January 31, 2000.
858284.3
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ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of July 18, 1999, among
Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
("Starwood"), Fire Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of Starwood, and the Registrant.
858284.3
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VISTANA, INC.
(Registrant)
Date: July 21, 1999
By /s/Raymond L. Gellein, Jr.
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Name: Raymond L. Gellein, Jr.
Title: Chairman and Co-Chief
Executive Officer
858284.3
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EXHIBIT INDEX
Exhibit
2.1 Agreement and Plan of Merger, dated as of July 18, 1999, among
Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
("Starwood"), Fire Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of Starwood, and the Registrant.
858284.3
5
Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
AMONG
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
FIRE ACQUISITION CORP.
AND
VISTANA, INC.
Dated as of July 18, 1999
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.........................................................2
Section 1.1 The Merger...................................................2
Section 1.2 Effective Time...............................................2
Section 1.3 Effects of the Merger........................................2
Section 1.4 Charter and By-laws; Directors...............................3
Section 1.5 Conversion of Securities.....................................3
Section 1.6 Parent to Make Certificates Available........................4
Section 1.7 Dividends; Transfer Taxes; Withholding.......................5
Section 1.8 No Fractional Securities.....................................6
Section 1.9 Return of Exchange Fund......................................7
Section 1.10 Adjustment of Exchange Ratio................................7
Section 1.11 No Further Ownership Rights in Company Common Stock.........7
Section 1.12 Closing of Company Transfer Books...........................7
Section 1.13 Lost Certificates...........................................7
Section 1.14 Further Assurances..........................................8
Section 1.15 Closing.....................................................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...................8
Section 2.1 Organization, Standing and Power.............................8
Section 2.2 Capital Structure...........................................10
Section 2.3 Authority...................................................12
Section 2.4 Consents and Approvals; No Violation........................12
Section 2.5 SEC Documents and Other Reports.............................14
Section 2.6 Registration Statement and Information Statement............14
Section 2.7 Absence of Certain Changes or Events........................15
Section 2.8 Permits and Compliance......................................15
Section 2.9 No Required Vote of Parent Stockholders.....................16
Section 2.10 Reorganization; Parent Tax Certificate.....................16
Section 2.11 Brokers....................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................17
Section 3.1 Organization, Standing and Power............................17
Section 3.2 Capital Structure...........................................17
Section 3.3 Authority...................................................19
Section 3.4 Consents and Approvals; No Violation........................19
Section 3.5 SEC Documents and Other Reports.............................21
Section 3.6 Registration Statement and Information Statement............21
Section 3.7 Absence of Certain Changes or Events........................22
Section 3.8 Permits and Compliance......................................23
Section 3.9 Tax Matters.................................................24
Section 3.10 Actions and Proceedings....................................25
Section 3.11 Certain Agreements.........................................25
Section 3.12 ERISA......................................................26
Section 3.13 Liabilities................................................28
Section 3.14 Intellectual Property......................................28
Section 3.15 Properties, Title and Related Matters......................28
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Page
Section 3.16 Customer Warranties.........................................30
Section 3.17 Environmental Matters.......................................30
Section 3.18 Insurance...................................................32
Section 3.19 Mortgages Receivable........................................32
Section 3.20 Parachute Payments to Disqualified Individuals..............33
Section 3.21 Opinion of Financial Advisor................................33
Section 3.22 State Takeover Statutes.....................................33
Section 3.23 Reorganization..............................................33
Section 3.24 Brokers.....................................................34
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.........................34
Section 4.1 Conduct of Business by the Company Pending the Merger........34
Section 4.2 No Solicitation..............................................39
Section 4.3 Third Party Standstill Agreements............................39
Section 4.4 Reorganization...............................................40
ARTICLE V ADDITIONAL AGREEMENTS..............................................40
Section 5.1 Notice to Shareholders.......................................40
Section 5.2 Filings; Other Actions.......................................40
Section 5.3 Comfort Letters..............................................41
Section 5.4 Access to Information........................................42
Section 5.5 Compliance with the Securities Act...........................43
Section 5.6 Stock Exchange Listings......................................43
Section 5.7 Fees and Expenses............................................43
Section 5.8 Company Stock Options........................................43
Section 5.9 Reasonable Efforts...........................................44
Section 5.10 Public Announcements........................................45
Section 5.11 Real Estate Transfer and Gains Tax..........................45
Section 5.12 State Takeover Laws.........................................45
Section 5.13 Indemnification; Directors and Officers Insurance...........46
Section 5.14 Notification of Certain Matters.............................46
Section 5.15 Employee Benefit Plans......................................47
Section 5.16 Shareholder Litigation......................................47
Section 5.17. Additional Matters..........................................48
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER................................49
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger.......................................................49
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger.......................................................50
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger.......................................................51
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................54
Section 7.1 Termination..................................................54
Section 7.2 Effect of Termination........................................55
Section 7.3 Amendment....................................................55
Section 7.4 Waiver.......................................................55
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Page
ARTICLE VIII GENERAL PROVISIONS..............................................56
Section 8.1 Non-Survival of Representations and Warranties...............56
Section 8.2 Notices......................................................56
Section 8.3 Interpretation...............................................57
Section 8.4 Counterparts.................................................57
Section 8.5 Entire Agreement; No Third-Party Beneficiaries...............57
Section 8.6 Governing Law................................................57
Section 8.7 Assignment...................................................57
Section 8.8 Severability.................................................58
Section 8.9 Enforcement of this Agreement................................58
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 18, 1999 (this
"Agreement"), among Starwood Hotels & Resorts Worldwide, Inc., a Maryland
corporation ("Parent"), Fire Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of Parent ("Sub"), and Vistana, Inc., a Florida
corporation (the "Company"; together with Sub (the "Constituent Corporations")).
W I T N E S S E T H:
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of the Company with and into Sub (the
"Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding share of common stock, par value $.01 per
share, of the Company ("Company Common Stock"), not owned by Parent, the Company
or their respective wholly-owned Subsidiaries (as hereinafter defined) will be
converted into (i) shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock"), and Class B Shares, par value $.01 per share ("Class B
Shares" and, when attached to shares of Parent Common Stock pursuant to the
Amended and Restated Intercompany Agreement dated as of January 6, 1999, between
Parent and the Trust (as hereinafter defined), "Units"), of Starwood Hotels and
Resorts, a Maryland real estate investment trust and a subsidiary of Parent (the
"Trust" and, together with Parent, the "Parent Companies"), and (ii) cash;
WHEREAS the Board of Directors of the Company, upon the recommendation
of the Special Committee thereof constituted on April 5, 1999 by such Board of
Directors (the "Special Committee"), has unanimously approved this Agreement and
submitted this Agreement to each of Raymond L. Gellein, Jr. and Jeffrey A. Adler
and certain of their respective affiliated or associated entities (collectively,
the "Principal Shareholders"), as the owners of an aggregate of approximately 53
percent of the currently outstanding shares of the voting common stock of the
Company, for their consent, and the Principal Shareholders have caused to be
executed a written shareholders' consent (the "Shareholders' Consent") pursuant
to Section 607.0704 of the Florida 1989 Business Corporation Act (the "FBCA")
approving this Agreement and the Merger;
WHEREAS Parent and each of the Principal Shareholders have entered into
a Shareholder Agreement (including an irrevocable proxy) of even date herewith
with Parent (the "Shareholder Agreements"), which agreements the Board of
Directors of the Company, upon the unanimous recommendation thereof by the
Special Committee, has approved;
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WHEREAS the respective Boards of Directors of each of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is in the best interest of
their respective stockholders or shareholders, as the case may be; and
WHEREAS for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth herein, and in accordance with the FBCA, the Company shall be merged
with and into Sub at the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of the Company shall cease and Sub
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company in
accordance with the FBCA. Notwithstanding anything to the contrary herein, at
the election of Parent, Parent or any wholly-owned Subsidiary of Parent may be
substituted for Sub as a constituent corporation in the Merger. In such event,
the parties agree to execute an appropriate amendment to this Agreement, in form
and substance reasonably satisfactory to Parent and the Company, in order to
reflect such substitution. Section 1.2 Effective Time. The Merger shall become
effective when articles of merger (the "Articles of Merger"), executed in
accordance with the relevant provisions of the FBCA, are filed with the
Department of State of the State of Florida; provided, however, that, upon
mutual consent of the Constituent Corporations, the Articles of Merger may
provide for a later date of effectiveness of the Merger not more than 30 days
after the date the Articles of Merger are filed. When used in this Agreement,
the term "Effective Time" shall mean the date and time at which the Articles of
Merger are accepted for record or such later time established by the Articles of
Merger. The filing of the Articles of Merger shall be made on the date of the
Closing (as hereinafter defined). Section 1.3 Effects of the Merger. The Merger
shall have the effects set forth in Section 607.1106 of the FBCA.
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Section 1.4 Charter and By-laws; Directors. (a) At the Effective Time,
the Articles of Incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law; provided, however, that the Articles of Incorporation of Sub
shall include provisions substantially identical to ARTICLE VII, Section B and
ARTICLE VIII of the Articles of Incorporation of the Company existing as of the
date of this Agreement; and provided further that at the Effective Time Article
I of the Articles of Incorporation of Sub shall be amended to read in its
entirety as follows: "The corporate name that satisfies the requirements of
Section 607.0401 of the 1989 Business Corporation Act is: Vistana, Inc." At the
Effective Time, the By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or in the Articles of
Incorporation. (b) The directors of Sub at the Effective Time shall be the
directors of the Surviving Corporation until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be. Section 1.5 Conversion of Securities. As of the Effective Time,
by virtue of the Merger and without any action on the part of Sub, the Company
or the holders of any securities of the Constituent Corporations: (a) Each
issued and outstanding share of common stock, par value $.01 per share, of Sub
shall be converted into one validly issued, fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation. (b) All
shares of Company Common Stock that are held in the treasury of the Company and
shares of Company Common Stock owned by Parent or Sub or by any wholly-owned
Subsidiary of Parent or of the Company shall be cancelled and no cash, capital
stock of Parent or other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10 hereof, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be cancelled in accordance with Section 1.5(b)) shall
as of the Effective Time be converted into the right to receive the Exchange
Ratio (as defined below) of validly issued, fully paid and nonassessable Units
plus $5.00 in cash. The "Exchange Ratio" shall be a number equal to the
quotient, rounded to the nearest thousandth, or if there shall not be a nearest
thousandth, the next higher thousandth, of (x) $14.00 divided by (y) the Market
Price
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(as hereinafter defined) of a Unit on the fifth New York Stock Exchange, Inc.
("NYSE") trading day prior to the date of the Effective Time; provided, however,
that in no event shall the Exchange Ratio be (A) less than an amount equal to
$14.00 divided by $36.00 or (B) greater than an amount equal to $14.00 divided
by $30.00. All such shares of Company Common Stock, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist and each holder thereof or of a certificate representing any such
shares shall cease to have any rights with respect thereto, except that each
holder of such a certificate shall have the right to receive (i) any dividends
and other distributions (paid with respect to Units) in accordance with Section
1.7, (ii) certificates representing the Units into which such shares are
converted, (iii) cash into which such shares are converted pursuant to this
Section 1.5(c), without interest, and (iv) any cash, without interest, in lieu
of fractional Units to be issued or paid in consideration therefor in accordance
with Section 1.8, all upon the surrender of such certificate in accordance with
Section 1.6. The "Market Price" of a Unit on any date means the average of the
Average Prices (as hereinafter defined) for the 20 consecutive NYSE trading days
immediately preceding such date. The "Average Price" for any date means the
average of the daily high and low prices per Unit as reported on the NYSE
Composite Transactions reporting system (as published in The Wall Street Journal
or, if not published therein, in another authoritative source mutually selected
by the Company and Parent).
Section 1.6 Parent to Make Certificates Available.
(a) Exchange of Certificates. Prior to the Effective Time, Parent shall
authorize a commercial bank (or such other person or persons as shall reasonably
be acceptable to Parent and the Company) to act as Exchange Agent hereunder (the
"Exchange Agent"). Parent shall deposit with the Exchange Agent, in trust for
the holders of shares of Company Common Stock converted in the Merger, (i) as
soon as practicable after the Effective Time, certificates representing the
Units issuable pursuant to Section 1.5(c) in exchange for outstanding shares of
Company Common Stock, and (ii) as required from time to time after the Effective
Time to enable the Exchange Agent to make such payments on Parent's behalf, cash
payable pursuant to Section 1.5(c) in exchange for outstanding shares of Company
Common Stock, cash required to make payments in lieu of any fractional shares
pursuant to Section 1.8 and cash or other property to pay or make any dividends
or distributions pursuant to Section 1.7 (such cash and Units, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall deliver the Units contemplated
to be issued and the cash payable pursuant to Section 1.5(c) out
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of the Exchange Fund. The Exchange Fund shall not be used for any other purpose
except as provided for in this Agreement.
(b) Exchange Procedures. As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each record holder of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted in the Merger (the
"Certificates"), a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent, and shall
contain instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Units and cash payable or other property
distributable pursuant to Section 1.5(c)). Upon surrender for cancellation to
the Exchange Agent of all Certificates held by any record holder of a
Certificate, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor cash and a
certificate representing that number of whole Units into which the shares
represented by the surrendered Certificate shall have been converted at the
Effective Time pursuant to this Article I, cash in lieu of any fractional Units
in accordance with Section 1.8 and any dividends or other distributions in
accordance with Section 1.7, and any Certificate so surrendered shall forthwith
be cancelled by the Exchange Agent.
Section 1.7 Dividends; Transfer Taxes; Withholding. No dividends or
other distributions that are declared on or after the Effective Time on the
Units, or are payable to the holders of record thereof on or after the Effective
Time, will be paid to any person entitled by reason of the Merger to receive a
certificate representing Units until such person surrenders the related
Certificate or Certificates, as provided in Section 1.6, and no cash payment
pursuant to Section 1.5(c) or 1.8 will be paid to any such person until such
person shall so surrender the related Certificate or Certificates. Subject to
the effect of applicable law, there shall be paid to each record holder of a new
certificate representing such Units: (i) at the time of such surrender or as
promptly as practicable thereafter, the amount of any dividends or other
distributions theretofore paid with respect to the Units represented by such new
certificate and having a record date on or after the Effective Time and a
payment date prior to such surrender; (ii) at the appropriate payment date or as
promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such Units and having a record date on or
after the Effective Time but prior to such surrender and a payment date on or
subsequent to such surrender; and (iii) at the time of such surrender or as
promptly as practicable thereafter, the amount of any cash payable pursuant to
Section 1.5(c) or 1.8 to which such holder is entitled. In no event shall the
person entitled to receive such
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dividends or other distributions or cash be entitled to receive interest on such
dividends or other distributions or cash. If any certificate representing Units
or cash or other property is to be issued or delivered in a name other than that
in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such Units in
a name other than that of the registered holder of the Certificate surrendered,
or shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as Parent
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent or
the Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or scrip
representing fractional Units shall be issued upon the surrender for exchange of
Certificates pursuant to this Article I, and no Parent or Trust dividend or
other distribution or stock split shall relate to any fractional share, and no
fractional share shall entitle the owner thereof to vote or to any other rights
of a securityholder of Parent or Trust. In lieu of any such fractional share,
each holder of Company Common Stock who would otherwise have been entitled to a
fraction of a Unit upon surrender of Certificates for exchange pursuant to this
Article I will be paid an amount in cash (without interest), rounded to the
nearest cent, determined by multiplying (i) the per share closing price on the
NYSE of a Unit (as reported in the NYSE Composite Transactions) on the date of
the Effective Time or, if the Units do not trade on the NYSE on such date, the
first date of trading of Units on the NYSE after the Effective Time) by (ii) the
fractional interest to which such holder would otherwise be entitled. As
promptly as practicable after the determination of the amount of cash to be paid
to holders of fractional share interests, the Exchange Agent shall so notify
Parent, and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Section 1.7 and this
Section 1.8. For purposes of paying such cash in lieu of fractional shares, all
Certificates surrendered for exchange by a Company shareholder shall be
aggregated, and no such Company shareholder will receive cash in
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lieu of fractional shares in an amount equal to or greater than the value of one
full Unit with respect to such Certificates surrendered.
Section 1.9 Return of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the former shareholders of the Company for one
year after the Effective Time shall be delivered to Parent, upon demand of
Parent, and any such former shareholders who have not theretofore complied with
this Article I shall thereafter look only to Parent for payment of their claim
for Units, any cash payable pursuant to Sections 1.5(c) and 1.8 and any
dividends or distributions with respect to Units. None of Parent, Trust or the
Surviving Corporation shall be liable to any former holder of Company Common
Stock for any such Units, cash and dividends and distributions held in the
Exchange Fund that is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.10 Adjustment of Exchange Ratio. In the event of any
reclassification, stock split, combination or stock dividend with respect to the
Units, any change or conversion of Units into other securities or any other
dividend or distribution with respect to the Units other than the declaration
and payment of cash dividends not in the aggregate in excess of $1.00 per Unit
(or if a record date with respect to the foregoing should occur) prior to the
Effective Time, appropriate and proportionate adjustments, if any, shall be made
to the Exchange Ratio, and all references to the Exchange Ratio in this
Agreement shall be deemed to be to the Exchange Ratio as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common Stock. All
Units and cash issued or paid upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid pursuant to Sections
1.5(c) and 1.8) shall be deemed to have been issued in full satisfaction of all
rights pertaining to the shares of Company Common Stock represented by such
Certificates.
Section 1.12 Closing of Company Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock shall thereafter be made on the records of the
Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, the Exchange Agent or the Parent, such Certificates shall
be cancelled and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Exchange Agent, the posting by such person of a bond,
in such reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against them with
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respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Units, any cash payable pursuant to
Section 1.5(c) or 1.8 to which the holders thereof are entitled and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 1.7.
Section 1.14 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.15 Closing. Unless this Agreement is otherwise terminated in
accordance with the provisions hereof, subject to Section 7.1(e), the closing of
the Merger (the "Closing" and the date on which the Closing occurs being the
"Closing Date") and all actions contemplated by this Agreement to occur at the
Closing shall take place at the offices of Sidley & Austin, 875 Third Avenue,
New York, New York, at 10:00 a.m., local time, on a date to be specified by the
parties, which (subject to fulfillment or waiver of the conditions set forth in
Article VI) shall be no later than the second business day following the day on
which the last of the conditions set forth in Article VI shall have been
fulfilled or waived, or at such other time and place as Parent and the Company
shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub represents and warrants to the Company as
follows:
Section 2.1 Organization, Standing and Power. Each of Parent and Sub is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite corporate power
and authority
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to carry on its business as now being conducted. Each Subsidiary of Parent is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect (as hereinafter defined) on Parent. Parent and each of
its Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Parent.
For all purposes of this Agreement, any reference to any state of
facts, event, change or effect having a "Material Adverse Effect" on or with
respect to Parent or the Company, as the case may be, means that such state of
facts, event, change or effect has had, or could reasonably be expected to have,
a material adverse effect on the business, properties, assets, results of
operations or condition (financial or otherwise) of Parent and its Subsidiaries,
taken as a whole, or the Company and its Subsidiaries, taken as a whole, as the
case may be; provided, however, that any such adverse effect resulting from any
Proposed Accounting Change (as defined below) shall not be taken into account in
determining whether there has been a Material Adverse Effect on or with respect
to Parent or the Company. A "Proposed Accounting Change" shall mean, for all
purposes of this Agreement, any proposed change in accounting principles which
has not been adopted (with or without a later effective date) by the American
Institute of Certified Public Accountants or the Financial Accounting Standards
Board prior to the Closing Date. For all purposes of this Agreement, except as
hereinafter provided, "Subsidiary" means any corporation, partnership, limited
liability company, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), (i) owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
partnership, limited liability company, joint venture or other legal entity,
(ii) is a general partner, trustee, manager or other entity or person performing
similar functions or (iii) has control (as defined in Rule 405 under the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act")); provided, however, that with
respect to the Company, neither the Company's limited partnerships relating to
Vistana Resort at World Golf Village (the "Company Venture"), nor the VOI (as
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hereinafter defined) owner associations present at any of its resorts shall be
deemed to be a "Subsidiary" of the Company for purposes of this Agreement. For
all purposes of this Agreement, a "wholly-owned Subsidiary" of the Company shall
be deemed to include those entities which, for regulatory or other local law
purposes, have issued nominal ownership interests to persons other than the
Company or any of its Subsidiaries.
Section 2.2 Capital Structure. At the date hereof, the authorized stock
of Parent consists of (i) 1,000,000,000 shares of Parent Common Stock, (ii)
200,000,000 shares of preferred stock, par value $0.01 per share (the "Parent
Preferred Stock"), (iii) 50,000,000 shares of excess common stock, par value
$0.01 per share ("Parent Excess Common Stock"), and (iv) 100,000,000 shares of
excess preferred stock, par value $0.01 per share ("Parent Excess Preferred
Stock"). At the close of business on June 30, 1999, 178,689,625 shares of Parent
Common Stock were issued and outstanding and no shares of Parent Preferred
Stock, Parent Excess Common Stock or Parent Excess Preferred Stock were
outstanding. As of the date hereof, the authorized beneficial interest of the
Trust consists of (i) 5,000 Class A Shares, par value $.01 per share (the "Class
A Shares"), (ii) 1,000,000,000 Class B Shares, (iii) 200,000,000 Excess Trust
Shares, par value $0.01 per share ("Excess Trust Shares"), (iv) 30,000,000 Class
A Exchangeable Preferred Shares, par value $0.01 per share ("Class A EPS"), (v)
15,000,000 Class B Exchangeable Preferred Shares, par value $0.01 per share
("Class B EPS"), (vi) 55,000,000 Trust Preferred Shares, par value $0.01 per
share ("Trust Preferred Shares"), and (vii) 50,000,000 Excess Preferred Shares,
par value $0.01 per share ("Excess Trust Preferred Shares"). At the close of
business on June 30, 1999, (i) 100 Class A Shares were issued and outstanding,
(ii) 178,689,625 Class B Shares were issued and outstanding, (iii) 3,944,692
shares of Class A EPS were issued and outstanding and (iv) 3,536,871 shares of
Class B EPS were issued and outstanding and (v) no excess Trust Shares or Excess
Trust Preferred Shares were outstanding. As of the close of business on June 30,
1999, (i) no Class B Shares were held in the treasury of the Trust or by its
Subsidiaries, (ii) 24,367,652 Class B Shares were reserved for issuance pursuant
to the Parent Stock Plans (as hereinafter defined), (iii) 11,777,501 Class B
Shares were reserved for issuance pursuant to the exchange of Class A EPS and
the exchange of SLT Units (as defined below) and SLC Units (as defined below),
(iv) 3,536,871 Class A EPS were reserved for issuance pursuant to the exchange
of Class B EPS and (v) 548,665 Class B EPS were reserved for issuance pursuant
to the exchange of certain SLT Units and SLC Units. All the outstanding shares
of Parent Common Stock, Class A Shares, Class B Shares, Class A EPS and Class B
EPS are validly issued, fully paid and nonassessable and free of preemptive
rights. As of the close of business on June 30, 1999, except as set forth in
Section 2.2 of the letter dated the date hereof and delivered on the date hereof
by Parent to the Company, which letter relates to this Agreement and is
designated therein
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as the Parent Letter (the "Parent Letter"), and except (a) for this Agreement,
(b) for stock options issued pursuant to the Incentive and Non-Qualified Shares
Option Plan (1986) of the Trust, the Corporation Stock Non-Qualified Stock
Option Plan (1986) of the Trust, the Stock Option Plan (1986) of Parent, the
Trust Shares Option Plan (1986) of Parent, the 1995 Long-Term Incentive Plan of
the Trust, the 1995 Long-Term Incentive Plan of Parent, the 1999 Long-Term
Incentive Plan of the Trust and the 1999 Long-Term Incentive Plan of Parent
(collectively, the "Parent Stock Plans") covering not in excess of 48,776,342
shares of Parent Common Stock (collectively, the "Parent Stock Options"), (c)
for 8,318,524 shares of Parent Common Stock issuable upon the exchange of units
("SLT Units") in SLT Realty Limited Partnership (the "Realty Partnership") and
units ("SLC Units") in SLC Operating Limited Partnership (the "Operating
Partnership"), and (d) as disclosed above, there are no options, warrants,
calls, rights, securities or agreements to which Parent is a party or by which
it is bound obligating Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or any of its
Subsidiaries or obligating Parent, or any of its Subsidiaries to grant, extend
or enter into any such option, warrant, call, right, security or agreement. As
of the close of business on June 30, 1999, except as disclosed in Section 2.2 of
the Parent Letter, and except (a) for this Agreement, (b) for stock options
issued pursuant to the Parent Stock Plans covering not in excess of 22,536,199
Class B Shares (collectively, the "Trust Stock Options"), (c) for 11,777,501
Class B Shares issuable upon the exchange of SLT Units, SLC Units and Class A
EPS, (d) for 3,536,871 Class A EPS issuable upon the conversion of Class B EPS,
(e) for 548,665 Class B EPS issuable upon the exchange of SLT Units and SLC
Units and (f) as disclosed above, there are no options, warrants, calls, rights,
securities or agreements to which the Trust is a party or by which it is bound
obligating the Trust to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of beneficial interest of the Trust or obligating the
Trust to grant, extend or enter into any such option, warrant, call, right,
security or agreement. At the date hereof, the capital stock of Sub consists of
1,000 shares of common stock, par value $0.01 per share ("Sub Shares"), of which
as of the date of this Agreement, 1,000 Sub Shares were issued and outstanding,
all of which shares were owned directly by Parent. Each outstanding share of
capital stock of each Subsidiary of Parent that is a corporation is duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the Parent SEC Documents filed prior to the date of this Agreement,
each such share is owned by Parent or another Subsidiary of Parent, free and
clear of all security interests, liens, claims, pledges, mortgages, options,
rights of first refusal, agreements, limitations on voting rights, charges and
other encumbrances of any nature whatsoever (each, a "Lien"). As of the date of
this Agreement, there are no outstanding contractual obligations of Parent or
any of its Subsidiaries
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to repurchase, redeem or otherwise acquire any shares of capital stock of Parent
or any of its Subsidiaries. Neither Parent nor any Subsidiary of Parent
beneficially owns any shares of Company Common Stock. Except as set forth in
Section 2.2 of the Parent Letter, Exhibit 21.1 to the Annual Report on Form 10-K
of Parent for the year ended December 31, 1998 (the "Parent Annual Report"), as
filed with the Securities and Exchange Commission (the "SEC"), is a true and
correct statement in all material respects of all the information required to be
set forth therein by the rules and regulations of the SEC.
Section 2.3 Authority. Each of Parent and Sub has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated hereby. The respective Boards of Directors of Parent and Sub have
duly approved and adopted this Agreement. The Board of Directors of Sub
recommended this Agreement to its sole shareholder, and the sole shareholder of
Sub has approved this Agreement, all such actions being taken in accordance with
the FBCA. The execution, delivery and performance of their obligations under
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
Merger and the other transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Sub, subject to the
filing of the Articles of Merger as required by the FBCA. This Agreement has
been duly executed and delivered by each of Parent and Sub and (assuming the
valid authorization, execution and delivery of this Agreement by the Company and
the validity and binding effect of this Agreement on the Company) constitutes
the valid and binding obligation of Parent and Sub enforceable against each of
them in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditor's rights and to general equity principles. The filing of a
joint registration statement on Form S-4 with the SEC by the Parent Companies
under the Securities Act for the purpose of registering the Units to be issued
in connection with the Merger as contemplated by this Agreement (together with
any amendments or supplements thereto, whether prior to or after the effective
date thereof, and including all information incorporated by reference therein,
the "Registration Statement") have been duly authorized by Parent's Board of
Directors and Trust's Board of Trustees. The issuance of the Class B Shares in
the Merger has been duly authorized by the Trust's Board of Trustees.
Section 2.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions specifically described in
this Section 2.4 have been obtained and all filings, registrations and
obligations specifically described in this Section 2.4 have been made or
satisfied, and except as set forth in Section 2.4 of the Parent Letter, the
execution and delivery of this Agreement by Parent
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and Sub do not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not (with or without notice or lapse
of time, or both), result in any violation of, or default or loss of a material
benefit under, or give to others a right of termination, cancellation or
acceleration of any obligation under, or result in the creation of any Lien upon
any of the properties, assets or operations of Parent or any of its Subsidiaries
under, any provision of (i) the articles of incorporation or by-laws of Parent,
(ii) any provision of the comparable charter or organization documents of any
Subsidiary of Parent, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties, assets or
operations, other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, losses, rights or Liens that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, materially impair
the ability of Parent or Sub to perform their respective obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
domestic (federal or state), foreign or supranational court, commission,
governmental body, regulatory agency, authority, commission or tribunal (a
"Governmental Entity") is required by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
Parent or Sub or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except (i) in connection, or in
compliance, with the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), (ii) the filing of the Articles of
Merger with the Department of State of the State of Florida and appropriate
documents with the relevant authorities of other states in which Parent or any
of its Subsidiaries is qualified to do business, (iii) such filings,
authorizations, orders and approvals as may be required by state takeover laws
(the "State Takeover Approvals"), (iv) such filings as may be required in
connection with the taxes described in Section 5.11, (v) pursuant to applicable
requirements, if any, of state securities or "blue sky" laws ("Blue Sky Laws")
and the NYSE, (vi) certain filings, authorizations, consents and approvals as
may be required with or from Governmental Entities in connection with gaming
operations, such filings or amendments as may be required by federal and state
land development, mortgage servicing and telemarketing laws, state time share
laws, state securities laws applicable to the sale or offer of VOIs, and seller
of travel or travel agency laws (the "Regulatory Approvals") and (vii) such
other consents, orders,
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authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent, materially impair the
ability of Parent or Sub to perform their respective obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
Section 2.5 SEC Documents and Other Reports. The Parent Companies have
filed all required documents with the SEC since January 1, 1997 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated (or combined
consolidated) financial statements (including, in each case, any notes thereto)
of the Parent Companies included in the Parent SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated (or combined
consolidated) financial position of Trust and Parent and their consolidated
Subsidiaries as at the respective dates thereof and the consolidated (or
combined consolidated) results of their operations and their consolidated (or
combined consolidated) cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments and to any
other adjustments described therein). Except as disclosed in the Parent SEC
Documents or as required by generally accepted accounting principles, the Parent
Companies have not, since December 31, 1998, made any change in the accounting
practices or policies applied in the preparation of their financial statements.
Section 2.6 Registration Statement and Information Statement. None of
the information to be supplied by Parent or Sub for inclusion or incorporation
by reference in the Registration Statement or the information
statement/prospectus included therein (together with any amendments or
supplements thereto, and including all information incorporated by reference
therein, the "Information Statement") relating to this Agreement and the
Shareholders Consent will (i) in the case of the Registration Statement, at the
time it becomes effective, contain any untrue statement of a material fact or
omit to state any
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material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Information
Statement, at the time of the mailing of the Information Statement and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event with
respect to Parent, its officers and directors or any of its Subsidiaries shall
occur that is required to be described in the Information Statement or the
Registration Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the shareholders of the Company. The Registration Statement
will comply (with respect to the Parent Companies) as to form in all material
respects with the provisions of the Securities Act, and the Information
Statement will comply (with respect to the Parent Companies) as to form in all
material respects with the provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Documents filed prior to the date of this Agreement, since
December 31, 1998, (i) Parent and its Subsidiaries have not incurred any
material liability or obligation (indirect, direct or contingent), or entered
into any material oral or written agreement or other transaction, that is not in
the ordinary course of business or that would reasonably be expected to result
in a Material Adverse Effect on Parent, (ii) Parent and its Subsidiaries have
not sustained any loss or interference with their business or properties from
fire, flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had or that would reasonably be expected to have a Material
Adverse Effect on Parent, (iii) there has been no change in the capital stock of
the Parent Companies and no dividend or distribution of any kind declared, paid
or made by the Parent Companies on any class of its stock, except for regular
quarterly dividends declared or paid on the Class A Shares, Class B Shares,
Class A EPS, Class B EPS and common shares of beneficial interest, par value
$.01 per share, of the Trust, and (iv) there has been no other event causing a
Material Adverse Effect on Parent, nor any development that, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
Parent.
Section 2.8 Permits and Compliance. Parent and each of its Subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
charters, easements, variances, exceptions, consents, certificates, approvals
and orders of any Governmental Entity (collectively, "Permits") necessary for
Parent or any of its Subsidiaries to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Parent Permits"),
except where the failure
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to have any of the Parent Permits, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent, and, as of
the date of this Agreement, no suspension or cancellation of any of the Parent
Permits is pending or, to the Knowledge of Parent (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the Parent
Permits, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries is in violation of (i) its respective charter, by-laws or other
organizational documents, (ii) any applicable law, ordinance, administrative or
governmental rule or regulation or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over Parent or any of its Subsidiaries,
except, in the case of clauses (i), (ii) and (iii), for any violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent. Except as disclosed in the Parent SEC
Documents filed prior to the date of this Agreement, and except for contracts or
agreements entered into after the date hereof not in violation of this
Agreement, there is no contract or agreement that is material to the business,
properties, results of operations or condition (financial or otherwise) of
Parent and its Subsidiaries, taken as a whole. Except as set forth in the Parent
SEC Documents or Section 2.8 of the Parent Letter, no event of default or event
that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by Parent of the
transactions contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, license or other agreement or instrument to which Parent or any of its
Subsidiaries is a party or by which Parent or any such Subsidiary is bound or to
which any of the properties, assets or operations of Parent or any such
Subsidiary is subject, other than any defaults that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Parent. For purposes of this Agreement, "Knowledge of Parent" means the actual
knowledge, after reasonable investigation, of the individuals identified in
Section 2.8 of the Parent Letter.
Section 2.9 No Required Vote of Parent Stockholders. No vote of the
stockholders of Parent is required by law, the organization documents of Parent
or otherwise in order for Parent to consummate the Merger and the transactions
contemplated hereby.
Section 2.10 Reorganization; Parent Tax Certificate. (a) To the
Knowledge of Parent, neither Parent nor any of its Subsidiaries has taken any
action or failed to take any action which action or failure would jeopardize the
qualification of the
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Merger as a reorganization within the meaning of Section 368(a) of the Code.
(b) To the Knowledge of the Parent, the representations and warranties
set forth in the Parent Tax Certificate attached to the Parent Letter, if made
on the date hereof (assuming the Merger were consummated on the date hereof),
would be true and correct.
Section 2.11 Brokers. No broker, investment banker or other person,
other than NationsBanc Montgomery Securities LLC, the fees and expenses of which
will be paid by Parent, is entitled to any broker's, finder's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company and
the Company Venture is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has the
requisite corporate (in the case of a Subsidiary that is a corporation) or other
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power or authority, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on the Company. The Company and
each of its Subsidiaries, and the Company Venture, are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company.
Section 3.2 Capital Structure. At the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Company Common
Stock and 5,000,000 shares of preferred stock, par value $.01 per share
("Company Preferred Stock"). At the close of business on June 30, 1999, (i)
21,567,377 shares of Company Common Stock were issued and
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outstanding (including 251,309 shares of Company Common Stock issued and held in
escrow pursuant to the contingent share earnout arrangement (the "Points and
Success Earnout") set forth in the Agreement and Plan of Reorganization, dated
as of August 15, 1997, relating to the acquisition of The Success Companies,
Success Developments, L.L.C. and Points of Colorado, Inc., Amendment No. 1
thereto and the related Escrow Agreement, which shares are not shown as
outstanding in the Company SEC Documents), (ii) no shares of Company Common
Stock were held in the treasury of the Company or by its Subsidiaries, (iii)
2,000,628 shares of Company Common Stock were reserved for issuance pursuant to
the Company Stock Plan and the Company Employee Stock Purchase Plan
(collectively, the "Company Stock Plans"). Except as set forth above, at the
close of business on June 30, 1999, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding. All
the outstanding shares of Company Common Stock are validly issued, fully paid
and nonassessable and free of preemptive rights. As of the date of this
Agreement, except for stock options issued pursuant to the Company Stock Plans
covering not in excess of 2,500,000 shares of Company Common Stock
(collectively, the "Company Stock Options"), there are no options, warrants,
calls, rights, securities or agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, security or
agreement. Each outstanding share of capital stock of each Subsidiary of the
Company that is a corporation is duly authorized, validly issued, fully paid and
nonassessable and, except as disclosed in Section 3.2 of the letter dated the
date hereof and delivered on the date hereof by the Company to Parent, which
letter relates to this Agreement and is designated therein as the Company Letter
(the "Company Letter"), or in the Company SEC Documents (as hereinafter defined)
filed prior to the date of this Agreement, each such share is owned by the
Company or another Subsidiary of the Company, free and clear of all Liens. As of
the date of this Agreement, the Company does not have outstanding any bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote. Except as
disclosed in Section 3.2 of the Company Letter, as of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries, or the Company Venture, to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Subsidiaries, or equity interests in the Company Venture. Except as set forth in
Section 3.2 of the Company Letter, Exhibit 21.1 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1998, as
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filed with the SEC (the "Company Annual Report"), is a true and correct
statement in all material respects of all the information required to be set
forth therein by the rules and regulations of the SEC as of such date.
Section 3.3 Authority. The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger and the other transactions contemplated
hereby. The Board of Directors of the Company, upon the recommendation of the
Special Committee, has unanimously duly approved (i) this Agreement, the Merger
and the other transactions contemplated hereby and (ii) the execution and
delivery by the Principal Shareholders of the Shareholder Agreements (including
the irrevocable proxy) and the Shareholders' Consent. The Board of Directors of
the Company has declared the Merger advisable and fair to and in the best
interests of the Company and its shareholders. The Principal Shareholders, as
the holders of a majority of the outstanding shares of Company Common Stock,
have duly approved, by delivering the Shareholders' Consent, this Agreement and
the Merger. No further action by or vote of the shareholders of the Company is
required by law, the Articles of Incorporation or the Amended and Restated
By-laws of the Company or otherwise in order for the Company to consummate the
Merger and the other transactions contemplated hereby. The execution, delivery
and performance of its obligations under this Agreement by the Company and the
consummation by the Company of the Merger and the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to notification to all shareholders of the
Company of such action in accordance with Section 607.0704(3) of the FBCA and
the Amended and Restated By-laws of the Company and the filing of the Articles
of Merger as required by Section 607.1105 of the FBCA. This Agreement has been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the validity and binding effect of this Agreement on Parent and Sub) constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles. The filing of the
Information Statement with the SEC has been duly authorized by the Company's
Board of Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions specifically described in
this Section 3.4 or in Section 3.4 of the Company Letter have been obtained or
taken and all filings, registrations and obligations specifically described in
this Section 3.4 have been made or satisfied, the execution and delivery of this
Agreement by the Company does not and the consummation of the transactions
contemplated hereby and
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compliance with the provisions hereof will not (with or without notice or lapse
of time, or both), result in any violation of, or default or the loss of a
material benefit under, or give to others a right of termination, cancellation
or acceleration of any obligation under, or result in the creation of any Lien,
upon any of the properties, assets or operations of the Company or any of its
Subsidiaries, or the Company Venture, under, any provision of (i) the Articles
of Incorporation or the Amended and Restated By-laws of the Company, (ii) any
provision of the comparable charter or organization documents of any Subsidiary
of the Company, or the Company Venture, (iii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement (other than employee
stock option agreements under the Stock Plans (as defined in Section 5.8), which
may provide for accelerated vesting of the underlying options upon the Effective
Time and employee purchase rights under the Company's Employee Stock Purchase
Plan which accelerate the "date of exercise" thereunder to the business day
prior to the Effective Time), instrument, permit, concession, franchise or
license applicable to the Company or any of its Subsidiaries, or the Company
Venture, or (iv) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries, or the Company
Venture, or any of their respective properties, assets or operations, other
than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, losses, rights or Liens that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the Company or any
of its Subsidiaries, or the Company Venture, in connection with the execution
and delivery of this Agreement by the Company, is necessary for the consummation
of the Merger and the other transactions contemplated by this Agreement or will
be necessary to allow the Surviving Corporation to operate the business of the
Company in the same manner as operated immediately prior to the Merger, except
(i) in connection, or in compliance, with the provisions of the HSR Act, the
Securities Act and the Exchange Act, (ii) the filing of the Articles of Merger
with the Department of State of the State of Florida and appropriate documents
with the relevant authorities of other states in which the Company or any of its
Subsidiaries, or the Company Venture, is qualified to do business, (iii) State
Takeover Approvals, (iv) such filings as may be required in connection with the
taxes described in Section 5.11, (v) pursuant to applicable requirements, if
any, of Blue Sky Laws and the National Market of the National Association of
Securities Dealers, Inc. Automated Quotations System, (vi) the Regulatory
Approvals and (vii) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made,
individually or in the aggregate, would not
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reasonably be expected to have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 3.5 SEC Documents and Other Reports. The Company has filed all
required documents with the SEC since January 1, 1997 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents, when taken
together with any amendment thereto filed prior to the date hereof, complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Company included in the
Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as of their respective dates of filing, were
prepared in accordance with generally accepted accounting principles (except, in
the case of the unaudited statements, as permitted by Regulation S-X of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly presented in all material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents or as required by generally accepted accounting
principles, the Company has not, since December 31, 1998, made any material
change in the accounting policies applied in the preparation of its financial
statements.
Section 3.6 Registration Statement and Information Statement. None of
the information to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement or the Information Statement will (i) in
the case of the Registration Statement, at the time it becomes effective,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or (ii) in the case of the Information Statement, at the
time of the mailing of the Information Statement and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior
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to the Effective Time any event with respect to the Company, its officers and
directors or any of its Subsidiaries, or the Company Venture, shall occur that
is required to be described in the Information Statement or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company. The Registration Statement will
comply (with respect to the Company) as to form in all material respects with
the provisions of the Securities Act, and the Information Statement will comply
(with respect to the Company) as to form in all material respects with the
provisions of the Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed prior to the date of this Agreement or
Section 3.7 of the Company Letter, since December 31, 1998, (A) the Company and
its Subsidiaries, and the Company Venture, have not incurred any material
liability or obligation (indirect, direct or contingent), or entered into any
material oral or written agreement or other transaction, that is not in the
ordinary course of business or that would reasonably be expected to result in a
Material Adverse Effect on the Company, (B) the Company and its Subsidiaries,
and the Company Venture, have not sustained any loss or interference with their
business or properties from fire, flood, windstorm, accident or other calamity
(whether or not covered by insurance) that has had or that would reasonably be
expected to have a Material Adverse Effect on the Company, (C) there has been no
change in the capital stock of the Company and no dividend or distribution of
any kind declared, paid or made by the Company on any class of its stock, (D)
there has not been (x) any payment or agreement to pay any compensation of any
nature whatsoever (other than pursuant to any agreement as in effect on the date
hereof), or any award or grant under any Company Plan (as hereinafter defined)
as in effect on the date hereof, to any executive officer of the Company or of
any of its Subsidiaries listed in Section 3.7(D)(x) of the Company Letter, or
the Company Venture, (y) any granting by the Company or any of its Subsidiaries,
or the Company Venture, to any such executive officer of any severance or
termination award or (z) any entry by the Company or any of its Subsidiaries, or
the Company Venture, into any employment, severance or termination agreement
with any such executive officer and (E) there has been no other event causing a
Material Adverse Effect on the Company, nor any development that, individually
or in the aggregate, would reasonably be expected to have resulted in a Material
Adverse Effect on the Company. Set forth in Section 3.7 of the Company Letter is
a list of the indebtedness of the Company and its Subsidiaries, and the Company
Venture, as of December 31, 1998 and May 31, 1999 and a summary of any material
changes in the terms of such indebtedness between December 31, 1998 and the date
of this Agreement. Between December 31, 1998 and the date of this Agreement,
except as set forth in Section 3.7 of the Company Letter, there have been no
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material changes in the net outstanding amount of indebtedness of the Company,
its Subsidiaries and the Company Venture other than changes resulting from
fundings and payments in the ordinary course of business under lines of credit
and credit facilities existing on December 31, 1998.
Section 3.8 Permits and Compliance. Each of the Company and its
Subsidiaries, and the Company Venture, is in possession of all Permits necessary
for the Company or any of its Subsidiaries, and the Company Venture, to own,
sell, lease and operate its properties or to carry on its business as it is now
being conducted (the "Company Permits"), except where the failure to have any of
the Company Permits, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, and, as of the date
of this Agreement, no suspension or cancellation of any of the Company Permits
is pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the Company
Permits, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries, nor the Company Venture, is in violation of (i) its charter,
by-laws or other organizational documents, (ii) any applicable law, ordinance,
administrative or governmental rule or regulation (including the Federal Trade
Commission Act, the Truth-in-Lending Act and Regulation Z promulgated
thereunder, the Equal Credit Opportunity Act and Regulation B promulgated
thereunder, the Interstate Land Sales Full Disclosure Act, the Civil Rights Acts
of 1964 and 1968, Environmental Laws (as hereinafter defined), federal and state
telemarketing laws, state time share laws, state securities laws applicable to
the sale or offer of vacation ownership interests ("VOIs"), and seller of travel
or travel agency laws) or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries, or the Company Venture, except, in the case of clauses (i), (ii)
and (iii), for any violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as disclosed in the Company SEC Documents filed prior to the date of this
Agreement or in Section 3.8 of the Company Letter, and except for contracts or
agreements entered into after the date hereof, not in violation of this
Agreement, there is no contract or agreement that is material to the business,
properties, results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries, and the Company Venture, taken as a whole. Except
as set forth in the Company SEC Documents or Section 3.8 of the Company Letter,
no event of default or event that, but for the giving of notice or the lapse of
time or both, would constitute an event of default exists or, upon the
consummation by the Company of the transactions contemplated by this Agreement,
will exist under any indenture, mortgage, loan agreement, note or other
agreement or instrument for borrowed money, any guarantee of any agreement or
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instrument for borrowed money or any lease, license, declaration of covenants,
conditions and restrictions, horizontal property regime, VOI owners' association
governing instruments or other agreement or instrument to which the Company or
any of its Subsidiaries, or the Company Venture, is a party or by which the
Company or any such Subsidiary, or the Company Venture, is bound or to which any
of the properties, assets or operations of the Company or any such Subsidiary,
or the Company Venture, is subject, other than any defaults that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company. For purposes of this Agreement, "Knowledge of the
Company" means the actual knowledge, after reasonable investigation, of the
individuals identified in Section 3.8 of the Company Letter.
Section 3.9 Tax Matters. Except as otherwise set forth in Section 3.9
of the Company Letter, (i) the Company and each of its Subsidiaries have filed
all federal, and all material state, local, foreign and provincial, Tax Returns
(as hereinafter defined) required to have been filed or appropriate extensions
therefor have been properly obtained, and such Tax Returns are correct and
complete, except to the extent that any failure to so file or any failure to be
correct and complete, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company; (ii) all Taxes (as
hereinafter defined) shown to be due on such Tax Returns have been timely paid
or reserved against or extensions for payment have been properly obtained, or
such Taxes are being timely and properly contested; (iii) the Company and each
of its Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company; (iv) neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of its Taxes; (v) any Tax Returns referred to
in clause (i) relating to federal and state income Taxes for any period
commencing after December 31, 1992, have been examined by the Internal Revenue
Service (the "IRS") or the appropriate state taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired; (vi) except for matters which have been fully reserved
against, no issues that have been raised in writing by the relevant taxing
authority in connection with the examination of the Tax Returns referred to in
clause (i) are currently pending; and (vii) all deficiencies asserted or
assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full or are being timely and properly
contested or have been fully accrued or reserved for on the Company's December
31, 1998 consolidated balance sheet included in the Company SEC Documents. To
the Knowledge of the Company, the representations set forth in the Company Tax
Certificate attached to the Company Letter, if made
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on the date hereof (assuming the Merger were consummated on the date hereof),
would be true and correct. For purposes of this Agreement: (i) "Taxes" means any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, value-added, transfer or excise tax,
or other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty imposed by any
Governmental Entity, and (ii) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be filed with respect
to any Tax, including any information return, claim for refund, amended return
or declaration of estimated Tax.
Section 3.10 Actions and Proceedings. Except as set forth in the
Company SEC Documents filed prior to the date of this Agreement, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its Subsidiaries,
or the Company Venture, or against or involving any of the directors, officers
or employees of the Company or any of its Subsidiaries, or the Company Venture,
as such, any of its or their properties, assets or business or any Company Plan
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company. Except as set forth in Section 3.10 of
the Company Letter, as of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of the Company, threatened against
or involving the Company or any of its Subsidiaries, or the Company Venture, or
any of its or their directors, officers or employees as such, or any of its or
their properties, assets or business or any Company Plan that, individually or
in the aggregate, if determined or resolved adversely to the Company or any
Subsidiary of the Company, or the Company Venture, in accordance with the
claimant's or plaintiff's demands, would reasonably be expected to have a
Material Adverse Effect on the Company. There are no actions, suits, labor
disputes or other litigation, legal or administrative proceedings or
governmental investigations relating to the transactions contemplated by this
Agreement that are pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, or the Company
Venture, or any of its or their officers, directors or employees, as such, or
any of its or their properties, assets or business.
Section 3.11 Certain Agreements. Except as set forth in Section 3.11 of
the Company Letter, neither the Company nor any of its Subsidiaries, nor the
Company Venture, is a party to any oral or written agreement or plan, including
any employment agreement, severance agreement, stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the
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vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as described in the Company Stock Plans,
no holder of any option to purchase shares of Company Common Stock, or shares of
Company Common Stock granted in connection with the performance of services for
the Company or its Subsidiaries, or the Company Venture, is or will be entitled
to receive cash from the Company or any Subsidiary, or the Company Venture, in
lieu of or in exchange for such option or shares as a result of the transactions
contemplated by this Agreement.
Section 3.12 ERISA. (a) Section 3.12 (a) of the Company Letter contains
a list of each Company Plan. With respect to each Company Plan, the Company has
made, or will as soon as practicable after the date hereof make, available to
Parent a true and correct copy of (i) the most recent annual report (Form 5500)
filed with the IRS, (ii) such Company Plan and all amendments thereto, (iii)
each trust agreement, insurance contract or administration agreement relating to
such Company Plan, (iv) the most recent summary plan description for each
Company Plan for which a summary plan description is required, (v) the most
recent determination letter, if any, issued by the IRS with respect to any
Company Plan intended to be qualified under section 401(a) of the Code, (vi) any
request for a determination currently pending before the IRS and (vii) all
material correspondence with the IRS, the Department of Labor or the Pension
Benefit Guaranty Corporation relating to any outstanding controversy. Except for
any failure to comply as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company, each Company Plan
complies with ERISA (as hereinafter defined), the Code and all other applicable
statutes and governmental rules and regulations. None of the Company Plans is
subject to Title IV of the Employee Retirement Income Security Act of 1974 and
the regulations promulgated thereunder ("ERISA").
(b) There has been no failure by the Company to make any required
contribution or pay any amount due to any Company Plan as required by Section
412 of the Code, Section 302 of ERISA, or the terms of any such Plan.
(c) With respect to the Company Plans, no event has occurred and, to
the Knowledge of the Company, there exists no condition or set of circumstances
in connection with which the Company or any ERISA Affiliate would be subject to
any liability (other than a liability to pay benefits thereunder) under the
terms of such Company Plans, ERISA, the Code or any other applicable law which
has had, or would reasonably be expected to have, a Material Adverse Effect on
the Company.
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(d) Except as listed on Section 3.12(d) of the Company Letter, all
Company Plans that are intended to be qualified under Section 401(a) of the Code
have been determined by the IRS to be so qualified, or a timely application for
such determination is now pending or will be filed on a timely basis and, except
as listed on Section 3.12(d) of the Company Letter, to the Knowledge of the
Company there is no reason why any Company Plan is not so qualified in
operation.
(e) Except as set forth in Section 3.12(e) of the Company Letter,
neither the Company nor any of its ERISA Affiliates has any liability or
obligation under any welfare plan to provide life insurance or medical benefits
after termination of employment to any employee or dependent other than as
required by (i) Section 4980B of the Code or Part 6 of Title 1 of ERISA or as
disclosed in Section 3.12(e) of the Company Letter or (ii) the laws of a
jurisdiction outside the United States.
(f) As used herein, (i) "Company Plan" means a "pension plan" (as
defined in Section 3(2) of ERISA (other than a Company Multiemployer Plan)), a
"welfare plan" (as defined in Section 3(1) of ERISA), or any material bonus,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, vacation, severance, death benefit,
insurance or other plan, arrangement or understanding, in each case established
or maintained or contributed to by the Company or any of its ERISA Affiliates or
as to which the Company or any of its ERISA Affiliates may have any liability,
(ii) "Company Multiemployer Plan" means a "Multiemployer Plan" (as defined in
Section 4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates
is or has been obligated to contribute, and (iii) with respect to any person,
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which is under common control or would be considered a single employer with such
person pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated under those sections or pursuant to Section 4001(b) of
ERISA and the regulations promulgated thereunder.
(g) The Company does not maintain any arrangement (other than a Company
Plan) providing retirement pension benefits that is established or maintained by
the Company or any Subsidiary, or the Company Venture, for the benefit of
employees who are or were employed outside the United States.
(h) Section 3.12(h) of the Company Letter contains a list, as of the
date of this Agreement, of all (i) severance and employment agreements with
officers of the Company and each ERISA Affiliate, (ii) severance programs and
policies of the Company with or relating to its employees and (iii) plans,
programs, agreements and other arrangements of the Company with or relating to
its employees which contain change of control or similar provisions, and in the
case of each of (i), (ii) and (iii) above,
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such list shall be limited only to such agreements, programs, policies, plans
and other arrangements that involve a severance or employment agreement or
arrangement with an individual officer or employee, and which provide for
minimum annual payments (not including commissions or any similar contingent
incentive payments) in excess of $100,000. The Company has provided to Parent a
true and complete copy of each of the foregoing or, with respect to agreements
with officers of ERISA Affiliates, will provide such a copy as soon as practical
after the date hereof.
Section 3.13 Liabilities. Except as set forth in Section 3.13 of the
Company Letter or in the Company SEC Documents filed prior to the date hereof
and except for such indebtedness as may be permitted under the provisions of
Section 4.1, the Company and its Subsidiaries, and the Company Venture, have no
liabilities, absolute or contingent, other than liabilities that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company.
Section 3.14 Intellectual Property. The Company and its Subsidiaries,
and the Company Venture, have, or have licenses to use, all patents, patent
rights, trademarks, trade names, service marks, trade secrets, copyrights and
other proprietary intellectual property rights (collectively, "Intellectual
Property Rights") as are necessary in connection with the business, as currently
conducted, of the Company and its Subsidiaries, and the Company Venture, taken
as a whole, except where the failure to have such Intellectual Property Rights,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company. Except as disclosed in Section 3.14 of
the Company Letter, neither the Company nor any of its Subsidiaries, or the
Company Venture, has infringed any Intellectual Property Rights of any third
party other than any infringements that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.15 Properties, Title and Related Matters. (a) Except as
disclosed in the Company SEC Documents: (i) the description of the Company's
resorts included in the Company's Form 10-K Report for the year ended December
31, 1998 was true and correct in all material respects as of such date; (ii)
except for periodic maintenance, repairs and replacements in the ordinary course
of business consistent with past practice, the dwelling units, sales centers,
recreation facilities and other amenities for which certificates of occupancy
have been issued at the Company's resorts are furnished and in good condition
and repair, ordinary wear and tear excepted; (iii) with respect to each resort
for which the Company or a Subsidiary of the Company, or the Company Venture,
provides VOI owners association management services, the applicable VOI owners
association has been duly formed, is validly existing and has a board of
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directors duly appointed by the Company or a Subsidiary of the Company, or the
Company Venture, or duly elected by the VOI owners, in either case in accordance
with the by-laws of such association; (iv) the Company's financial obligations
to each such association are current in all material respects; and (v) to the
Knowledge of the Company, the 1999 budgets established by each such association
are adequate to fund the projected 1999 operating expenditures of such
association in all material respects, subject to payment by all VOI owners,
including the Company and its Subsidiaries, and the Company Venture, of the dues
and assessments levied by the respective association and the reserves for
capital replacements maintained by each such association, when supplemented by
additional reserve contributions in future years as set forth in the reserve
analysis delivered to Parent by the Company prior to the date hereof, will be
adequate to fund in all material respects the replacement of capital items owned
by the association over their anticipated useful lives.
(b) Except as disclosed or reserved against in the most recent
financial statements contained in the Company SEC Documents or as set forth in
Section 3.15 of the Company Letter, the Company and each of its Subsidiaries,
and the Company Venture, have good and valid title to all of the material
properties and assets, tangible or intangible, reflected in such financial
statements as being owned by the Company and each of its Subsidiaries, and the
Company Venture, as of the dates thereof, free and clear of all Liens, except
such imperfections or irregularities of title, liens, encumbrances, charges or
defaults that do not adversely affect the properties with respect to their
intended use in any material respect and statutory liens securing payments not
yet due ("Permitted Liens"). There are no hidden or latent defects at or in any
properties, assets, improvements, fixtures or equipment of the Company or any of
its Subsidiaries, or the Company Venture, except for defects that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company, and the properties, assets, improvements, fixtures and
equipment of the Company and its Subsidiaries, and the Company Venture, do not
violate any applicable judgment, order, decree, statute, law, ordinance, rule or
regulation, that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Company. All leased buildings and all
leased fixtures, equipment and other property and assets that are material to
the Company's business on a consolidated basis are held under leases or
subleases that are valid and binding instruments enforceable in accordance with
their respective terms, and there is not under any of such leases, any existing
material default or event of default (or event which with notice or lapse of
time, or both, would constitute a material default), except where the lack of
such validity and binding nature or the existence of such default or event of
default does not have and
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would not reasonably be expected (so far as can be foreseen at the time) to have
a Material Adverse Effect on the Company.
Section 3.16 Customer Warranties. There are not pending nor are there,
to the Knowledge of the Company, threatened, any claims under or pursuant to any
warranty, whether expressed or implied, on products or services sold prior to
the date of this Agreement by the Company or any of its Subsidiaries, or the
Company Venture, that are not disclosed or referred to in the financial
statements contained in the Company SEC Documents and that are not fully
reserved against, except for such claims that if determined or resolved
adversely to the Company or any Subsidiary of the Company in accordance with the
claimant's or plaintiff's demands, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 3.17 Environmental Matters. Except as disclosed in Section 3.17
of the Company Letter or the Company SEC Documents, (i) neither the businesses
of the Company and its Subsidiaries, nor the operation thereof, nor any
condition or circumstance at any property, asset, improvement, fixture or
equipment violates in any material respect any applicable federal, state, local,
regional and foreign laws, rules and regulations, orders, decrees, common law,
judgments, permits and licenses relating to public or worker health and safety,
the protection, management, regulation or clean-up of the indoor or outdoor
environment and activities or conditions related thereto, including, without
limitation, those relating to the generation, handling, disposal, transportation
or release of hazardous or toxic materials, substances, wastes, pollutants and
contaminants including, without limitation, asbestos, petroleum (whether crude
oil or any refined or altered product), radon, urea formaldehyde, lead-based
paint, and polychlorinated biphenyls (collectively, "Environmental Laws"),
except for non-compliance that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company; (ii)
no condition, circumstance or event exists or has occurred which, with notice or
the passage of time or both, would constitute such a violation of any
Environmental Law or which could reasonably be expected to result in a Material
Adverse Effect; (iii) the Company and each of its Subsidiaries is in possession
of all Permits required under any applicable Environmental Law ("Environmental
Permits") for its operations and the Company and each of its Subsidiaries has
been and is in compliance in all material respects with all the requirements and
limitations included in such Environmental Permits except where the failure to
have or comply would not reasonably be expected to have a Material Adverse
Effect on the Company; (iv) none of the Company or any of its Subsidiaries has
handled, disposed of, released, transported, stored or used any materials,
products, pollutants, contaminants, hazardous or toxic wastes, substances or
other materials regulated by or subject to any Environmental Law (collectively,
the "Hazardous Substances")
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on or at any of its property in a manner that would be expected to have a
Material Adverse Effect on the Company; (v) to the Knowledge of the Company, no
person (other than the Company or any of its Subsidiaries) is violating, or has
violated, any Environmental Law applicable to the business of the Company or any
of its Subsidiaries, or to any property, asset, improvement, fixture or
equipment owned, leased or operated by the Company or any of its Subsidiaries,
except for any violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company, nor has
any such other person failed to obtain any Environmental Permits respecting any
property, asset, improvement, fixture or equipment necessary or useful to the
Company or any of its Subsidiaries in the conduct of their respective
operations, other than the failure to obtain any Environmental Permits that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company; (vi) none of the Company or any of its
Subsidiaries has received any notice, suit or claim from any authority or any
private person or entity alleging that the Company and its Subsidiaries or the
operation of any of their respective properties is in violation of any
Environmental Law or any Environmental Permit or that it is responsible (or
potentially responsible) for the cleanup of any Hazardous Substances at, on or
beneath any of the properties (including ground water) of the Company and each
of its Subsidiaries, or at, on or beneath any land adjacent thereto (including
ground water) or in connection with any other site which would reasonably be
expected to have a Material Adverse Effect on the Company; and (vii) none of the
Company or any of its Subsidiaries has buried, dumped, disposed, spilled or
actively or passively released any material quantity or amount of Hazardous
Substances on, beneath or adjacent to any of its property or any other property
(including ground water); (viii) each of the Company and its Subsidiaries has
timely filed all material reports required to be filed with respect to all of
its property, assets, improvements, fixtures or equipment and has generated and
maintained all material required data, documentation and records required under
all applicable Environmental Laws; (ix) to the Knowledge of the Company, there
are no underground storage tanks, including any piping, at, on or beneath any
property used by the Company or any Subsidiary for any purpose; and (x) to the
Knowledge of the Company, there are no conditions, circumstances or events
respecting any property, asset, improvement, fixture or equipment owned or
operated by any person other than the Company or any Subsidiary that could
reasonably be expected to give rise to a Material Adverse Effect on the Company
under any Environmental Law. All of the foregoing representations and warranties
contained in clauses (i) through (x) concerning properties, assets,
improvements, fixtures and equipment of the Company or any of its Subsidiaries
shall be deemed to include all current and former properties, assets,
improvements, fixtures and equipment of the Company or any of its Subsidiaries;
provided, however, that any representations and
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warranties respecting former properties, assets, improvements, fixtures and
equipment of the Company or any of its Subsidiaries shall be limited to the
current Knowledge of the Company.
Section 3.18 Insurance. Each of the Company and its Subsidiaries has
insurance contracts or policies (the "Company Policies") in full force and
effect which provide for coverages that are usual and customary as to amount and
scope in its businesses. Section 3.18 of the Company Letter sets forth
descriptions of all insurance contracts or policies that relate to liability or
excess liability insurance (collectively, the "Company Liability Policies"),
including the name of the insurer, the types, dates and amounts of coverages,
and any material coverage exclusions. None of the Company or any of its
Subsidiaries has breached or otherwise failed to perform in any material
respects its obligations under any of the Company Policies or the Company
Liability Policies nor has the Company or any of its Subsidiaries received any
adverse notice or communication from any of the insurers party to the Company
Policies or the Company Liability Policies with respect to any such alleged
breach or failure in connection with any of the Company Policies or the Company
Liability Policies, except to the extent that any such breach or failure to so
perform, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed in Section
3.18 of the Company Letter, all Company Policies are sufficient for compliance
with all Governmental Entity laws and regulations and all agreements to which
the Company and its Subsidiaries are subject; are valid, outstanding,
collectible and enforceable policies; and will not in any way be affected by, or
terminate or lapse by reason of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except to the extent
that any such termination or lapse, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.19 Mortgages Receivable. The "mortgages receivable" of the
Company and its Subsidiaries, and the Company Venture, reflected in the
financial statements contained in the Company SEC Documents and such additional
accounts receivable as are reflected on the books of the Company and its
Subsidiaries, and the Company Venture, are, to the Knowledge of the Company,
good and collectible except to the extent reserved against thereon (which
reserves have been determined in accordance with generally accepted accounting
principles consistently applied). Except as set forth in Section 3.19 of the
Company Letter, all "mortgage receivables" of the Company and its Subsidiaries,
and the Company Venture, are owned free and clear of all Liens and such
"mortgage receivables" are otherwise valid, genuine and existing. During the
twelve month period ended March 31, 1999, the default rate of interest on any
"mortgage receivables" owned by the Company or any of its Subsidiaries did not
exceed the
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maximum rate allowable under Federal and State law for such "mortgage
receivables." All such accounts receivable (except to the extent so reserved
against) are valid, genuine and subsisting, arise out of bona fide sales and
deliveries of goods, performance of services or other business transactions and
are not subject to defenses, setoffs or counterclaims.
Section 3.20 Parachute Payments to Disqualified Individuals. Except as
set forth in Section 3.20 of the Company Letter, no payment or other benefit,
and no acceleration of the vesting of any options, payments or other benefits,
will, as a direct or indirect result of the transactions contemplated by this
Agreement, be (or under Section 280G of the Code and the Treasury Regulations
thereunder be presumed to be) a "parachute payment" to a "disqualified
individual" (as those terms are defined in Section 280G of the Code and the
Treasury Regulations thereunder) with respect to the Company or any of its
Subsidiaries, or the Company Venture, without regard to whether such payment or
acceleration is reasonable compensation for personal services performed or to be
performed in the future. The approximate aggregate amount of "parachute
payments" related to the matters set forth in such Section 3.20 of the Company
Letter, assuming the Closing occurs on the date specified therein and
termination of all listed individuals without cause on such date is set forth in
such Section 3.20 of the Company Letter.
Section 3.21 Opinion of Financial Advisor. The Special Committee and
the Board of Directors of the Company have received the opinion of Salomon Smith
Barney Inc, dated the date of this Agreement, to the effect that, as of such
date, the consideration to be received by holders of Company Common Stock (other
than the Principal Shareholders) in the Merger is fair to such holders from a
financial point of view, a copy of the written opinion of which will be
delivered to Parent after receipt thereof by the Company.
Section 3.22 State Takeover Statutes. The Board of Directors of the
Company has, to the extent such statutes are applicable, taken all action
necessary to exempt the Merger, this Agreement, the Shareholder Agreements and
the transactions contemplated hereby from the requirements of Sections 607.0901
through 607.0903 of the FBCA or to satisfy the requirements thereof. Each member
of the Board of Directors of the Company is "disinterested," as such term is
used in Section 607.0901 of the FBCA, with regard to the transactions
contemplated by this Agreement and the Shareholder Agreements. To the Knowledge
of the Company, no other state takeover statutes are applicable to the Merger,
this Agreement or the transactions contemplated hereby.
Section 3.23 Reorganization. To the Knowledge of the Company, neither
it nor any of its Subsidiaries, nor the Company Venture, has taken any action or
failed to take any action which
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action or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Section 3.24 Brokers. No broker, investment banker or other person,
other than Bear Stearns & Co., Inc., and Salomon Smith Barney Inc, the fees and
expenses of each of which will be paid by the Company (as reflected in an
agreement between Bear Stearns & Co., Inc. and the Company and an agreement
between Salomon Smith Barney Inc and the Company, a copy of each of which has
been furnished to Parent), is entitled to any broker's, finder's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending the Merger.
During the period from the date of this Agreement through the Effective Time,
the Company shall, and shall cause each of its Subsidiaries, and the Company
Venture, to, carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to keep available the services
of its current officers and employees and, except as otherwise agreed upon by
Parent, preserve its relationships with customers, suppliers, licensors,
lessors, creditors and others having business dealings with it. Without limiting
the generality of the foregoing, and except as otherwise expressly required by
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries, or the Company Venture, to, without the prior written consent of
Parent which consent shall be granted or denied no later than 10 business days
after Parent has received a written request for consent from the Company
accompanied by reasonably adequate information to grant or deny such consent:
(a) (i) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to its shareholders in their
capacity as such (other than dividends and other distributions by
wholly-owned Subsidiaries to the Company or its wholly-owned Subsidiaries
or by non-wholly-owned Subsidiaries or the Company Venture to the extent
required by the terms of their respective organizational documents as of
the date hereof), (ii) other than in the case of any wholly-owned
Subsidiary, split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its
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capital stock or (iii) except as set forth in Section 4.1(a)(iii) of
the Company Letter, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its non wholly-owned Subsidiaries,
or the Company Venture, or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(b) except for shares of Company Common Stock issued pursuant to the
Points and Success Earnout as in effect on January 1, 1999, and except as
set forth in Section 4.1(b) of the Company Letter, issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of its capital stock,
any other voting securities or equity equivalent or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities, equity equivalent or convertible securities,
other than the issuance of shares of Company Common Stock upon the exercise
of employee stock options pursuant to the Company Stock Plans outstanding
on the date of this Agreement in accordance with their terms as of the date
hereof;
(c) amend its articles or certificate of incorporation or by-laws or
other comparable organizational documents;
(d) (A) acquire or agree to acquire (i) except as set forth in Section
4.1(d)(i) of the Company Letter, by merging or consolidating with, or by
purchasing a substantial portion of the assets or properties of or equity
in (except as contemplated by clause (ii) below), or by any other manner,
any business or any corporation, partnership, limited liability company,
association or other business organization or division thereof or (ii)
except for the land acquisition, construction and development projects
described in Section 4.1(d)(ii) of the Company Letter (collectively, the
"Development Projects"), any assets or properties that are, individually or
in the aggregate, material to the Company and its Subsidiaries taken as a
whole, other than purchases of inventory that are in the ordinary course of
business consistent with past practice or (B) make any capital
contributions to, or other investments in, any other person;
(e) except for the pending approximately $86 million securitization of
customer mortgages receivable with Dresdner Kleinwort Benson as placement
agent (the "Pending Securitization"), except as described in Section 4.1(e)
of the Company Letter and except in connection with the sale and financing
of customer contracts and mortgages receivable in the ordinary course of
business consistent with past practice, and the incurrence of indebtedness
permitted by Section 4.1(f), sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of, or
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agree to sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of, any of its assets, other than
transactions (including the sale of inventory) that are in the ordinary
course of business consistent with past practice;
(f) incur any indebtedness for borrowed money, guarantee any such
indebtedness, issue or sell any debt securities or warrants or other rights
to acquire any debt securities, guarantee any debt securities or make any
loans or advances to any other person, or enter into any arrangement having
the economic effect of any of the foregoing, other than (i) indebtedness
incurred in the financing of customer contracts and mortgages receivable in
the ordinary course of business consistent with past practice; provided,
however, that the Company will not complete any securitization other than
the Pending Securitization without first consulting with Parent; provided,
further, that in the event Parent provides warehouse financing to the
Company at interest rates and terms comparable to the Company's primary
warehouse receivables line and in an amount sufficient to permit the
Company to finance its ongoing generation of customer contracts and
mortgages receivable in the ordinary course of business consistent with
past practice through the anticipated closing date of the transactions
contemplated by this Agreement without completing a securitization, the
Company will not complete any securitization other than the Pending
Securitization; provided, further, that if Parent has provided any
financing to the Company pursuant to the foregoing proviso and this
Agreement is terminated pursuant to a valid termination under Section 7.1,
then Parent shall continue any existing financing for the Company for a
90-day period after such termination; (ii) indebtedness and guarantees
incurred in connection with financing the acquisition, construction,
development and operations of the Development Projects in accordance with
the budgets set forth in Section 4.1(f)(ii) of the Company Letter; (iii)
indebtedness, loans, advances, guarantees, capital contributions and
investments between the Company and any of its wholly-owned Subsidiaries,
between any of such wholly-owned Subsidiaries or, to the extent set forth
in Section 4.1(f)(iii) of the Company Letter, between (x) the Company or
any of its Subsidiaries and (y) any of the Company's non- wholly-owned
Subsidiaries, the VOI owners associations or the Company Venture; (iv)
other indebtedness in a maximum aggregate principal amount not exceeding
$10 million; provided, however, that the Company will consult with Parent
before incurring any such other indebtedness of $500,000 or more if the
maximum aggregate principal amount of all indebtedness incurred pursuant to
this clause (iv) is greater than $5 million but less than $10 million; (v)
indebtedness incurred in connection with the issuance of (A)
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construction completion bonds incurred in connection with the budgets set
forth in Section 4.1(f)(ii) of the Company Letter, utility bonds to secure
the payment of future utility obligations of the Company or its
Subsidiaries, submission bid bonds, advertising bonds, registration bonds
or similar bonds in the ordinary course of business or (B) bonds used to
provide alternative assurance, in lieu of escrow, for customer deposits,
down payments and mortgage payments on VOI sales; and (vi) the borrowing of
up to $20 million in working capital under the Line of Credit Agreement
dated as of November 1, 1997 among the Company, Vistana Development, Ltd.,
and Dresdner Bank AG New York and Grand Cayman Branches;
(g) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the
Company or any non wholly-owned Subsidiary, or the Company Venture;
(h) except as required under Section 5.8 or as described in Section
4.1(h) of the Company Letter, enter into or adopt any, or amend any
existing, severance plan, agreement or arrangement or enter into or amend
any Company Plan or employment or consulting agreement, other than as
required by law or by an existing contractual obligation of the Company
disclosed in Section 4.1(h) of the Company Letter (in which case, any
action taken in accordance therewith is expressly permitted), except that
the Company or its Subsidiaries, or the Company Venture, may enter into (a)
employment agreements if such agreements (i) are no longer than two years
in duration and (ii) provide for an annual base salary of less than
$125,000, and (b) consulting agreements in the ordinary course of business
consistent with past practice that are terminable on no more than 90 days'
notice without penalty;
(i) except (1) as permitted under Section 4.1(h), or (2) to the extent
required by written employment agreements existing on the date of this
Agreement, increase the compensation payable or to become payable to its
officers or such other employees, except for increases in the ordinary
course of business consistent with past practice in salaries or wages of
such officers or other employees of the Company or any of its Subsidiaries,
or the Company Venture;
(j) grant or award any stock options, restricted stock, performance
shares, stock appreciation rights or other equity-based incentive awards,
except as set forth in Section 4.1(j) of the Company Letter;
(k) take any action, other than reasonable actions in the ordinary
course of business consistent with past practice, with respect to
accounting policies (other than
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actions required to be taken by changes in generally accepted accounting
principles);
(l) make or agree to make any capital expenditure in excess of
$1,000,000 individually or $8,000,000 in the aggregate, other than (i)
capital expenditures committed prior to the date of this Agreement, (ii)
capital expenditures included in the budgets for the Development Projects
set forth in Section 4.1(f)(ii) of the Company Letter, (iii) capital
expenditures included in the capital expenditure budget of the Company and
its Subsidiaries for 1999 previously disclosed to Parent, (iv) legal,
financing, registration, collection and repossession fees and expenses and
prepaid costs (including prepaid direct marketing costs) incurred in the
ordinary course of business and capitalized to the balance sheet in
accordance with GAAP, applied on a basis consistent with past practice, (v)
purchases of VOI inventory and liens on VOI units in the ordinary course of
business consistent with past practice, and (vi) capital expenditures made
on behalf of VOI owner associations which will be paid or reimbursed by the
VOI owner associations;
(m) except as otherwise disclosed in Section 4.1(m) of the Company
Letter, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company SEC Documents or incurred in the ordinary
course of business consistent with past practice;
(n) settle or compromise any material liability under any federal,
state, local or foreign tax law or under any Environmental Law;
(o) except for contracts, arrangements or understandings relating to
the lease or purchase of equipment, materials, supplies or services, (i)
included in the budgets for the Development Projects set forth in Section
4.1(f)(ii) of the Company Letter, (ii) set forth in the capital expenditure
budget of the Company and its Subsidiaries for 1999 previously disclosed to
Parent, or (iii) which will be paid or reimbursed by the VOI owner
associations, enter into any contract, arrangement or understanding
requiring the lease or purchase of equipment, materials, supplies or
services in excess of $100,000 individually or $1,000,000 in the aggregate,
over a period greater than 12 months, which is not cancellable without
penalty on 90 or fewer days' notice; or
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(p) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 No Solicitation. (a) From the date hereof until the
termination of this Agreement in accordance with its terms, the Company shall
not, nor shall it authorize or permit any of its Subsidiaries to, nor shall it
authorize or permit any officer, director or employee of or any financial
advisor, attorney or other advisor, representative or agent of, the Company or
any of its Subsidiaries to, (i) solicit, initiate or encourage the submission
of, any Takeover Proposal (as hereinafter defined), (ii) enter into any
agreement with respect to or approve or recommend any Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any director or officer of the Company or any of its
Subsidiaries or any financial advisor, attorney or other advisor, representative
or agent of the Company or any of its Subsidiaries, whether or not such person
is purporting to act on behalf of the Company or any of its Subsidiaries or
otherwise, shall be deemed to be a breach of this Section 4.2(a) by the Company.
For purposes of this Agreement, "Takeover Proposal" means any proposal for a
merger, sale of all or substantially all the assets of or other business
combination or recapitalization or similar transaction involving the Company or
any of its Subsidiaries or any proposal or offer to acquire in any manner,
directly or indirectly, an equity interest in excess of 15% of the voting
securities of, or a substantial portion of the assets of, the Company or any of
its Subsidiaries, other than the transactions contemplated by this Agreement.
(b) The Company promptly (but in no event later than 24 hours) shall
advise Parent orally and in writing of (i) any Takeover Proposal or any inquiry
or any communication with respect to or which could reasonably be expected to
lead to any Takeover Proposal, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal) and (iii) the identity of the person
or persons making any such Takeover Proposal, inquiry or communication. The
Company will keep Parent promptly and fully informed of the status, changes in
and details of any such Takeover Proposal, inquiry or communication.
Section 4.3 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality,
standstill or similar agreement
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to which the Company or any of its Subsidiaries is a party (other than any to
which Parent or any of its Subsidiaries is a party). During such period, the
Company agrees to enforce, to the fullest extent permitted under applicable law,
the provisions of any such agreements, including using its best efforts to
obtain injunctions to prevent any threatened or actual breach of such agreements
and to enforce specifically the terms and any provision thereof in any court of
the United States or any state thereof having jurisdiction.
Section 4.4 Reorganization. During the period from the date of this
Agreement through the Effective Time, unless the other party shall otherwise
agree in writing, none of Parent, the Company or any of their respective
Subsidiaries shall knowingly take or fail to take any action which action or
failure would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code or would cause any of the
representations and warranties set forth in the Company Tax Certificate attached
to the Company Letter or the Parent Tax Certificate attached to the Parent
Letter to be untrue or incorrect in any material respect.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Notice to Shareholders. The Company shall, as promptly as
practicable but in any event within ten days after the date of this Agreement,
prepare and mail to its shareholders pursuant to Section 607.0704 of the FBCA
and the Amended and Restated By-laws of the Company the notice of action
authorized by the Shareholders' Consent (the "Florida Notice"). Parent shall
have the right and opportunity to review and make reasonable comments on the
Florida Notice prior to its mailing and the Company shall not unreasonably
refuse to include such comments of Parent.
Section 5.2 Filings; Other Actions. (a) The Company shall as soon as
practicable after the date hereof prepare and file with the SEC the Information
Statement and the Parent Companies shall prepare and file with the SEC the
Registration Statement, in which the Information Statement will be included as a
prospectus. Each of Parent and the Company shall use all reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. As promptly as practicable after the
Registration Statement shall have become effective, the Company shall mail the
Information Statement to its shareholders (the date of such mailing to any of
such shareholders being hereinafter called the "Mailing Date"). Parent shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is currently not so qualified) required
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to be taken under any applicable state securities laws in connection with the
issuance of Units in the Merger and upon the exercise of the Substitute Options
(as hereinafter defined), and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may reasonably
be requested in connection with any such action, including information relating
to the number of Units required to be registered.
(b) Each party hereto agrees, subject to applicable laws relating to
the exchange of information, promptly to furnish the other parties hereto with
copies of written communications (and memoranda setting forth the substance of
all oral communications) received by such party, or any of its subsidiaries,
affiliates or associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date hereof), from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
(c) Each of the Company and Parent will promptly, and in any event
within twenty business days after execution and delivery of this Agreement, make
all filings or submissions as are required under the HSR Act. Each of the
Company and Parent will promptly furnish to the other such necessary information
and reasonable assistance as the other may request in connection with its
preparation of any filing or submissions necessary under the HSR Act. Without
limiting the generality of the foregoing, each of the Company and Parent will
promptly notify the other of the receipt and content of any inquiries or
requests for additional information made by any Governmental Entity in
connection therewith and will promptly (i) comply with any such inquiry or
request and (ii) provide the other with a description of the information
provided to any Governmental Entity with respect to any such inquiry or request.
In addition, each of the Company and Parent will keep the other apprised of the
status of any such inquiry or request. The foregoing shall not require Parent or
the Company to make any divestiture or consent to any divestiture in order to
fulfill any condition or obtain any consent to any divestiture in order to
fulfill any condition or obtain any consent, authorization or approval or to
appeal an injunction or order, or to post a bond in respect of such appeal.
Section 5.3 Comfort Letters. (a) The Company shall use all reasonable
efforts to cause to be delivered to Parent "comfort" letters of KPMG Peat
Marwick LLP, the Company's independent public accountants, dated the date on
which the Registration Statement shall become effective and as of the Effective
Time, and addressed to Parent, Trust and the Company, in form and substance
reasonably satisfactory to Parent and reasonably customary in scope and
substance for letters delivered by independent public accountants in connection
with transactions such as those contemplated by this Agreement.
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(b) Parent shall use all reasonable efforts to cause to be delivered to
the Company "comfort" letters of Arthur Andersen LLP, Parent's independent
public accountants, dated the date on which the Registration Statement shall
become effective and as of the Effective Time, and addressed to the Company,
Parent and Trust, in form and substance reasonably satisfactory to the Company
and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions such as those
contemplated by this Agreement.
Section 5.4 Access to Information. (a) The Company shall, and shall
cause each of its Subsidiaries, and the Company Venture, to, afford to the
accountants, counsel, financial advisors and other representatives of Parent
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during normal business hours during the period from the
date of this Agreement through the Effective Time, all their respective
properties, books, Tax Returns, contracts, commitments and records (including
the work papers of independent accountants, if available and subject to the
consent of such independent accountants) and, during such period, the Company
shall, and shall cause each of its Subsidiaries, and the Company Venture, to,
furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws (other than in connection with
obtaining the Regulatory Approvals or in connection with making time share
regulatory filings in the ordinary course of business) and (ii) all other
information concerning its business, properties and personnel as Parent may
reasonably request. The Company shall, and shall cause each of its Subsidiaries,
and the Company Venture, to, furnish promptly upon the request of Parent a copy
of each report, schedule, registration, application or other document filed by
the Company with any Governmental Entity in connection with obtaining the
Regulatory Approvals. No investigation pursuant to this Section 5.4(a) shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. All information obtained
by Parent pursuant to this Section 5.4(a) shall be kept confidential in
accordance with the letter agreement dated September 14, 1998 (the
"Confidentiality Agreement") between Parent and the Company.
(b) Parent shall afford to the accountants, counsel, financial advisors
and other representatives of the Company reasonable access to, and permit them
to make such inspections as they may reasonably require of, during normal
business hours during the period from the date of this Agreement through the
Effective Time, its properties, books, contracts and records. No investigation
pursuant to this Section 5.4(b) shall affect any representation or warranty in
this Agreement of any party hereto or any condition to the obligations of the
parties hereto. All
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information obtained by the Company pursuant to this Section 5.4(b) shall be
kept confidential in accordance with the Confidentiality Agreement.
Section 5.5 Compliance with the Securities Act. Within 30 days
following the date of this Agreement, the Company shall cause to be prepared and
delivered to Parent a list (reasonably satisfactory to counsel for Parent)
identifying all persons who, at the time of the Company Shareholders Meeting, in
the Company's reasonable judgment may be deemed to be "affiliates" of the
Company as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Rule 145 Affiliates"). The Company shall use its best
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list to deliver to Parent on or prior to the Effective Time a written agreement
in substantially the form of Exhibit 5.5 hereto, executed by such person.
Section 5.6 Stock Exchange Listings. Parent shall use all reasonable
efforts to list on the NYSE, upon official notice of issuance, the Units to be
issued in connection with the Merger and upon exercise of the Substitute
Options.
Section 5.7 Fees and Expenses. Except as otherwise provided in Section
5.11, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses,
provided that all printing expenses shall be divided equally between Parent and
the Company.
Section 5.8 Company Stock Options. (a) Not later than the Effective
Time, each Company Stock Option that is outstanding immediately prior to the
Effective Time pursuant to the Company's stock option plans (other than any
"stock purchase plan" within the meaning of Section 423 of the Code) in effect
on the date hereof (the "Stock Plans") shall be assumed by Parent and become and
represent an option to purchase the number of Units (a "Substitute Option")
(rounded to the nearest full share, or if there shall not be a nearest share,
the next greater full share) determined by multiplying (i) the number of shares
of Company Common Stock (the "Underlying Shares") subject to such Company Stock
Option immediately prior to the Effective Time by (ii) the Exchange Ratio, at an
exercise price per Unit (rounded up to the nearest tenth of a cent) equal to the
difference (the "Difference") between (A) the exercise price per share of
Company Common Stock immediately prior to the Effective Time divided by the
Exchange Ratio and (B) the cash amount of the per share merger consideration
payable pursuant to Section 1.5(c) divided by the Exchange Ratio. Each
Substitute Option shall be vested only to the extent that the predecessor
Company Stock Option was, pursuant to its terms, vested at the Effective Time.
To the
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extent the Difference would be a negative number, the Difference shall be deemed
to be zero and Parent shall promptly after the Effective Time pay to the holder
of each such vested Company Stock Option an amount of cash equal to the absolute
value of the Difference times the number of Underlying Shares subject to such
option. Parent shall pay cash to holders of Company Stock Options in lieu of
issuing fractional Units upon the exercise of Substitute Options. After the
Effective Time, each Substitute Option shall be exercisable in full until the
earlier of the expiration date of the related Company Stock Option or the date
such related Company Stock Option would have become unexercisable due to the
optionee's termination of employment and, except as otherwise provided in this
Section 5.8, shall be subject to the same terms and conditions as were
applicable under the related Company Stock Option immediately prior to the
Effective Time. The Company agrees to use its best efforts to obtain any
necessary consents of holders of Company Stock Options and take such other
actions as may be necessary to effect this Section 5.8.
(b) In respect of the Units underlying each Substitute Option pursuant
to Section 5.8(a), Parent shall file and keep current a registration statement
on Form S-8 (or a post-effective amendment to a Registration Statement on Form
S-8) or other appropriate form for as long as such options remain outstanding.
Section 5.9 Reasonable Efforts. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including: (i) the obtaining of all necessary
actions or non- actions, waivers, consents and approvals from all Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including those in connection with the
HSR Act and state takeover statutes), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity with respect to the Merger or
this Agreement vacated or reversed, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement; provided, however, that the foregoing shall not require Parent
or the Company to make any divestiture or consent to any divestiture
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in order to fulfill any condition or obtain any consent to any divestiture in
order to fulfill any condition or obtain any consent, authorization or approval
or to appeal an injunction or order, or to post a bond in respect of such
appeal.
(b) Neither Parent nor the Company shall take any action or fail to
take any action that, in any such case, might reasonably be expected to (i)
cause any of its representations or warranties contained in this Agreement that
is qualified as to materiality to be untrue, (ii) cause any of its
representations or warranties contained in this Agreement that is not so
qualified to be untrue in any material respect or (iii) result in a breach of
any covenant made by it in this Agreement, (iv) result directly or indirectly in
any of the conditions to the Merger set forth in Article VI not being satisfied
or (v) impair the ability of the parties to consummate the Merger at the
earliest possible time (regardless of whether such action would otherwise be
permitted or not prohibited hereunder).
Section 5.10 Public Announcements. Neither Parent nor the Company will
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the other party, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange.
Section 5.11 Real Estate Transfer and Gains Tax. Parent and the Company
agree that either the Company or the Surviving Corporation will pay any state or
local tax which is attributable to the transfer of the beneficial ownership of
the Company's or its Subsidiaries' real property, if any (collectively, the
"Gains Taxes"), and any penalties or interest with respect to the Gains Taxes,
payable in connection with the consummation of the Merger. The Company and
Parent agree to cooperate with the other in the filing of any returns with
respect to the Gains Taxes, including supplying in a timely manner a complete
list of all real property interests held by the Company and its Subsidiaries and
any information with respect to such property that is reasonably necessary to
complete such returns. The portion of the consideration allocable to the real
property of the Company and its Subsidiaries shall be agreed to between Parent
and the Company. The shareholders of the Company shall be deemed to have agreed
to be bound by the allocation established pursuant to this Section 5.11 in the
preparation of any return with respect to the Gains Taxes.
Section 5.12 State Takeover Laws. If any "fair price", "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby,
Parent and the Company and their respective Boards of Directors shall use all
reasonable efforts to grant such approvals and take such
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actions as are necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
shall otherwise act to minimize the effects of any such statute or regulation on
the transactions contemplated hereby.
Section 5.13 Indemnification; Directors and Officers Insurance. For six
years from and after the Effective Time, Parent shall, and agrees to cause the
Surviving Corporation to, indemnify, defend and hold harmless all past and
present officers and directors of the Company and of its Subsidiaries (the
"Indemnified Parties") to the same extent such persons are indemnified as of the
date of this Agreement by the Company pursuant to the Company's Articles of
Incorporation, the Company's Amended and Restated By-laws and any indemnity
agreements to which the Company is a party as of the date hereof, for acts or
omissions occurring at or prior to the Effective Time; provided, that, in the
event any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until final disposition of such claim or claims. For six years from and after
the Effective Time, Parent shall indemnify, defend and hold harmless the
Indemnified Parties, to the same extent such persons are indemnified as of the
date of this Agreement by the Company pursuant to the Company's Articles of
Incorporation, the Company's Amended and Restated By-laws and any indemnity
agreements to which the Company is a party as of the date hereof, for acts and
omissions in furtherance of the execution and delivery of the Merger Agreement,
the Merger, the Shareholder Agreements and all agreements and actions as
contemplated therein. For a period of six (6) years after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions that are no less
advantageous in any material respect to the Indemnified Parties) with respect to
matters arising before the Effective Time. The provisions of this Section 5.13
are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party, his or her heirs and his or her personal representatives and
shall be binding on all successors and assigns of Parent, Sub, the Company and
the Surviving Corporation.
Section 5.14 Notification of Certain Matters. Parent shall use all
reasonable efforts to give prompt notice to the Company, and the Company shall
use all reasonable efforts to give prompt notice to Parent, of: (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which it is aware and which would reasonably be likely to cause (x) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (y) any covenant, condition or agreement
contained in this Agreement not
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to be complied with or satisfied in all material respects, (ii) any failure of
Parent or the Company, as the case may be, to comply in a timely manner with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder or (iii) any event, change or development that, individually or in
the aggregate, has had, or would reasonably be expected to have, a Material
Adverse Effect on Parent or the Company, as the case may be; provided, however,
that the delivery of any notice pursuant to this Section 5.14 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.15 Employee Benefit Plans. (a) For the period ending on the
first anniversary of the Effective Time, Parent shall cause the Surviving
Corporation (i) to maintain the Company Plans in effect on the date of this
Agreement or (ii) to provide benefits to employees of the Company and its
Subsidiaries that are, in the aggregate, not materially less favorable than
those provided pursuant to such Company Plans as in effect immediately prior to
the Effective Time. Parent agrees to provide severance pay and other benefit
entitlements which may be owing to any employee of the Company whose employment
is terminated by Parent on or after the Effective Date or by reason of the
transactions contemplated hereby. If such severance occurs on or within one year
after the Effective Date by reason of the transactions contemplated hereby, such
severance pay and benefit entitlements shall be determined (on an employee by
employee basis) in accordance with the severance policy of the Company and its
affiliates applicable to such employee immediately prior to the Effective Date,
if more favorable than the severance policy of Parent in effect after the
Effective Date.
(b) The foregoing notwithstanding, Parent agrees to honor in accordance
with their terms all benefits vested as of the date hereof under the Company
Plans or under other contracts, arrangements, commitments, or understandings
identified in Section 5.15 of the Company Letter. Nothing in this Agreement
shall be interpreted as limiting the power of the Surviving Corporation to amend
or terminate any Company Plan or any other employee benefit plan, program,
agreement or policy or as requiring the Surviving Corporation or Parent to offer
to continue (other than as required by its terms) any written employment
contract or any employee of the Company or of any of its Subsidiaries. Company
employees' service prior to the Effective Time shall be considered service with
the Surviving Corporation for purposes of eligibility, vesting and level of
benefits under any plan, program or arrangement maintained or contributed to the
Surviving Corporation.
Section 5.16 Shareholder Litigation. The Company shall give Parent the
opportunity to participate in, but not control, the defense or settlement of any
shareholder litigation
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against the Company and its directors relating to the transaction contemplated
by this Agreement; provided, however, that no such settlement shall be agreed to
without Parent's consent unless (i) neither the Company nor Parent is or may
become directly or indirectly liable to pay any amount in connection therewith
pursuant to Section 5.13 or otherwise and (ii) such settlement does not impose
any restriction on the business or activities of the Company or Parent or their
respective Subsidiaries.
Section 5.17. Additional Matters. (a) Prior to the Effective Date, the
Company shall cause Sub to be named as an insured under the Company's Commercial
Lines Policy issued by the Fire & Casualty Insurance Company of Connecticut as
Policy #NAP-001000 and the General Liability Policy issued by American and
Foreign Insurance Company as Policy #A TS-459190 0000.
(b) Within 15 business days from the date hereof, the Company shall
deliver to Parent a certificate from the Company's General Counsel listing all
Regulatory Approvals the Company must obtain and setting forth the actions and
procedures which must be taken or followed to obtain the Regulatory Approvals.
Within 60 business days from the date hereof, the Company shall take all actions
and follow all procedures set forth on such certificate with respect to any
action that must be taken or any procedure that must be followed prior to the
Effective Time. The Company shall at all times keep Parent informed of the
progress in obtaining the Regulatory Approvals. Parent shall cooperate with and
assist the Company in obtaining the Regulatory Approvals, and shall provide such
information as the Company shall reasonably request in order to obtain the
Regulatory Approvals.
(c) At Parent's request, prior to the Effective Time, the Company shall
use reasonable efforts as soon as reasonably practicable to establish a
commercial paper conduit facility; provided, however, that if this Agreement is
validly terminated pursuant to Section 7.1, and the Company does not use such
commercial paper conduit facility during the six-month period commencing on the
date of such termination, then Parent will reimburse the Company for its actual,
reasonable out-of-pocket expenses incurred in connection with the establishment
of such facility. The Company further agrees to consult and cooperate with
Parent regarding the terms of any commercial paper conduit facility it may
establish.
(d) Before the Company or any of its Subsidiaries hires any person as a
director of internal audit, assistant controller, real estate attorney or
corporate attorney, it will consult with Parent regarding the employment of such
person.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment (or waiver by such party) at or prior to the Effective Time
of the following conditions:
(a) Stock Exchange Listings. The Units issuable in the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(b) HSR and Other Approvals. (i) The waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or approvals
of, or registrations, declarations or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental Entity (including
any state gaming authority), where the failure to obtain, make or occur would
have the effect of making the Merger or any of the transactions contemplated
hereby illegal or would have, individually or in the aggregate, a Material
Adverse Effect on the Company (assuming the Merger had taken place), shall have
been obtained, shall have been made or shall have occurred, and shall be in full
force and effect.
(c) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the Knowledge of Parent or the Company, threatened by the SEC.
All necessary state securities or blue sky authorizations (including State
Takeover Approvals) shall have been received.
(d) No Order. No court or other Governmental Entity having jurisdiction
over the Company or Parent, or any of their respective Subsidiaries, shall
(after the date of this Agreement) have enacted, issued, promulgated, enforced
or entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is then in
effect and has the effect of making the Merger or any of the transactions
contemplated hereby illegal.
(e) Information Statement. At least twenty calendar days shall have
elapsed from the mailing of the Information Statement to the shareholders of the
Company.
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Section 6.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment (or waiver by the Company) at or prior to the Effective Time of
the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. Each of
Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed at or prior to
the Effective Time, each of the representations and warranties of Parent and Sub
contained in this Agreement that is qualified as to materiality shall be true
and correct at and as of the Effective Time as if made at and as of such time
(other than representations and warranties which address matters only as of a
certain date, which shall be true and correct as of such certain date), each of
the representations and warranties that is not so qualified shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date, which shall be true and correct in all
material respects as of such certain date), and the representation as to the
accuracy of the Parent Tax Certificate described in Section 2.10(b) shall be
true and correct at and as of the Effective Time as if made at and as of such
time, in each case except as otherwise contemplated or permitted by this
Agreement, and the Company shall have received certificates signed on behalf of
each of Parent and Sub by Parent's Chief Financial Officer and any other
Executive or Senior Vice President of Parent to such effect.
(b) Tax Opinion. The Company shall have received an opinion of Battle
Fowler LLP, in form and substance reasonably satisfactory to the Company, dated
the Effective Time, substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion that are consistent
with the state of facts existing as of the Effective Time, for federal income
tax purposes the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Sub and Parent will each be a party
to that reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, Battle Fowler LLP may rely as to matters of fact upon
the representations contained herein and may receive and rely upon
representations from Parent, the Company, and others, including representations
from Parent substantially similar to the representations in the Parent Tax
Certificate attached to the Parent Letter and representations from the Company
substantially similar to the representations in the Company Tax Certificate
attached to the Company Letter.
(c) Comfort Letters. The Company shall have received the "comfort
letters" described in Section 5.3(b), in form and substance reasonably
satisfactory to the Company.
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(d) Employment Agreements. The employment agreements set forth in
Section 6.3(g) of the Parent Letter shall have been executed by Parent or Sub
and shall be in full force and effect (assuming the valid authorization,
execution and delivery of such employment agreements by the parties thereto
other than Parent or Sub and the validity and binding effect of such employment
agreements on such other parties).
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment (or waiver by Parent) at or prior to the Effective Time of
the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed at or prior to the
Effective Time, each of the representations and warranties of the Company
contained in this Agreement that is qualified as to materiality shall be true
and correct at and as of the Effective Time as if made at and as of such time
(other than representations and warranties which address matters only as of a
certain date, which shall be true and correct as of such certain date), except
for actions taken, obligations incurred or agreements entered into as permitted
by Section 4.1 or resulting from any transaction consented to in writing by
Parent, and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects at and as of the Effective
Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date, which shall be true
and correct in all material respects as of such certain date), except for
actions taken, obligations incurred or agreements entered into as permitted by
Section 4.1 or resulting from any transaction consented to in writing by Parent,
and the representation as to the accuracy of the Company Tax Certificate
described in Section 3.9 shall be true and correct at and as of the Effective
Time as if made at and as of such time, and Parent shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer and
its Chief Financial Officer to such effect.
(b) Consents Under Agreements. The Company shall have obtained the
consent or approval of each person that is not a Governmental Entity whose
consent or approval (i) is set forth in Section 2.4 of the Parent Letter and
Section 3.4(a)(iii) of the Company Letter or (ii) shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, hotel management agreement or other
agreement or instrument, except as to which the failure to obtain such consents
and approvals, individually or in the aggregate, would not be expected, in the
reasonable opinion of Parent, to have a Material Adverse Effect on the
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Company or upon the consummation of the transactions contemplated in this
Agreement.
(c) No Litigation. There shall not be pending or threatened any suit,
action or proceeding by any Governmental Entity or any other person, or before
any court or governmental authority, agency or tribunal, domestic or foreign, in
each case that has a significant likelihood of success (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock, seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to the Company
and its Subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
Subsidiaries, or the Company Venture, of any material portion of the business or
assets of the Company, Parent, Trust or any of their respective Subsidiaries, or
the Company Venture, or to compel the Company, Parent or any of their respective
Subsidiaries, or the Company Venture, to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or any of
their respective Subsidiaries, or the Company Venture, as a result of the Merger
or any of the other transactions contemplated by this Agreement, (iii) seeking
to impose limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock,
including, without limitation, the right to vote any Company Common Stock
purchased by it on all matters properly presented to the shareholders of the
Company, (iv) seeking to prohibit Parent or any of its respective Subsidiaries,
or the Company Venture, from effectively controlling in any material respect the
business or operations of the Company or its Subsidiaries, or the Company
Venture, or (v) which otherwise would reasonably be expected to have a Material
Adverse Effect on the Company.
(d) Comfort Letters. Parent shall have received the "comfort letters"
described in Section 5.3(a), in form and substance reasonably satisfactory to
Parent.
(e) Tax Opinion. Parent shall have received an opinion of Sidley &
Austin, in form and substance reasonably satisfactory to Parent, dated the
Effective Time, substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing as of the Effective Time, for federal income
tax purposes the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Sub and Parent will each be a party
to that reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, Sidley & Austin may rely as to matters of fact upon
representations contained herein and may receive and rely upon representations
from Parent, the Company, and others,
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including representations from Parent substantially similar to the
representations in the Parent Tax Certificate attached to the Parent Letter and
representations from the Company substantially similar to the representations in
the Company Tax Certificate attached to the Company Letter.
(f) Material Adverse Effect. Since the date of this Agreement, there
shall have been no Material Adverse Effect with respect to the Company. Parent
shall have received a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect. For purposes of this Section
6.3(f), a Material Adverse Effect shall not be deemed to include (i) delays
incurred following the date of this Agreement in constructing or opening the
Company's proposed vacation resorts at PGA Village in St. Lucie, Florida,
Harborside at Atlantis in Paradise Island, The Bahamas, or Vistana II in
Orlando, Florida, provided that the Company pursues the construction and opening
of the respective resort with reasonable diligence following the date of this
Agreement and any such delays are primarily attributable to causes beyond the
reasonable control of the Company; (ii) any termination by Promus Hotels, Inc.
without cause or pursuant to Section 15(c) of the amended joint venture
agreement with Promus Hotels, Inc. or expiration of the Company's joint venture
agreement with Promus Hotels, Inc.; (iii) any negotiated agreement to terminate
the use of the "Hampton Inn" name by the Company's Oak Plantation Joint Venture;
or (iv) any termination of the proposed time share joint venture relating to
Harborside at Atlantis in Paradise Island, The Bahamas for any reason other than
due to a material breach by the Company, or a material failure to perform, any
representation, warranty, agreement or covenant of the Company.
(g) Employment Agreements. The employment agreements set forth in
Section 6.3(g) of the Parent Letter shall have been executed by the parties
thereto other than Parent or Sub and shall be in full force and effect (assuming
the valid authorization, execution and delivery of such employment agreements by
Parent and Sub and the validity and binding effect of such employment agreements
on Parent and Sub).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be ter minated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented at the Company Shareholders Meeting in connection with the Merger:
(a) by mutual written consent of Parent and the Company;
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(b) by either Parent or the Company if the other of them shall have
failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with prior
to the date of such termination, which failure to comply has not been cured
within ten business days following receipt by such other of them of written
notice of such failure to comply;
(c) by either Parent or the Company if there has been a breach (which
breach has not been cured within ten business days following receipt by the
breaching party of written notice of the breach) by the other of them (in
the case of Parent, including any material breach by Sub) of any
representation or warranty that: (i) is not qualified as to materiality,
which breach has the effect of making such representation or warranty not
true and correct in all material respects or (ii) is qualified as to
materiality;
(d) by either Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on January 31, 2000 (as such
date may be extended by mutual agreement); provided, however, that the
right to terminate this Agreement pursuant to this Section 7.1(d)(i) shall
not be available to any party whose failure to fulfill any of its
obligations contained in this Agreement has been the proximate cause of the
failure of the Merger to have occurred on or prior to the aforesaid date;
or (ii) any court or other Governmental Entity having jurisdiction over a
party hereto shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree or
ruling or other action shall have become final and non-appealable;
(e) by either Parent or the Company if the closing price of the Units
on the NYSE on the trading day immediately preceding the Closing Date is
less than $23; provided, however, that neither Parent nor the Company may
terminate this Agreement pursuant to this Section 7.1(e) unless (i) either
party has delivered a written notice on the day immediately preceding the
Closing Date to the other party of its election to terminate this Agreement
pursuant to this Section 7.1(e), and (ii) during each of the ten trading
days following delivery of such notice the closing price of the Units on
the NYSE is less than $23; provided, further, that if the closing price of
the Units is greater than or equal to $23 on any of such ten trading days,
then the Closing shall occur on the first business day after such date on
which the closing price of the Units is greater than or equal to $23, with
such day being deemed to be the Closing Date for all purposes of this
Agreement; or
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(f) by either Parent or the Company if the Market Price of the Units is
less than $23 on the trading day immediately preceding the day that, but
for the termination of this Agreement pursuant to this Section 7.1(f),
would have been the Closing Date.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 5.4 and the entirety of
Sections 2.12, 3.24 and 5.7, this Section 7.2 and Article VIII, which shall
survive the termination); provided, however, that nothing contained in this
Agreement shall relieve any party hereto from any liability for any willful
breach of a representation or warranty contained in this Agreement or the breach
of any covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing duly executed by each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly executed by such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
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<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. Except for
purposes of the Shareholder Agreements, and except for any claim arising as a
result of any breach of a representation or warranty prior to the termination of
this Agreement as provided in Section 7.2, the representations and warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
terminate at the earlier of (i) the Effective Time or (ii) the termination of
this Agreement.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to a nationally recognized overnight courier or when
telecopied (with a confirmatory copy sent by such overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to
Starwood Hotels & Resorts
Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604
Attention: Thomas C. Janson, Jr.
Facsimile No: (914)640-8250
with copies to:
Scott M. Freeman
Sidley & Austin
875 Third Avenue
New York, New York 10022
Facsimile No.: (212) 906-2021
(b) if to the Company, to
Vistana, Inc.
8801 Vistana Centre Drive
Orlando, Florida 32821
Attention: Charles E. Harris
Facsimile No.: (407)239-3222
with a copy to:
Martin L. Edelman
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Facsimile No.: (212) 856-7808
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<PAGE>
Section 8.3 Interpretation. When a reference is made in this Agreement
to a Section or Article, such reference shall be to a Section or Article of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement together with all other agreements executed by the parties hereto on
the date hereof, except as provided in the last sentences of Section 5.4(a) and
(b), constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement, except for the provisions of Section 5.8
and Section 5.13, is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. Except to the extent that the laws of the
State of Florida are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under the applicable
principles of conflicts of laws thereof.
Section 8.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent, Trust or to any wholly-owned Subsidiary of Parent or Trust,
but no such assignment shall relieve Sub of any of its obligations under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
Section 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated
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<PAGE>
hereby are not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally contemplated to
the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific wording or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such remedy being
in addition to any other remedy to which any party is entitled at law or in
equity.
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<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.
By: /s/ Russell Sternlicht
_________________________
Name: Russell Sternlicht
Title: Senior Vice President
FIRE ACQUISITION CORP.
By: /s/ Russell Sternlicht
__________________________
Name: Russell Sternlicht
Title: Vice President
VISTANA, INC.
By: /s/ Raymond L. Gellein, Jr.
__________________________
Name: Raymond L. Gellein, Jr.
Title: Co-Chief Executive Officer
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<PAGE>
Exhibit 5.5
FORM OF AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
[Date]
Starwood Hotels & Resorts
Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604
Starwood Hotels & Resorts
777 Westchester Avenue
White Plains, New York 10604
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Vistana, Inc., a Florida corporation (the "Company"), as
the term "affiliate" is defined for purposes of paragraphs (c) and (d) of Rule
145 of the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement and Plan of Merger
dated as of July 18, 1999 (the "Merger Agreement"), among Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation ("Parent"), Fire Acquisition
Corp., a Florida corporation ("Sub"), and the Company, Sub will be merged with
and into the Company (the "Merger"). Capitalized terms used in this letter
without definition shall have the meanings assigned to them in the Merger
Agreement.
As a result of the Merger, I may receive shares of common stock, par
value $.01 per share, of Parent (the "Parent Shares") and Class B Shares, par
value $.01 per share, of Starwood Hotels & Resorts (the "Trust") ("Trust Shares"
and, when attached Parent Shares, "Units"), in exchange for shares of common
stock, par value $.01 per share, of the Company (the "Company Shares"), owned by
me or purchasable upon exercise of stock options.
1. I represent, warrant and covenant to Parent that in the event I
receive any Units as a result of the Merger:
<PAGE>
A. I shall not make any sale, transfer or other disposition of any
Units in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Units, to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Units to me pursuant to
the Merger has [not] been registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
because at the time the Merger is submitted for a vote of the shareholders of
the Company, (a) I may be deemed to be an affiliate of the Company and (b) the
sale, transfer or other distribution by me of the Units has not been registered
under the Act, I may not sell, transfer or otherwise dispose of the Units issued
to me in the Merger unless (i) [such sale, transfer or other disposition is made
in conformity with the volume limitations and other conditions of Rule 145
promulgated by the Commission under the Act (provided that I deliver to Parent
customary letters of representation from myself and my broker), (ii)] such sale,
transfer or other disposition has been registered under the Act or ([i]ii) in
the opinion of counsel reasonably acceptable to Parent, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register the
sale, transfer or other disposition of any Units by me or on my behalf under the
Act or, except as provided in paragraph 2(A) below, to take any other action
necessary in order to make compliance with an exemption from such registration
available.
E. I also understand that there will be placed on the certificates for
the Units issued to me, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 MAY APPLY. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
JULY 18, 1999 BETWEEN THE REGISTERED HOLDER HEREOF AND STARWOOD HOTELS
& RESORTS WORLDWIDE, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF EACH OF STARWOOD HOTELS & RESORTS WORLDWIDE, INC."
F. I also understand that unless a sale, transfer or other disposition
is made [in conformity with the provisions of Rule 145, or] pursuant to a
registration statement, Parent
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<PAGE>
reserves the right to put the following legend on the certificates issued to my
transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 [AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES]. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
G. Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter, nor as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
2. By Parent's acceptance of this letter, Parent hereby agrees with me
as follows:
A. For so long as and to the extent necessary to permit me to sell the
Units pursuant to Rules 144 and 145 under the Act, to the extent applicable, the
Parent Companies shall (a) use their reasonable best efforts to (i) file, on a
timely basis, all reports and data required to be filed with the Commission by
them pursuant to Section 13 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and (ii) furnish to me upon request a written statement as to
whether the Parent Companies have each complied with such reporting requirements
during the 12 months preceding any proposed sale of Units by me under Rule 145,
and (b) otherwise use all reasonable efforts to permit such sales pursuant to
Rule 145 and Rule 144. The Parent Companies have filed all reports required to
be filed with the Commission under Section 13 of the 1934 Act during the
preceding 12 months.
B. It is understood and agreed that certificates with the legends set
forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the Units received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the Units
received in the Merger and the provisions of Rule 145(d)(3) are then applicable
to the undersigned, or (iii) Parent has received either an opinion of counsel,
which opinion of counsel shall reasonably be satisfactory to Parent, or a "no
action" letter obtained by the undersigned from the staff of the
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<PAGE>
Commission, to the effect that the restrictions imposed by Rule 145 under the
Act no longer apply to the undersigned.
Very truly yours,
------------------------------
Name:
Agreed and accepted this ___
day of __________, 1999, by
Starwood Hotels & Resorts
Worldwide, Inc.
By_________________________
Name:
Title:
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