<PAGE> 1
================================================================================
UNITED STATES
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): March 24, 2000
--------------
BRIDGESTREET ACCOMMODATIONS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 000-22843 04-3327773
- ------------------------------ ---------------------- -------------------
State or other jurisdiction of Commission File Number IRS Employer
incorporation Identification No.
2242 PINNACLE PARKWAY
TWINSBURG, OH 44087-9904
----------------------------------------
(Address of principal executive offices)
(330) 405-6060
-------------------------------
(Registrant's telephone number,
including area code)
================================================================================
<PAGE> 2
Page 2
ITEM 5. OTHER EVENTS.
Set forth below is the text of a press release filed under the cover of
Schedule 14A with the Securities and Exchange Commission on March 24, 2000
announcing the execution of an Agreement and Plan of Merger among the Company,
Meristar Hotels & Resorts, Inc. and Meristar Brooklyn, Inc. Included with this
filing as exhibits 2.1 and 10.1, respectively, are the Agreement and Plan of
Merger and that certain Stockholders' Agreement executed by certain directors
and officers of the Company in connection therewith (the "Stockholders'
Agreement"). The Stockholders' Agreement provides that certain stockholders,
including Lynda Clutchey, John E. Danneberg, David B. Hammond, William N.
Hulett, III, Stephen J. Ruzika, Jerry Sue Thornton and Paul M. Verrochi, have
each agreed to vote his or her shares in favor of the approval of the Merger
Agreement and against any proposal that would adversely affect the adoption of
the Merger Agreement and the consummation of the merger contemplated thereby. In
furtherance of this arrangement, each of the stockholders has appointed Meristar
Hotels & Resorts, Inc. proxy to vote his or her BridgeStreet common stock in
furtherance of the obligations of the stockholders under the Stockholders'
Agreement. In addition, also under the terms of the Stockholders' Agreement,
each of the stockholders has granted to MeriStar Hotels & Resorts, Inc. an
option to purchase his or her shares of BridgeStreet common stock upon the
termination of the Merger Agreement under certain circumstances.
BRIDGESTREET ACCOMMODATIONS, INC. REACHES DEFINITIVE
AGREEMENT TO MERGE WITH MERISTAR HOTELS AND RESORTS, INC.
CLEVELAND, March 24, 2000-BridgeStreet Accommodations, Inc. (AMEX:BDS)
today announced that it has agreed to be acquired by MeriStar Hotels & Resorts,
Inc. (NYSE:MMH), the nation's largest independent management company, in a
merger in which each outstanding share of BridgeStreet would be exchanged for
$1.50 in cash plus 0.5 share of MeriStar common stock. Total consideration per
share of BridgeStreet is estimated to be approximately $3.00. The merger is
subject to approval of the stockholders of BridgeStreet and other customary
conditions.
The $35 million projected aggregate value of the transaction includes $24
million for the approximately 8 million outstanding shares of BridgeStreet
common stock plus $11 million to retire BridgeStreet's existing debt.
John Danneberg, president and chief executive officer, stated, "The merger
with MeriStar will strengthen BridgeStreet's ability to serve its customers in
the increasingly competitive corporate extended stay market. MeriStar's
financial and marketing resources will enhance BridgeSteet's ability to expand
its domestic and international operations. With the focus on Fortune 2000
business travelers and major consulting companies, there are good marketing
synergies between the two companies."
BridgeStreet offers upscale, fully furnished apartments, townhouses and
condominiums primarily for business travelers and relocating corporate
executives who need lodging for one night up to several months or more. A
typical unit is considerably larger and its cost per night considerably lower
than traditional and extended-stay hotels. The company's diverse customer base
centers on Fortune 2000 corporations, professional firms and travel-wise
individuals.
2
<PAGE> 3
Page 3
BridgeStreet's toll-free number is 1-800-B-STREET for calls from the U.S.
or Canada. Feel free to visit our web site at WWW.BRIDGESTREET.COM.
MeriStar Hotels & Resorts operates 235 hospitality and leisure properties
with more than 46,000 rooms and 10 golf courses in 34 states, the District of
Colombia, Canada, Puerto Rico and the U.S. Virgin Islands. For more information
about MeriStar Hotels & Resorts, visit MeriStar's web site: WWW.MERISTAR.COM.
This release contains forward-looking statements, which involve risks and
uncertainties. The company's actual results may differ significantly from
results discussed in the forward-looking statements due to a number of important
factors, including, but not limited to, the company's planned rapid expansion,
risks related to acquisition financing, dependence on third parties, market
acceptance of the company's brand name, and factors affecting travel. These
factors are more fully discussed in the company's Registration Statement on Form
S-4 filed with the Securities and Exchange Commission (File No. 333-39187).
ALL STOCKHOLDERS OF BRIDGESTREET ARE URGED TO READ BRIDGESTREET'S PROXY
STATEMENT RELATING TO THE SPECIAL MEETING OF BRIDGESTREET'S STOCKHOLDERS THAT
WILL BE CALLED FOR THE PURPOSE OF APPROVING THE MERGER WHEN THE PROXY STATEMENT
IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ACQUISITION
DESCRIBED IN THIS PRESS RELEASE. SUCH INFORMATION WILL INCLUDE THE STOCK
OWNERSHIP AND OTHER INTERESTS IN THE TRANSACTION OF BRIDGESTREET'S DIRECTORS AND
EXECUTIVE OFFICERS, WHO WILL BE PARTICIPATING IN THE SOLICITATION OF PROXIES
RELATED TO THE TRANSACTION, AND MERISTAR'S EXECUTIVE OFFICERS, WHO MAY BE
PARTICIPATING IN THE SOLICITATION OF SUCH PROXIES.
ONCE COMPLETED, BRIDGESTREET WILL MAIL ITS PROXY STATEMENT TO EACH OF ITS
STOCKHOLDERS. THE COMPANY'S PROXY STATEMENT, AND ANY OTHER RELEVANT DOCUMENTS,
WILL BE AVAILABLE FOR FREE AT THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE
(WWW.SEC.GOV). FURTHER, WHEN THEY ARE AVAILABLE, THE COMPANY'S NOTICE OF MEETING
AND PROXY STATEMENT WILL BE AVAILABLE FOR FREE FROM THE COMPANY BY CONTACTING
INVESTOR RELATIONS, AT 330-405-6060.
* * *
For further information contact: BridgeStreet Accommodations, Inc.
John E. Danneberg, President and CEO,
(330) 405-6060
WWW.BRIDGESTREET.COM
3
<PAGE> 4
Page 4
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
The following Exhibits are filed with this Current Report on Form 8-K:
Exhibit Number Description
- -------------- -----------
2.1 Agreement and Plan of Merger, dated as of March 23, 2000,
among BridgeStreet Accommodations, Inc., MeriStar Hotels &
Resorts, Inc., and MeriStar Brooklyn, Inc.
10.1 Stockholders' Agreement, dated as of March 23, 2000, among
MeriStar Hotels & Resorts Inc., MeriStar Brooklyn, Inc., and
certain officers and directors of BridgeStreet
Accommodations, Inc.
4
<PAGE> 5
Page 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRIDGESTREET ACCOMMODATIONS, INC.
By: /s/ John E. Danneberg
-----------------------------------
John E. Danneberg
President and Chief Executive Officer
Dated: April 4, 2000
5
<PAGE> 6
Page 6
EXHIBIT INDEX.
Exhibit Number Description
- -------------- -----------
2.1 Agreement and Plan of Merger, dated as of March 23, 2000,
among BridgeStreet Accommodations, Inc., MeriStar Hotels &
Resorts, Inc., and MeriStar Brooklyn, Inc.
10.1 Stockholders' Agreement, dated as of March 23, 2000, among
MeriStar Hotels & Resorts Inc., MeriStar Brooklyn, Inc., and
certain officers and directors of BridgeStreet
Accommodations, Inc.
6
<PAGE> 1
EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MERISTAR HOTELS & RESORTS, INC
MERISTAR BROOKLYN, INC
AND
BRIDGESTREET ACCOMMODATIONS, INC.
DATED AS OF MARCH 23, 2000
<PAGE> 2
EXECUTION COPY
EXHIBIT 2.1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER.................................................................................2
SECTION 1.1 THE MERGER.............................................................................2
SECTION 1.2 EFFECTIVE DATE.........................................................................2
SECTION 1.3 EFFECT OF THE MERGER...................................................................2
SECTION 1.4 CERTIFICATE OF INCORPORATION, BY-LAWS..................................................4
SECTION 1.5 DIRECTORS AND OFFICERS.................................................................4
SECTION 1.6 EFFECT ON CAPITAL STOCK................................................................4
SECTION 1.7 EXCHANGE OF CERTIFICATES...............................................................7
SECTION 1.8 STOCK TRANSFER BOOKS...................................................................9
SECTION 1.9 NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK............................................9
SECTION 1.10 LOST, STOLEN OR DESTROYED CERTIFICATES.................................................9
SECTION 1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION.............................................9
SECTION 1.12 STOCKHOLDERS' MEETING; REGISTRATION STATEMENT.........................................10
SECTION 1.13 MATERIAL ADVERSE EFFECT...............................................................12
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................12
SECTION 2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..........................................12
SECTION 2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS..............................................13
SECTION 2.3 CAPITALIZATION........................................................................13
SECTION 2.4 AUTHORITY RELATIVE TO THIS AGREEMENT..................................................14
SECTION 2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................................15
SECTION 2.6 COMPLIANCE, PERMITS...................................................................16
SECTION 2.7 SEC FILINGS; FINANCIAL STATEMENTS.....................................................17
SECTION 2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS..................................................17
SECTION 2.9 NO UNDISCLOSED LIABILITIES............................................................18
SECTION 2.10 ABSENCE OF LITIGATION.................................................................19
SECTION 2.11 EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS.........................................19
SECTION 2.12 EMPLOYMENT AND LABOR MATTERS..........................................................22
SECTION 2.13 PROXY STATEMENT AND REGISTRATION STATEMENT............................................22
SECTION 2.14 RESTRICTIONS ON BUSINESS ACTIVITIES...................................................23
SECTION 2.15 TITLE TO PROPERTY.....................................................................23
SECTION 2.16 TAXES.................................................................................24
SECTION 2.17 ENVIRONMENTAL MATTERS.................................................................26
SECTION 2.18 INTELLECTUAL PROPERTY.................................................................27
SECTION 2.19 INTERESTED PARTY TRANSACTIONS.........................................................28
SECTION 2.20 INSURANCE.............................................................................28
SECTION 2.21 OPINION OF FINANCIAL ADVISER..........................................................29
SECTION 2.22 BROKERS...............................................................................29
SECTION 2.23 SECTION 203 OF DELAWARE LAW NOT APPLICABLE............................................29
SECTION 2.24 INVESTMENT COMPANY ACT................................................................29
SECTION 2.25 VOTE REQUIRED.........................................................................29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB...........................30
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..........................................30
SECTION 3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS..............................................30
SECTION 3.3 CAPITALIZATION OF PARENT..............................................................30
SECTION 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT..................................................31
SECTION 3.5 NO CONFLICT, REQUIRED FILINGS AND CONSENTS............................................32
</TABLE>
<PAGE> 3
EXECUTION COPY
EXHIBIT 2.1
<TABLE>
<CAPTION>
<S> <C>
SECTION 3.6 COMPLIANCE, PERMITS..................................................................33
SECTION 3.7 SEC FILINGS; FINANCIAL STATEMENTS....................................................34
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................34
SECTION 3.9 NO UNDISCLOSED LIABILITIES...........................................................34
SECTION 3.10 ABSENCE OF LITIGATION................................................................35
SECTION 3.11 EMPLOYMENT AND LABOR MATTERS.........................................................35
SECTION 3.12 PROXY STATEMENT AND REGISTRATION STATEMENT...........................................36
SECTION 3.13 TAXES................................................................................36
SECTION 3.14 ENVIRONMENTAL MATTERS................................................................37
SECTION 3.15 INTERESTED PARTY TRANSACTIONS........................................................37
SECTION 3.16 INSURANCE............................................................................37
SECTION 3.17 BROKERS..............................................................................37
SECTION 3.18 INVESTMENT COMPANY ACT...............................................................38
SECTION 3.19 NO PRIOR ACTIVITIES; FINANCING.......................................................38
ARTICLE IV CONDUCT OF BUSINESS......................................................................39
SECTION 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER................................39
SECTION 4.2 CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER.....................................42
SECTION 4.3 NO SOLICITATION; ACQUISITION PROPOSALS...............................................44
ARTICLE V ADDITIONAL AGREEMENTS.....................................................................46
SECTION 5.1 HSR ACT..............................................................................46
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY...............................................46
SECTION 5.3 CONSENTS; APPROVALS..................................................................47
SECTION 5.4 INDEMNIFICATION AND INSURANCE........................................................47
SECTION 5.5 NOTIFICATION OF CERTAIN MATTERS......................................................49
SECTION 5.6 FURTHER ACTION.......................................................................49
SECTION 5.7 PUBLIC ANNOUNCEMENTS.................................................................49
SECTION 5.8 CONVEYANCE TAXES.....................................................................50
SECTION 5.9 EMPLOYEE BENEFIT PLANS...............................................................50
SECTION 5.10 LISTING AND DELISTING OF SECURITIES..................................................50
SECTION 5.11 AUDITED FINANCIAL STATEMENTS.........................................................51
SECTION 5.12 PLAN OF REORGANIZATION...............................................................51
SECTION 5.13 SENIOR CREDIT FACILITY...............................................................51
ARTICLE VI CONDITIONS TO THE MERGER.................................................................51
SECTION 6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER...........................51
(f) REGISTRATION STATEMENT.....................................................................53
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND ACQUISITION SUB TO EFFECT THE
MERGER............................................................................................53
(a) REPRESENTATIONS AND WARRANTIES..............................................................53
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY...................................................53
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER...............54
ARTICLE VII TERMINATION.............................................................................55
SECTION 7.1 TERMINATION...........................................................................55
SECTION 7.2 EFFECT OF TERMINATION.................................................................57
SECTION 7.3 FEES AND EXPENSES.....................................................................57
ARTICLE VIII GENERAL PROVISIONS.....................................................................58
SECTION 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS...........................58
SECTION 8.2 NOTICES...............................................................................58
SECTION 8.3 CERTAIN DEFINITIONS...................................................................59
SECTION 8.4 AMENDMENT.............................................................................60
SECTION 8.5 WAIVER................................................................................60
SECTION 8.6 HEADINGS..............................................................................60
</TABLE>
<PAGE> 4
EXECUTION COPY
EXHIBIT 2.1
<TABLE>
<CAPTION>
<S> <C>
SECTION 8.7 SEVERABILITY.........................................................................61
SECTION 8.8 ENTIRE AGREEMENT.....................................................................61
SECTION 8.9 ASSIGNMENT; GUARANTEE OF ACQUISITION SUB OBLIGATIONS.................................61
SECTION 8.10 PARTIES IN INTEREST..................................................................61
SECTION 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE................................61
SECTION 8.12 GOVERNING LAW........................................................................61
SECTION 8.13 COUNTERPARTS.........................................................................62
SECTION 8.14 INTERPRETATION.......................................................................62
</TABLE>
<PAGE> 5
EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 23, 2000, is among
BRIDGESTREET ACCOMMODATIONS, INC., a Delaware corporation (the "COMPANY"),
MERISTAR HOTELS & RESORTS, INC. a Delaware corporation ("PARENT"), and MERISTAR
BROOKLYN, INC. a Delaware corporation and a wholly owned subsidiary of Parent
("ACQUISITION SUB").
WHEREAS, the respective Boards of Directors of Parent, Acquisition Sub and
the Company have determined that it is advisable and in the best interest of
their respective stockholders to combine the respective businesses of Parent and
the Company, and consequently have each approved the acquisition of the Company
by Parent, by means of a merger of the Company with and into Acquisition Sub
(the "MERGER"), upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and the rules and
regulations promulgated under the Code;
WHEREAS, as a condition to the willingness of Parent and Acquisition Sub to
enter into this Agreement, Parent and Acquisition Sub have entered into a
Stockholders' Agreement, dated as of the date hereof (the "STOCKHOLDERS'
AGREEMENT"), with each of the stockholders listed on the signature pages
thereto, pursuant to which each such stockholder has agreed, among other things,
(i) to appear, in person or by proxy, for the purpose of obtaining a quorum at
any annual or special meeting of shareholders of the Company and at any
adjournment thereof at which matters relating to the Merger, this Agreement (as
amended from time to time) or any transaction contemplated by this Agreement are
considered; (ii) to vote their respective shares in favor of approval and
adoption of the Merger and this Agreement at an annual or special meeting of
shareholders of the Company; and (iii) to grant to Parent an irrevocable option
to purchase all Shares owned by such stockholder;
WHEREAS, the Board of Directors of the Company (the "BOARD") has approved
this Agreement and the transactions contemplated hereby and declared the
advisability and resolved to recommend approval of the Merger and approval and
adoption of this Agreement by the stockholders of the Company; and
WHEREAS the Boards of Directors of Parent and Acquisition Sub have each
approved the Merger of the Company with and into Acquisition Sub in accordance
with the Delaware General Corporation Law (the "DELAWARE LAW") upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Acquisition Sub hereby agree as follows:
<PAGE> 6
EXECUTION COPY
EXHIBIT 2.1
ARTICLE I
THE MERGER
Section 1.1 THE MERGER.
(a) EFFECTIVE TIME. Subject to Section 1.3(b), at the Effective Time
(as defined below), and subject to and upon the terms and conditions of this
Agreement and the Delaware Law, the Company shall be merged with and into
Acquisition Sub; the separate corporate existence of the Company shall cease and
Acquisition Sub shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
(b) CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the principal offices of
Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York,
New York 10019, unless another date and time or place is agreed to in writing by
the parties hereto (the "Closing Date").
Section 1.2 EFFECTIVE DATE. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI (and in any
event within two business days), the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger as contemplated by the Delaware
Law (the "CERTIFICATE OF MERGER"), together with any required related
certificate, with the Secretary of State of the State of Delaware, in such form
as required by, and executed in accordance with the relevant provisions of the
Delaware Law (the time of such filing being the "EFFECTIVE TIME").
Section 1.3 EFFECT OF THE MERGER.
(a) At the Effective Time, the effect of the Merger shall be as
provided in this Agreement, the Certificate of Merger and the applicable
provisions of the Delaware Law. Without limiting the generality of the foregoing
and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Acquisition Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Acquisition Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
(b) If (A) on the day upon which the Effective Time occurs (or if no
trading of common stock, par value $0.01 per share, of Parent (the "PARENT
COMMON STOCK") on the New York Stock Exchange, Inc. ("NYSE ") takes place prior
to the Effective Time on such day, the last date prior to the date upon which
the Effective Time occurs upon which there was trading of Parent Common Stock on
the NYSE), the fair market value, based on the volume weighted average per share
sales price of Parent Common Stock on that day on the NYSE, of all of Parent
Common Stock to be delivered in connection with the Merger (the
<PAGE> 7
EXECUTION COPY
EXHIBIT 2.1
"TOTAL STOCK VALUE") is less than 50% of the sum of (i) the Total Stock Value,
(ii) the aggregate amount of Cash Consideration (as defined below) paid by
Parent pursuant to Section 1.6(a), (iii) an estimate of cash payable, based on
the aggregate number of Dissenting Shares (as defined below) multiplied by the
cash value per share of the Merger Consideration (as defined below), in respect
of Dissenting Shares, (iv) cash payable in respect of fractional shares (such
sum being referred to as the "Total Consideration") and (v) any transfer taxes
paid or to be paid by the Company on behalf of stockholders of the Company in
connection with the Merger or (B) the conditions set forth in Section 6.2(d) and
Section 6.3(c) cannot be satisfied, then the Merger contemplated by this Section
1.3(b) shall be restructured such that Acquisition Sub shall be merged with and
into the Company, and the Company shall be the surviving corporation. In such
event: all references to the term "Merger" shall be deemed references to the
merger contemplated by this Section 1.3(b); all references to the term
"Surviving Corporation" shall be deemed references to the Company, as the
surviving corporation after the Merger; all references to the term "Effective
Time" shall be deemed references to the time at which the Certificate of Merger
is duly filed with the Delaware Secretary of State or at such later time as is
specified in the Certificate of Merger in respect to the Merger as restructured
in the manner contemplated by this Section 1.3(b); the conditions set forth in
Sections 6.2(d) and 6.3(c) and the covenant set forth in Section 5.12 shall
thereafter cease to apply. The parties shall cooperate and take all steps
necessary to implement such alternative structure.
Section 1.4 CERTIFICATE OF INCORPORATION, BY-LAWS.
(a) CERTIFICATE OF INCORPORATION. Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time the Certificate of
Incorporation of Acquisition Sub as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the Delaware Law and such Certificate of
Incorporation.
(b) BY-LAWS. Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time the By-Laws of Acquisition Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by the Delaware Law,
the Certificate of Incorporation of the Surviving Corporation and such By-Laws.
Section 1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of
Acquisition Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-Laws of the Surviving Corporation, and
the officers of Acquisition Sub immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
Section 1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Acquisition Sub,
the Company, or the holders of any of the following securities:
(a) MERGER CONSIDERATION. Each share (a "SHARE") of common stock, par
value $0.01 per share, of the Company (the "COMMON STOCK") issued and
outstanding
<PAGE> 8
EXECUTION COPY
EXHIBIT 2.1
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.6(b) and any Dissenting Shares (as defined in Section
1.6(e)) shall immediately cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist and be converted into (i) the
right to receive $1.50 in cash, without interest thereon (the "CASH
CONSIDERATION"), plus (ii) the right to receive 0.5 shares (the "EXCHANGE
RATIO") of Parent Common Stock (as may be adjusted from time to time, the
"MERGER CONSIDERATION"), in accordance with Section 1.7 and each holder of any
such Share shall cease to have any rights with respect thereto arising therefrom
(including without limitation the right to vote), except the right to receive
the Merger Consideration in accordance with Section 1.7. Notwithstanding
anything to the contrary contained herein, (i) in the event the Average Trading
Price (as defined below) is less than $2.25, then this Agreement may be
terminated by the Company in accordance with Article VII; or (ii) in the event
the Average Trading Price is more than $3.75, then this Agreement may be
terminated by Parent in accordance with Article VII. As used herein, the
"Average Trading Price" for each share of Parent Common Stock shall be the
average of the closing prices for a share of Parent Common Stock as reported on
the NYSE Composite Transactions Tape for the ten trading days ending three
trading days prior to the Effective Time (the "10-DAY PERIOD "). Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time the
outstanding Shares or the outstanding Parent Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Merger Consideration shall be
correspondingly adjusted on a per-share basis to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
(b) CANCELLATION. Each Share held in the treasury of the Company and
each Share owned by Parent, Acquisition Sub or any direct or indirect wholly
owned subsidiary of the Company or Parent immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, and be canceled and retired without
payment of any consideration therefor and cease to exist.
(c) STOCK OPTIONS. Immediately prior to the Effective Time, each
outstanding option to purchase Common Stock (a "STOCK OPTION") granted under the
Company's 1997 Equity Incentive Plan or the Stock Option Plan for Non-Employee
Directors or pursuant to any other employee stock option plan or agreement
entered into by the Company with any employee of the Company or any subsidiary
thereof and listed on Section 2.11(c) of the Company Disclosure Schedule (the
"COMPANY STOCK OPTION PLANS"), whether or not then exercisable, shall become
exercisable, subject to the terms of the Company Stock Option Plan pursuant to
which such Stock Option was issued. If and to the extent that a Stock Option
shall not have been exercised at the Effective Time, such Stock Option shall be
automatically canceled. Each holder of a canceled Stock Option shall be entitled
to receive as soon as practicable after the first date payment can be made
without liability to such person under Section 16(b) of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "EXCHANGE ACT") from the Company in consideration for such cancellation an
amount in cash (less applicable withholding taxes) equal to the product of (i)
the number of shares of Common Stock previously subject to such Stock Option
multiplied by (ii) the excess, if any, of the equivalent cash value of the
Merger Consideration at the Effective Time over the exercise price per share of
Common Stock previously subject to
<PAGE> 9
EXECUTION COPY
EXHIBIT 2.1
such Stock Option (the "OPTION CONSIDERATION") upon surrender of such Stock
Option to the Company or an affidavit of loss in the form requested by Parent,
together with such additional documentation as may be reasonably required by
Parent or the Company. The surrender of a Stock Option in exchange for the
Option Consideration in accordance with the terms of this Section 1.6(c) shall
be deemed a release of any and all rights the holder had or may have had in
respect of such Stock Option. Prior to the Effective Time, the Company shall use
its reasonable best efforts to obtain all necessary consents or releases from
holders of Stock Options under the Company Stock Option Plans and take all such
other lawful action as may be necessary to give effect to the transactions
contemplated by this Section 1.6(c). Except as otherwise agreed to by the
parties, (i) the provisions in the Company Stock Option Plans with respect to
the right to issue or grant additional options or rights to acquire Common Stock
shall terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any subsidiary thereof shall
be canceled as of the Effective Time, and (ii) the Company shall use its
reasonable best efforts to assure that following the Effective Time no
participant in the Stock Option Plans or other plans, programs or arrangements
shall have any right thereunder to acquire any equity securities of the Company,
the Surviving Corporation or any subsidiary thereof and to terminate all such
plans.
(d) CAPITAL STOCK OF ACQUISITION SUB. At the Effective Time, each
share of common stock, par value $0.01 per share, of Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall remain outstanding as
one validly issued, fully paid and nonassessable share of the common stock, par
value $0.01 per share, of the Surviving Corporation.
(e) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, Shares issued and outstanding immediately prior to the Effective
Time held by any person who has the right to demand, and who properly demands,
an appraisal of such Shares (the "DISSENTING SHARES") in accordance with Section
262 of the Delaware Law (or any successor provision) shall not be converted into
the right to receive the Merger Consideration unless such holder fails to
perfect or otherwise loses such holder's right to such appraisal, if any. If,
after the Effective Time, such holder fails to perfect or loses any such right
to appraisal, each such Share of such holder shall be treated as a Share that
had been converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 1.6(a). At the Effective Time, any
holder of Dissenting Shares shall cease to have any rights with respect thereto,
except the rights provided in Section 262 of the Delaware Law (or any successor
provision) and as provided in the immediately preceding sentence. The Company
shall give prompt notice to Parent of any demands received by the Company for
appraisal of Shares and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
Section 1.7 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT AND PROCEDURES. Prior to, the Effective Time, a
bank or trust company shall be designated by Parent (the "PAYING AGENT") to act
as agent in
<PAGE> 10
EXECUTION COPY
EXHIBIT 2.1
connection with the Merger to receive the funds to which holders of Shares shall
become entitled pursuant to Section 1.6(a). Promptly after the Effective Time,
the Surviving Corporation shall cause to be mailed to each record holder, as of
the Effective Time of a certificate or certificates (the "CERTIFICATES ") that,
prior to the Effective Time, represented Shares, a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent, and shall be in such form and have such other provisions as
Parent may reasonably specify) and instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration therefor.
Upon the surrender of each such Certificate formerly representing Shares,
together with such letter of transmittal and any additional documents as may
reasonably be required by Parent or the Paying Agent, in each case, duly
completed and validly executed in accordance with the instructions thereto, the
holder of such Certificate shall be entitled to receive in exchange (A) a
certificate representing the number of whole shares of Parent Common Stock that
such holder is entitled to receive under Section 1.6 and (B) a check in the
amount (after giving effect to any required tax withholding) of the cash portion
of the Merger Consideration plus any cash in lieu of fractional shares that such
holder has the right to receive under Section 1.6 and such Certificate shall
forthwith be canceled. Until so surrendered and exchanged, each such Certificate
(other than Shares held by Parent, Acquisition Sub or the Company, or any direct
or indirect subsidiary thereof) shall represent solely the right to receive the
Merger Consideration. No interest shall be paid or accrue on the Merger
Consideration. If the Merger Consideration (or any portion thereof) is to be
delivered to any person other than to the person in whose name the Certificate
formerly representing Shares surrendered in exchange therefor is registered, it
shall be a condition to such exchange that the Certificate so surrendered shall
be properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(b) CONSIDERATION. When and as needed, Parent or Acquisition Sub
shall deposit or cause to be deposited, in trust with the Paying Agent, the
Merger Consideration to which holders of Shares shall be entitled at the
Effective Time pursuant to Section 1.6(a) hereof.
(c) INVESTMENT OF MERGER CONSIDERATION. The cash portion of the
Merger Consideration shall be invested by the Paying Agent, as directed by
Parent, provided that such investments shall be limited to (i) direct
obligations of the United States of America, (ii) obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, (iii) commercial paper rated of the highest
quality by Moody's Investors Service, Inc. or Standard & Poor's Corporation, or
(iv) certificates of deposit issued by a commercial bank having at least
$1,000,000,000 in assets.
(d) TERMINATION OF DUTIES. Promptly following the date which is six
months after the Effective Time, Parent will cause the Paying Agent to deliver
to the Surviving Corporation all cash and documents in its possession relating
to the transactions described in this Agreement and the Paying Agent's duties
shall terminate thereafter. Thereafter, each holder of a Certificate formerly
representing a Share may surrender such Certificate to the
<PAGE> 11
EXECUTION COPY
EXHIBIT 2.1
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Merger Consideration, without any
interest thereon.
(e) NO LIABILITY. Neither Parent, Acquisition Sub nor the Company
shall be liable to any holder of Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) WITHHOLDING RIGHTS. Parent or the Paying Agent shall be entitled
to deduct and withhold from any amounts payable pursuant to this Agreement to
any holder of Common Stock such amounts as Parent or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Parent or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made by Parent or the Paying Agent.
(g) FRACTIONAL SHARES. No certificates or scrip of shares of Parent
Common Stock representing fractional shares of Parent Common Stock or book-entry
credit of the same shall be issued upon the surrender for exchange of
Certificates and such fractional share interests will not entitle the owner
thereof to vote or to have any rights of a stockholder of Parent or a holder of
shares of Parent Common Stock. Notwithstanding any other provision in this
Agreement, each holder of Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Parent
Common Stock (determined after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (i) such fractional part of a share of Parent
Common Stock multiplied by (ii) the average of the closing prices for a share of
Parent Common Stock as reported on the NYSE Composite Transactions Tape during
the 10-Day Period. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to the holders of fractional interests, the
Paying Agent shall so notify Parent, and Parent shall deposit such amount with
the Paying Agent and shall cause the Paying Agent to forward payments to such
holders of fractional interests subject to and in accordance with the terms
hereof.
Section 1.8 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of the Common Stock thereafter on the records of the Company.
Section 1.9 NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger
Consideration delivered in exchange for the Shares in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Shares, and there shall be no further registration of
transfers on the records of the Surviving Corporation of Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
Section 1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
deliver in
<PAGE> 12
EXECUTION COPY
EXHIBIT 2.1
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the Merger Consideration as may be
required pursuant to Section 1.6; provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen destroyed Certificate to deliver a bond in such sum
as it may reasonably direct as indemnity against any claim that may be made
against Parent or the Paying Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
Section 1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent,
Acquisition Sub and the Company will take all such reasonable and lawful action
as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Acquisition Sub, the officers and directors of
the Company and Acquisition Sub immediately prior to the Effective Time are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
Section 1.12 STOCKHOLDERS' MEETING; REGISTRATION STATEMENT.
(a) As promptly as practicable after the execution of this Agreement,
the Company and the Parent shall prepare and file with the Securities and
Exchange Commission (the "SEC") a single document that will constitute (i) the
proxy statement of the Company relating to the stockholders meeting to be held
to consider approval and adoption of this Agreement and the Merger (the
"STOCKHOLDERS MEETING") and (ii) the registration statement on Form S-4 of
Parent (together with all amendments thereto, the "REGISTRATION STATEMENT"), in
connection with the registration under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "SECURITIES ACT") of
(A) the Parent Common Stock to be issued to the stockholders of the Company in
connection with the Merger and (B) the Parent Common Stock to be acquired in the
Merger by the Company's stockholders, such that the shares of such Parent Common
Stock may be freely offered and resold without compliance with Rules 144 and 145
of the Securities Act in transactions in which those Company's stockholders and
any broker/dealer from whom such shares are sold may be deemed to be
underwriters within the meaning of the Securities Act, including the two forms
of prospectus contained in the Registration Statement (such single document,
together with any amendments thereof or supplements thereto, the "PROXY
STATEMENT"). Parent and the Company each shall use its reasonable best efforts
to cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement (the
"REGISTRATION STATEMENT EFFECTIVE DATE"), Parent shall take all or any action
required under any applicable Law in connection with the issuance of Parent
Common Stock pursuant to the Merger. Parent or the Company, as the case may be,
shall furnish all information concerning Parent or the Company as the other
party may reasonably request in connection with such actions and the preparation
of the Proxy Statement and the Registration Statement. As promptly as
practicable after the Registration Statement Effective Date, the proxy statement
and prospectus included in the Proxy Statement and all documents related thereto
(collectively, the "PROXY MATERIALS") will be mailed to the stockholders of the
<PAGE> 13
EXECUTION COPY
EXHIBIT 2.1
Company. Parent and the Company shall cause the Proxy Statement to comply as to
form and substance in all material respects with the applicable requirements of
(i) the Exchange Act, including Sections 14(a) and 14(d) thereof, (ii) the
Securities Act, (iii) the rules and regulations of the American Stock Exchange
and the NYSE and (iv) Delaware Law.
(b) Subject to the duties of the Board under applicable Law as
determined and exercised in good faith by the Board in a manner consistent with
Section 4.3, the Proxy Statement shall include the unconditional recommendation
of the Board to the stockholders of the Company that they vote in favor of the
adoption of this Agreement and the Merger; provided, however, that the Board
may, at any time prior to the Effective Time, withdraw, modify or change any
such recommendation solely in accordance with the provisions of Section 4.3. In
addition, the Proxy Statement and the Proxy Materials will include a copy of the
written opinion of Bank of America Securities LLC ("BAS") referred to in Section
2.21.
(c) No amendment or supplement to the Proxy Statement will be made
without the approval of each of Parent and the Company, which approval shall not
be unreasonably withheld or delayed.
(d) If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its subsidiaries, or their
respective officers or directors, should be discovered by the Company that
should be set forth in an amendment or a supplement to the Proxy Statement or
the Registration Statement so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the Company shall promptly inform Parent.
(e) If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any of its subsidiaries, or their respective
officers or directors, should be discovered by Parent that should be set forth
in an amendment or a supplement to the Proxy Statement or the Registration
Statement so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, Parent shall promptly inform the Company.
(f) The Company shall call and hold the Stockholders Meeting as
promptly as practicable after the Registration Statement Effective Date for the
purpose of voting upon the adoption of this Agreement, and Parent and the
Company will cooperate with each other to cause the Stockholders Meeting to be
held as soon as practicable following the mailing of the Proxy Materials to the
stockholders of the Company. The Company shall use its reasonable best efforts
(through its agents or otherwise) to solicit from its stockholders proxies in
favor of the adoption of this Agreement, and shall take all other action
reasonably necessary or advisable to secure the Requisite Company Vote (as
hereinafter defined), subject to the duties of the Board under applicable law as
determined and exercised in good faith by the Board in a manner consistent with
Section 4.3.
<PAGE> 14
EXECUTION COPY
EXHIBIT 2.1
Section 1.13 MATERIAL ADVERSE EFFECT. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "Material Adverse Effect" means any change, effect or
circumstance that is materially adverse to the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, or Parent and its subsidiaries, as the case may be, in each case
taken as a whole, other than any such changes, effects or circumstances (i)
expressly set forth in Section 1.13 of the Company Disclosure Schedule or the
Parent Disclosure Schedule (each as hereinafter defined), as the case may be, or
(ii) specifically set forth or described in the Company SEC Reports or the
Parent SEC Reports (each as hereinafter defined), as the case may be, other than
general risk factors, and provided that none of the following shall be deemed by
itself or by themselves, either alone or in combination, to constitute a
Material Adverse Effect for the Company: any changes, effects or circumstances
(x) caused by the public announcement of this Agreement or any of the
transactions contemplated hereby, (y) stockholders' lawsuits for breach of
fiduciary duties or (z) arising or resulting from general industry, economic or
stock market conditions that affect the Company (or the markets in which the
Company competes) in a manner not disproportionate to the manner in which such
conditions affect other companies in the industries or markets in which the
Company competes.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition Sub
that on the date hereof, except as set forth in the section of the written
disclosure schedule delivered on or prior to the date hereof by the Company to
Parent (the "COMPANY DISCLOSURE SCHEDULE") corresponding to each representation
and warranty made hereunder by the Company:
Section 2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company and
each of its subsidiaries are corporations, limited partnerships or limited
liability companies duly organized, validly existing and in good standing under
the respective laws of the jurisdictions of their incorporation or formation.
The Company and each of its subsidiaries have the requisite power and authority
and are in possession of all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders (the
"APPROVALS") necessary to own, lease and operate the properties they purport to
own, lease or operate and to carry on their business as they are now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and Approvals would not, individually
or in the aggregate, have a Material Adverse Effect. The Company and each of its
subsidiaries are duly qualified or licensed as a foreign corporation, limited
partnership or limited liability company to do business, and are in good
standing in each jurisdiction where the character of its properties owned,
leased or operated by them or the nature of their activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. A true and complete list of all
of the Company's subsidiaries, together with the jurisdiction of incorporation
of each subsidiary and the percentage of each subsidiary's outstanding capital
stock owned by the Company or another subsidiary, is set forth in Section 2.1 of
the Company Disclosure Schedule. The Company
<PAGE> 15
EXECUTION COPY
EXHIBIT 2.1
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any person.
Section 2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a true, complete and correct copy of its
Certificate of Incorporation and By-Laws, each as amended to date, and has
furnished or made available to Parent the certificate of incorporation and
by-laws (or equivalent organizational documents) of each of its subsidiaries
(the "SUBSIDIARY DOCUMENTS"). Such Certificate of Incorporation, By-Laws and
Subsidiary Documents are in full force and effect. Neither the Company nor any
of its subsidiaries is in violation of any of the provisions of its Certificate
of Incorporation or By-Laws or Subsidiary Documents.
Section 2.3 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 35,000,000 shares of Common Stock and (ii) 5,000,000 shares of
preferred stock, $0.01 par value per share, none of which is issued and
outstanding and none of which is held in treasury. As of March 16, 2000, (i)
8,169,835 shares of Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and none of which were held in
treasury, (ii) no shares of Common Stock were held by subsidiaries of the
Company and (iii) 1,091,834 shares of Common Stock were reserved for future
issuance pursuant to outstanding Stock Options granted under the Company Stock
Option Plans and agreements listed in Section 2.3 of the Company Disclosure
Schedule. No material change in such capitalization has occurred between
September 30, 1999 and the date hereof. Section 2.3 of the Company Disclosure
Schedule sets forth a true and complete list of all outstanding options,
warrants and other rights for the purchase of, or conversion into or exchange
for Common Stock, the name of each holder thereof, the number of shares
purchasable thereunder or upon conversion or exchange thereof and the per share
exercise or conversion price or exchange rate of each option, warrant and other
right. There are no options, warrants or other similar rights, agreements,
arrangements, commitments or understanding, whether or not in writing, of any
character relating to the issued or unissued capital stock or other securities
of the Company or any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue (whether upon conversion, exchange or otherwise) or
sell any share of capital stock of, or other equity interests in or other
securities of, the Company or any of its subsidiaries other than those listed in
Section 2.3 of the Company Disclosure Schedule. All securities subject to
issuance as aforesaid upon issuance on the term and conditions specified in the
instruments pursuant to which they are issuable shall be duly authorized,
validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of the Company of any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Common Stock or capital
stock of any subsidiary or any other securities of the Company or any of its
subsidiaries or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any such subsidiary or any other
entity. All of the outstanding shares of capital stock of each of the Company's
subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and all such shares are owned by the Company or another subsidiary of the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations in the Company's voting rights, charges or other
encumbrances of any nature whatsoever (collectively, "LIENS").
<PAGE> 16
EXECUTION COPY
EXHIBIT 2.1
Section 2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of the Company, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, other than the adoption of this Agreement by the holders a
majority of the outstanding shares of Common Stock entitled to vote in
accordance with the Delaware Law and the Company's Certificate of Incorporation
and By-Laws (the "REQUISITE COMPANY VOTE"). The Board has approved this
Agreement and declared its advisability. This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Acquisition Sub, as
applicable, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Section 2.5(a) of the Company Disclosure Schedule includes a list
of all contracts, agreements, arrangements or understanding, whether or not in
writing, to which the Company or any of its subsidiaries is a party or by which
any of them is bound as of the date hereof, (i) which are required to be filed
as "material contracts" with the SEC pursuant to the requirements of the
Exchange Act; (ii) under which the consequences of a default, nonrenewal or
termination could have a Material Adverse Effect; (iii) pursuant to which
payments are required or acceleration of benefits is required upon a "change of
control" of the Company or its subsidiaries; (iv) which require the consent or
waiver of a third party prior to the Company (or its subsidiary, if applicable)
entering into the transactions contemplated by this Agreement, except where the
failure to obtain such consent or waiver would not, individually or in the
aggregate, have a Material Adverse Effect; (v) whose terms prohibit or would
materially delay the consummation of the Merger and the other transactions
contemplated by this Agreement; (vi) which as of March 1, 2000, pertain to the
rental by the Company or its subsidiaries of accommodations and involve
consideration in excess of $10,000 over the term of the contract or have a term
that will expire more than one year from the date hereof; (vii) which as of
March 1, 2000, constitute contracts, agreements, arrangements or understanding
between the Company or its subsidiaries and any person for the rental by such
person of accommodations and represent individually in excess of $250,000 in
annual revenue to the Company or its subsidiaries, as applicable; or (viii) the
termination of which in accordance with their terms would require or result in
individual payments by the Company, Acquisition Sub, Parent or any of their
subsidiaries or affiliates in excess of $75,000 (the contracts, agreements,
arrangements or understandings referred to in clauses (i) through (viii) above
are referred to collectively herein as the "MATERIAL CONTRACTS") and other than
in the ordinary course of business, consistent with past practice neither the
Company nor any of its subsidiaries is currently negotiating, in discussion with
any person with respect to, or a party to any non-binding agreement or
understanding with respect to, any Material Contract, subject to Section 4.3.
<PAGE> 17
EXECUTION COPY
EXHIBIT 2.1
(b) Except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws of the Company or any
Subsidiary Document, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or result in a
modification of any right or benefit under, or impair the Company's or any of
its subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration,
repayment or repurchase, or result in increased payments or cancellation under,
or result in the creation of a Lien on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except in the case of (ii) or (iii)
only for any such conflicts, violations, breaches, defaults or other occurrences
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not require any
consent approval, authorization or permit of, or filing with or notification to,
any national, federal, state, provincial or local governmental regulatory or
administrative authority, agency, commission, court, tribunal, arbitral body or
self-regulated entity, domestic or foreign (collectively, the "GOVERNMENTAL
AUTHORITIES"), except for (i) applicable requirements, if any, of the Securities
Act, the Exchange Act, state securities laws ("BLUE SKY LAWS"), the premerger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), and the filing and recordation of appropriate
merger or other documents as required by the Delaware Law or (ii) as would not
have a Material Adverse Effect or prohibit or materially delay the consummation
of the Merger and the other transactions contemplated by this Agreement.
Section 2.6 COMPLIANCE, PERMITS.
(a) Except as set forth in Section 2.6 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties is bound or affected, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) The Company and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from Governmental Authorities that are necessary to the operation of the
business of the Company
<PAGE> 18
EXECUTION COPY
EXHIBIT 2.1
and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "COMPANY PERMITS"), except when the failure to have such
Company permits would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and its subsidiaries are in compliance with the
terms of the Company Permits, and neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of any applicable
laws or regulations except, in each case, where the failure to so comply would
not, individually or in the aggregate, have a Material Adverse Effect.
Section 2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required
to be filed with the SEC including, without limitation, (i) its Annual Reports
on Form 10-K for the fiscal years ended December 31, 1997 and 1998,
respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended
March 31, 1999, June 30, 1999 and September 30, 1999, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since January 1, 1999, (iv) all other reports or registration statements
filed by the Company with the SEC since January 1, 1999 and (v) all amendments
and supplements to all such reports and registration statements filed by the
Company with the SEC since January 1, 1999 (collectively, the "COMPANY SEC
REPORTS"). The Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's subsidiaries is required to file any
forms, reports or other documents with the SEC or any national securities
exchange or quotation service or comparable Governmental Authority.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules thereto) contained in the Company SEC
Reports was prepared in accordance with U.S. generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto), and each fairly presents in all
material respects the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
Section 2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company SEC Reports and Section 2.8 of the Company Disclosure Schedule,
since December 31, 1998, the Company and its subsidiaries have conducted their
business in the ordinary course and there has not occurred: (i) any Material
Adverse Effect; (ii) any amendments or changes in the Certificate of
Incorporation or By-laws of the Company; (iii)any damage to, destruction or loss
of any asset of the Company or its subsidiaries (whether or not covered by
insurance) that would have a Material Adverse Effect; (iv) any material change
by the Company or its subsidiaries in their accounting methods, principles or
practices; (v) any material revaluation by the Company or its subsidiaries of
any of their assets, including,
<PAGE> 19
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business; (vi) any sale
of a material amount of property of the Company or any of its subsidiaries,
except in the ordinary course of business; (vii) any declaration, setting aside
or payment of any dividend or distribution in respect of Shares or any
redemption, purchase or other acquisition of any of the Company's securities
(except as contemplated by this Agreement); (viii) any increase in the
compensation or benefits or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any executive officers of the Company or any subsidiary, in each case
except in the ordinary course of business consistent with past practice or
except as required by applicable law; (ix) any creation or assumption by the
Company or any of its subsidiaries of any Lien on any material asset of the
Company or any of its subsidiaries, other than in the ordinary course of
business, consistent with past practice; (x) any making of any loan, advance or
capital contribution to or investment in any person by the Company or any of its
subsidiaries, other than advances to employees to cover travel and other
ordinary business-related expenses in the ordinary course of business consistent
with past practice; (xi) any incurrence or assumption by the Company or any of
its subsidiaries of any indebtedness for borrowed money or any guarantee,
endorsement or other incurrence or assumption of a material liability (whether
directly, contingently or otherwise) by the Company or any of its subsidiaries
for the obligations of any other person (other than any wholly owned subsidiary
of the Company), in each case other than in the ordinary course of business
consistent with past practice; or (xii) any modification, amendment, assignment
or termination of or relinquishment by the Company or any of its subsidiaries of
any rights under any Material Contract that does or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
Section 2.9 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
except liabilities (a) in the aggregate adequately provided for in the Company's
unaudited balance sheet (including any related notes thereto) as of September
30, 1999 (the "1999 COMPANY BALANCE SHEET"), (b) incurred in the ordinary course
of business and not required under U.S. generally accepted accounting principles
to be reflected on the 1999 Company Balance Sheet, (c) incurred since September
30, 1999 in the ordinary course of business consistent with past practice, (d)
incurred in connection with this Agreement, (e) disclosed in the Company SEC
Reports or (f) which would not have a Material Adverse Effect.
Section 2.10 ABSENCE OF LITIGATION. Except as set forth in Section 2.10 of
the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or any properties or
rights of the Company or any of its subsidiaries, before any Governmental
Authority or body, domestic or foreign, nor are there, to the Company's
knowledge, any investigations or reviews by any Governmental Authority pending
or threatened against, relating to or affecting, the Company or any of its
subsidiaries that, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ,
<PAGE> 20
EXECUTION COPY
EXHIBIT 2.1
injunction or decree of any court or Governmental Authority which, individually
or in the aggregate, has resulted or could reasonably be expected to result in a
Material Adverse Effect.
Section 2.11 EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS.
(a) Section 2.11(a) of the Company Disclosure Schedule lists all
employee pension plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended; ("ERISA")), all material employee
welfare plans (as defined in Section 3(1) of ERISA) and all other material
bonus, stock option, stock purchase, incentive or deferred compensation,
supplemental retirement, severance and other fringe or employee benefit plans,
programs, or arrangements, and any material current or former employment,
executive compensation, consulting or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of or consultant to,
and which is maintained or contributed to, the Company, any trade or business
(whether or not incorporated) which is a member of a controlled group including
the Company or which is under common control with the Company (an "ERISA
AFFILIATE") within the meaning of Section 414 of the Code, or any subsidiary of
the Company, as well as each plan with respect to which the Company or an ERISA
Affiliate could reasonably be expected to incur liability under Section 4069 (if
such plan has been or were terminated) or Section 4212(c) of ERISA (collectively
the "COMPANY EMPLOYEE PLANS"). There have been made available to Parent copies
of (i) each such written Company Employee Plan (other than those referred to in
Section 4(b) of ERISA), (ii) the most recent annual report on Form 5500, with
accompanying schedules and attachments, filed with respect to each Company
Employee Plan required to make such a filing, and (ii) the most recent actuarial
valuation for each Company Employee Plan subject to Title IV of ERISA.
(b) Except as set forth in Section 2.11(a) of the Company Disclosure
Schedule, (i) none of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person (other than
post-employment benefits provided in accordance with the health care
continuation provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, or comparable state law), and none of the Company Employee
Plans is a "multiemployer plan" as such term is defined in Section 3(37) of
ERISA; (ii) there has been no "prohibited transaction," as such term is defined
in Section 406 of ERISA and Section 4975 of the Code, with respect to any
Company Employee Plan, which could result in any material liability of the
Company or any of its subsidiaries; (iii) all Company Employee Plans are in
compliance in all material respects with the requirements prescribed by any and
all statutes (including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto (including all applicable
requirements for notification to participants or the Department of Labor, the
Pension Benefit Guaranty Corporation (the "PBGC"), the Internal Revenue Service
(the "IRS") or Secretary of the Treasury), and the Company and each of its
subsidiaries have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party to any of
the Company Employee Plans; (iv) each Company Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (v) all contributions required
<PAGE> 21
EXECUTION COPY
EXHIBIT 2.1
to be made to any Company Employee Plan pursuant to Section 412 of the Code, or
the terms of the Company Employee Plan or any collective bargaining agreement,
have been made on or before their due dates; (vi) with respect to each Company
Employee Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the 30 day notice requirement has been
waived under the regulations to Section 4043 of ERISA) nor any event described
in Section 4062, 4063 or 4041 of ERISA has occurred; (vii) neither the Company
nor any ERISA Affiliate has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than liability for premium payments to
the PBGC arising in the ordinary course); (viii) there is no pending or, to the
knowledge of the Company, threatened litigation, administrative action or
proceeding relating to any Company Employee Plan (other than claims for benefits
in the ordinary course of business); (ix) there has been no announcement or
commitment by the Company or any of its subsidiaries to create an additional
Company Employee Plan or to amend a Company Employee Plan except for amendments
required by applicable law or changes in the ordinary course, in each case which
do not materially increase the cost of such Company Employee Plan; (x) the
Company has no liability, whether absolute or contingent, direct or indirect,
including any obligations under any Company Employee Plan, with respect to any
misclassification of a person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employee; and (xi)
with respect to the Company and its subsidiaries, except as specifically
identified in the Company Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (a) increase the amount of, accelerate the time of payment of, or the
vesting of compensation payable to any employee or (b) result in any liability
to any present or former employee, including but not limited to, as a result of
the Worker Adjustment Retraining and Notification Act. Neither the Company nor
any of its subsidiaries maintains or contributes to any foreign Employee Plan.
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer or director
of the Company or any of its subsidiaries who holds (i) any Stock Option as of
the date hereof, together with the number of shares of Common Stock subject to
such Stock Option, the option price of such Stock Option (to the extent
determined as of the date hereof), whether such Stock Option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code (an "ISO") and the expiration date of such option; and (ii) any other right
granted by the Company to acquire, directly or indirectly, Common Stock,
together with the number of shares of Common Stock subject to such right.
Section 2.11(c) of the Company Disclosure Schedule also sets forth the total
number of such ISOs, such nonqualified options and such other rights.
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth a
true and complete list of (i) all employment agreements with employees and
officers of the Company or any of its subsidiaries; (ii) all agreements with
consultants who are individuals obligating the Company or any of its
subsidiaries to make annual cash payments in an amount exceeding $100,000; (iii)
all employees of, or consultants to, the Company or any of its subsidiaries who
have executed a noncompetition agreement with the Company or any of its
subsidiaries; (iv) all severance agreements, programs and policies of the
Company or any of its subsidiaries with or relating to its employees, excluding
programs and policies required to be maintained by law; and (v) all plans,
programs, agreements and other arrangements of the
<PAGE> 22
EXECUTION COPY
EXHIBIT 2.1
Company or any of its subsidiaries with or relating to its employees which
contain change in control provisions.
Section 2.12 EMPLOYMENT AND LABOR MATTERS.
(a) Except as set forth in Section 2.10 of the Company Disclosure
Schedule, there are no controversies pending or, to the knowledge of the
Company, threatened, between the Company or any of its subsidiaries and any of
their respective employees, which controversies have had or could, individually
or in the aggregate, have a Material Adverse Effect. Neither the Company nor any
of its subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or its
subsidiaries, nor does the Company know of any activities or proceedings of any
labor union to organize any such employees; and the Company has no knowledge of
any strikes or lockouts, or any material slowdowns, work stoppages, or threats
thereof, by or with respect to any employees of the Company or any of its
subsidiaries.
(b) Neither the Company nor any of its subsidiaries has violated, in
a manner that could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, any provision of federal or state law or any
rule, regulation, order, ruling, decree, judgment or arbitration award of any
Governmental Authority regarding the terms and conditions of employment of
employees, former employees, or prospective employees or other labor related
matters, including without limitation, laws, rules, regulations, orders,
rulings, decrees, judgments and awards relating to discrimination, fair labor
standards and occupational health and safety, wrongful discharge or violation of
the personal rights of employees, former employees or prospective employees.
Section 2.13 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the
information provided by the Company and/or by its auditors, legal counsel,
financial advisors or other consultants or advisors specifically for use in the
Registration Statement will, on the date it is declared effective, on the date
first published, sent or given to the Company's stockholders and on the date of
the Stockholders Meeting, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy Materials
distributed to the Company's stockholders in connection with the Merger,
including any amendments or supplements thereto, will not, at the time mailed to
the Company's stockholders, at the time of the Stockholders' Meeting, 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. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information provided by Parent, Acquisition Sub
and/or by their auditors, legal counsel, financial advisors or other consultants
or advisors specifically for use in the Proxy Materials. The Proxy Materials
will comply in all material respects with the provisions of the Exchange Act and
any other applicable law.
Section 2.14 RESTRICTIONS ON BUSINESS ACTIVITIES.
<PAGE> 23
EXECUTION COPY
EXHIBIT 2.1
(a) Except for this Agreement, to the Company's knowledge, there is
no material agreement, judgment, injunction, order or decree binding upon the
Company or any of its subsidiaries which has or could reasonably be expected to
have the effect of prohibiting or impairing any material business practice of
the Company or any of its subsidiaries, any acquisition of property by the
Company or any of its subsidiaries or the conduct of business by the Company or
any of its subsidiaries as currently conducted or as proposed to be conducted by
the Company, in any location in the world, except for any prohibition or
impairment as would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) To the Company's knowledge, none of the Company's officers,
directors or key employees is a party to any agreement which, by virtue of such
person's relationship with the Company, restricts in any material respect the
Company or any of its subsidiaries of either of them from, directly or
indirectly, engaging in any of the businesses described above.
Section 2.15 TITLE TO PROPERTY. The Company and each of its subsidiaries
have good and defensible title to all of their properties and assets, free and
clear of all Liens, except Liens for taxes not yet due and payable and such
Liens or other imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property affected thereby
or which would not, individually or in the aggregate, have a Material Adverse
Effect. Section 2.15(a) of the Company Disclosure Schedule is a schedule of all
leases of real property as of March 1, 2000 ("REAL PROPERTY LEASES") pursuant to
which the Company or any of its subsidiaries lease from others which schedule
sets forth (A) the date of each lease and the premises covered thereby, (B) the
term thereof, and (C) the rent payable thereunder. The information set forth in
such Section 2.15(a) is true, correct and complete, except to the extent an
inaccuracy therein would not, individually or in the aggregate, have a Material
Adverse Effect. Section 2.15(b) of the Company Disclosure Schedule lists all
real property owned by the Company and its subsidiaries. The Real Property
Leases and all leases of personal property by the Company or its subsidiaries
from others are in good standing, valid and effective in accordance with their
respective terms and there is not, to the knowledge of the Company, under any of
such leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default), except where the
lack of such good standing, validity and effectiveness or the existence of such
default would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 2.16 TAXES.
(a) For purposes of this Agreement, "Audit" shall mean any audit,
assessment or other examination relating to Taxes by any tax authority or any
judicial or administrative proceedings related to taxes; "TAX" OR "TAXES" shall
mean taxes, fees, levies, duties, tariffs, imposts, and governmental impositions
or charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation,
<PAGE> 24
EXECUTION COPY
EXHIBIT 2.1
premiums, windfall profits, transfer and gains taxes, and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto;
and "TAX RETURNS" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(b) Except as set forth in Section 2.16(b) of the Company Disclosure
Schedule, the Company and its subsidiaries (for such periods as each subsidiary
was owned, directly or indirectly, by the Company) have filed all income Tax
Returns and all other material Tax Returns required to be filed by them, and the
Company and its subsidiaries have paid all Taxes due in connection with or with
respect to the periods or transactions covered by such Tax Returns and have paid
all other Taxes as are due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
and except as may be determined to be owed upon completion of any Tax Return not
yet filed based upon an extension of time to file. There are no other Taxes that
would be due if asserted by a taxing authority, except with respect to which the
Company is maintaining reserves to the extent currently required and except to
the extent the failure to do so would not, individually or in the aggregate,
have a Material Adverse Effect. Except as does not involve or would not result
in liability to the Company or any of its subsidiaries that would have a
Material Adverse Effect:
(i) there are no Tax liens on any assets of the Company or any
subsidiary thereof;
(ii) neither the Company nor any of its subsidiaries has granted
any waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax, except as described on Section 2.16 of
the Company Disclosure Schedule;
(iii) as of the date hereof, no Federal, state, local or foreign
Audits are pending (A) with regard to any Taxes or Tax Returns of the Company or
its subsidiaries and (B) for which the Company or any of its subsidiaries has
received written notice. To the best knowledge of the Company and its
subsidiaries no such Audit is threatened;
(iv) as of the date hereof no material adjustments have been
asserted as a result of examinations of the United States Federal income Tax
Returns of the Company and its subsidiaries have been examined by the applicable
tax authorities for all periods through and including December 31, 1998, which
have not been (x) resolved and fully paid or (y) reserved on the 1999 Company
Balance Sheet in accordance with U.S. generally accepted accounting principles;
(v) neither the Company nor any of its subsidiaries is a party
to any agreement providing for the allocation, indemnification or sharing of
Taxes with any person other than the Company and its subsidiaries, and the
Company has provided Parent with copies of any such agreement that the Company
or any of its subsidiaries has entered into with any other subsidiary of the
Company;
<PAGE> 25
EXECUTION COPY
EXHIBIT 2.1
(vi) neither the Company nor any of its subsidiaries has been a
member of any "affiliated group" (as defined in section 1504(a) of the Code)
other than the affiliated group of which the Company is the "parent" and, except
with respect to any group of which only the Company and/or its subsidiaries are
members, is not subject to Treas. Reg. 1.1502-6 (or any similar provision under
foreign, state or local law) for any period;
(vii) neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (i) in the
two years prior to the date of this Agreement or (ii) in a distribution which
otherwise constitutes part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger;
(viii) neither the Company nor any of its subsidiaries has filed
a consent under Section 341(f) of the Code concerning collapsible corporations.
Neither the Company nor any of its subsidiaries has been required to include in
income any adjustment pursuant to Section 481 of the Code (or any similar
provision of state, local or foreign tax law) by reason of a voluntary change in
accounting method initiated by the Company or any of its subsidiaries, and the
IRS has not initiated or proposed any such adjustment or change in accounting
method;
(ix) no closing agreement that could affect the Taxes of the
Company or any of its subsidiaries for periods ending after the Effective Time
pursuant to Section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local or foreign law has been entered into by or
with respect to the Company or any of its subsidiaries;
(x) there is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by the Company or any of its
subsidiaries by reason of Section 162(m) or Section 280G of the Code and neither
the Company nor any of its subsidiaries has made any such payments; and
(xi) neither the Company nor any of its subsidiaries is, or has
been, a United States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. To the knowledge of the Company, neither the
Company nor any of its subsidiaries owns any property of a character, the
indirect transfer of which, pursuant to this Agreement, would give rise to any
material documentary, stamp or other transfer tax.
Section 2.17 ENVIRONMENTAL MATTERS. Except in all cases as, in the
aggregate, have not had and would not, individually or in the aggregate, have a
Material Adverse Effect, the Company and each of its subsidiaries (i) to the
Company's knowledge have obtained all applicable permits, licenses and other
authorizations (collectively, the "ENVIRONMENTAL PERMITS") which are required to
be obtained under all applicable federal, state or local laws or any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
<PAGE> 26
EXECUTION COPY
EXHIBIT 2.1
promulgated or approved thereunder relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes ("ENVIRONMENTAL LAWS") by the Company or its
subsidiaries (or their respective agents) which Environmental Permits are in
full force and effect; (ii) to the Company's knowledge are in compliance with
all terms and conditions of such Environmental Permits; (iii) are in compliance
with all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iv) as of the date hereof, are not aware of nor have
received notice of any past or present violations of Environmental Laws or
Environmental Permits or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with Environmental Permits or which would give rise to any
common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, against the Company or any of its subsidiaries based
on or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous toxic material
or waste; and (v) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required to be
registered by the Company or its subsidiaries (or any of their respective
agents) thereunder.
Section 2.18 INTELLECTUAL PROPERTY.
(a) Section 2.18(a) of the Company Disclosure Schedule sets forth a
true and complete list of all Intellectual Property (as defined below) owned or
used by the Company or its subsidiaries. The Company and/or each of its
subsidiaries owns free and clear of all Liens, or is licensed or otherwise
possesses legally enforceable right to use all patents, trademarks, trade names,
service marks, and any applications therefor, and computer software programs or
applications (the "INTELLECTUAL PROPERTY") that are used in the business of the
Company and its subsidiaries as currently conducted, and such rights constitute
all the rights necessary for the Company and its subsidiaries to conduct their
business as currently conducted, except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any licenses, sublicenses and other agreements as to
which the Company is a party and pursuant to which the Company is authorized to
use any third-party Intellectual Property ("THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS"). After the completion of the transactions contemplated by this
Agreement, the Company will continue to own all right, title and interest in,
and to have a license to use all Intellectual Property material to its or any of
its subsidiaries' business and operations on terms and conditions identical in
all material respects to those enjoyed by the Company immediately prior to such
transactions. No claims with respect to the Intellectual Property owned by the
Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY RIGHTS"),
any trade secret material to the Company, or Third Party Intellectual Property
Rights
<PAGE> 27
EXECUTION COPY
EXHIBIT 2.1
to the extent arising out of any use, reproduction or distribution of such Third
Party Intellectual Property Rights by or through the Company or any of its
subsidiaries, are currently pending or, to the knowledge of the Company, are
threatened by any person, except claims that would not have a Material Adverse
Effect. The Company does not know of any valid grounds for any bona fide claims
(i) to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the Company
or any of its subsidiaries, infringes on any Third Party Intellectual Property
Rights; (ii) against the use by the Company or any of its subsidiaries of any
Intellectual Property used in the business of the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted; (iii)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company or
its subsidiaries; or (iv) challenging the license or legally enforceable right
to use of the Third Party Property Rights by the Company or any of its
subsidiaries, except claims that would not have a Material Adverse Effect.
(c) To the Company's knowledge, all Company Intellectual Property
Rights are valid. To the Company's knowledge, there is no material unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property by any third party, including any employee or former employee of the
Company or any of its subsidiaries, except any use, infringement or
misappropriation that would not have a Material Adverse Effect.
(d) All software, hardware, databases, and embedded control systems
(collectively, the "SYSTEMS") used by the Company and its subsidiaries are Year
2000 Compliant (as defined below), except for failures to be Year 2000 Compliant
that, individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect. For purposes of
this Agreement, "Year 2000 Compliant" means that the Systems (i) accurately
process date and time data (including calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries, the years 1999
and 2000, and leap year calculations and (ii) operate accurately with other
software and hardware that use standard date format (4 digits) for
representation of the year.
Section 2.19 INTERESTED PARTY TRANSACTIONS. Except as set forth in the
Company SEC Reports and Section 2.10 of the Company Disclosure Schedule, since
the date of the Company's proxy statement dated April 14, 1999, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
Section 2.20 INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, professional liability and sprinkler
and water damage insurance policies maintained by the Company or any of its
subsidiaries are with reputable insurance carriers, provide, to the Company's
knowledge, full and adequate coverage for all normal risks incident to the
business of the Company and its subsidiaries and their respective properties and
assets and are in character and amount at least equivalent to that carried by
entities engaged in similar businesses and subject to the same or similar perils
or hazards, except as would not, individually or in the aggregate, have a
Material Adverse Effect.
<PAGE> 28
EXECUTION COPY
EXHIBIT 2.1
Section 2.21 OPINION OF FINANCIAL ADVISER. The Board has orally received
the opinion of the Company's financial advisor, BAS, to the effect that, as of
the date of this Agreement, the Merger Consideration is fair to the Company's
stockholders from a financial point of view and the Company will, promptly after
receipt of such opinion in writing, deliver a signed copy of that opinion to
Parent.
Section 2.22 BROKERS. No broker, finder or investment banker (other than
BAS) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and BAS pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
Section 2.23 SECTION 203 OF DELAWARE LAW NOT APPLICABLE. The Board has
taken all actions so that the restrictions contained in Section 203 of the
Delaware Law applicable to a "business combination" (as defined in such Section
203) will not apply to the execution, delivery or performance of this Agreement
or the Stockholders Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
Section 2.24 INVESTMENT COMPANY ACT. Each of the Company and its
subsidiaries either (i) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," within the meanings of the Investment Company Act of 1940, as amended
(the "INVESTMENT COMPANY ACT"), or (ii) satisfies all conditions for an
exemption from the Investment Company Act, and, accordingly, neither the Company
nor any of its subsidiaries is required to be registered under the Investment
Company Act.
Section 2.25 VOTE REQUIRED. The Requisite Company Vote is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under the charter documents of the Company, the Delaware Law, other applicable
law or otherwise) to approve this Agreement, the Merger or the other
transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION SUB
Parent and Acquisition Sub hereby, jointly and severally, represent and
warrant to the Company that, except as set forth in the section of the written
disclosure schedule delivered on or prior to the date hereof, by Parent to the
Company (the "PARENT DISCLOSURE SCHEDULE") corresponding to each representation
and warranty made hereunder by Parent and Acquisition Sub:
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent
and Acquisition Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
Parent and Acquisition Sub has the
<PAGE> 29
EXECUTION COPY
EXHIBIT 2.1
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and Approvals would not, individually or in the aggregate, have
a Material Adverse Effect on Parent or Acquisition Sub. Each of Parent and
Acquisition Sub is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not, individually
or in the aggregate, have a Material Adverse Effect. A true and complete list of
all of Parent's subsidiaries, together with the jurisdiction of incorporation of
each subsidiary and the percentage of each subsidiary's outstanding capital
stock owned by Parent or another subsidiary, is set forth in Section 3.1 of
Parent Disclosure Schedule.
Section 3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. Each of Parent and
Acquisition Sub have heretofore furnished to the Company a true, complete and
correct copy of its Certificate of Incorporation and By-Laws, each as amended to
date. Such Certificate of Incorporation and By-Laws are in full force and
effect. Neither the Parent nor Acquisition Sub is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws.
Section 3.3 CAPITALIZATION OF PARENT. The authorized capital stock of
Parent consists of (i) 100,000,000 shares of common stock, par value $0.01 per
share, and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share.
As of March 16, 2000, (i) 31,723,650 shares of common stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
none of which were held in treasury, (ii) no shares of common stock were held by
subsidiaries of Parent, (iii) 3,730,193 shares of common stock were reserved for
future issuance pursuant to outstanding stock options (the "PARENT STOCK
OPTIONS"), and (iv) 3,730,193 shares of common stock were reserved for issuance
upon redemption of certain outstanding units of limited partnership interest
("OP Units") in MeriStar H&R Operating Company, L.P. No material change in such
capitalization has occurred between December 31, and the date hereof. Section
3.3 of Parent Disclosure Schedule sets forth a true and complete list of all
outstanding options, warrants and other rights for the purchase of, or
conversion into or exchange for common stock, the name of each holder thereof,
the number of shares purchasable thereunder or upon conversion or exchange
thereof and the per share exercise or conversion price or exchange rate of each
option, warrant and other right. There are no options, warrants or other similar
rights, agreements, arrangements, commitments or understanding, whether or not
in writing, of any character relating to the issued or unissued capital stock or
other securities of Parent or any of its subsidiaries or obligating Parent or
any of its subsidiaries to issue (whether upon conversion, exchange or
otherwise) or sell any share of capital stock of, or other equity interests in
or other securities of, Parent or any of its subsidiaries other than the Parent
Stock Options or OP Units. All securities subject to issuance as aforesaid upon
issuance on the term and conditions specified in the instruments pursuant to
which they are issuable shall be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in Section 3.3 of Parent Disclosure Schedule,
there are no obligations, contingent or otherwise, of Parent of any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of common
stock or capital stock of any subsidiary or any other securities of Parent or
any of its subsidiaries or to provide funds to or
<PAGE> 30
EXECUTION COPY
EXHIBIT 2.1
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity. Except as disclosed in Schedule 3.3
of Parent Disclosure Schedule, all of the outstanding shares of capital stock of
each of Parent's subsidiaries are duly authorized, validly issued, fully paid
and nonassessable, and all such shares are owned by Parent or another subsidiary
of Parent free and clear of all Liens. At the Effective Time, all shares of
Parent Common Stock to be issued pursuant to this Agreement will be duly
authorized, validly issued, fully paid and nonassessable.
Section 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by each of Parent and Acquisition Sub and the consummation by
each of Parent and Acquisition Sub of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Acquisition Sub, and no other corporate proceedings on the part of
Parent or Acquisition Sub or the stockholders of Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent and Acquisition Sub enforceable against each of them in accordance with
its terms.
Section 3.5 NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) Section 3.5(a) of Parent Disclosure Schedule includes a list of
all contracts, agreements, arrangements or understanding, whether or not in
writing, to which Parent or any of its subsidiaries is a party or by which any
of them is bound as of the date hereof, (i) which are required to be filed as
"material contracts" with the SEC pursuant to the requirements of the Exchange
Act; (ii) under which the consequences of a default, nonrenewal or termination
could have a Material Adverse Effect; (iii) which require the consent or waiver
of a third party prior to Parent (or its subsidiary, if applicable) entering
into the transactions contemplated by this Agreement, except where the failure
to obtain such consent or waiver would not, individually or in the aggregate,
have a Material Adverse Effect; or (iv) whose terms prohibit or would materially
delay the consummation of the Merger and the other transactions contemplated by
this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Acquisition Sub do not, and the performance of this Agreement by each of Parent
and Acquisition Sub will not, (i) conflict with or violate the certificate of
incorporation (or equivalent organizational documents) or by-laws of Parent or
Acquisition Sub, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
its or their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or modification in a manner materially
adverse to Parent or its subsidiaries of any right or benefit under, or impair
Parent's or any of its subsidiaries' rights or alter the rights or obligations
of any third party under, or give to others any rights of termination,
amendment, acceleration, repayment or repurchase, increased payments or
<PAGE> 31
EXECUTION COPY
EXHIBIT 2.1
cancellation under, or result in the creation of a Lien on any of the properties
or assets of Parent or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except in the case
of (ii) or (iii) only, for any such conflicts, violations, breaches, defaults or
other occurrences that would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or its subsidiaries.
(c) The execution and delivery of this Agreement by each of Parent
and Acquisition Sub does not, and the performance of this Agreement by each of
Parent and Acquisition Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for (i) applicable requirements, if any, of the Securities
Act, the Exchange Act, the Blue Sky Laws, the pre-merger notification
requirements of the HSR Act, and the filing and recordation of appropriate
merger or other documents as required by the Delaware Law or (ii) as would not
have a Material Adverse Effect or prohibit or materially delay the consummation
of the Merger and the other transactions contemplated by this Agreement.
Section 3.6 COMPLIANCE, PERMITS.
(a) Neither Parent nor any of its subsidiaries is in conflict with,
or in default or violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from Governmental Authorities that are necessary to the operation of the
business of Parent and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "PARENT PERMITS"), except when the failure to have
such Parent Permits would not, individually or in the aggregate, have a Material
Adverse Effect. Parent and its subsidiaries are in compliance with the terms of
Parent Permits, and neither Parent nor any of its subsidiaries is in conflict
with, or in default or violation of any applicable laws or regulations except,
in each case, where the failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has filed all forms, reports and documents required to be
filed with the SEC including, without limitation, (i) its Annual Reports on Form
10-K for the fiscal years ended December 31, 1998 and 1999, respectively, (ii)
all proxy statements relating to Parent's meetings of stockholders (whether
annual or special) held since January 1, 1999, (iv) all other reports or
registration statements filed by Parent with the SEC since January 1, 1999 and
(v) all amendments and supplements to all such reports and registration
statements
<PAGE> 32
EXECUTION COPY
EXHIBIT 2.1
filed by Parent with the SEC since January 1, 1999 (collectively, the "PARENT
SEC REPORTS"). Parent SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC or any national securities
exchange or quotation service or comparable Governmental Authority.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules thereto) contained in Parent SEC Reports
was prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto), and each fairly presents in all material
respects the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of their operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Parent SEC Reports or as contemplated by this Agreement, since December 31,
1998, Parent and its subsidiaries have conducted their business in the ordinary
course and there has not occurred: (a) any Material Adverse Effect; or (b)
except as disclosed in Section 3.3 of Parent Disclosure Schedule, any
declaration, setting aside or payment of any dividend or distribution in respect
of shares or any redemption, purchase or other acquisition of any of Parent's
securities (except as contemplated by this Agreement).
Section 3.9 NO UNDISCLOSED LIABILITIES. Neither Parent nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
except liabilities (a) in the aggregate adequately provided for in Parent's
unaudited balance sheet (including any related notes thereto) as of December 31,
1999 (the "1999 PARENT BALANCE SHEET"), (b) incurred in the ordinary course of
business and not required under U.S. generally accepted accounting principles to
be reflected on the 1999 Company Balance Sheet, (c) incurred since December 31,
1999 in the ordinary course of business consistent with past practice, (d)
incurred in connection with this Agreement, (e) disclosed in Parent SEC Reports
or (f) which would not have a Material Adverse Effect, in each case, other than
liabilities under the Senior Secured Credit Agreement, dated as of February 29,
2000, between MeriStar H&R Operating Company, L.P., as borrower and Societe
Generale, Southwest Agency, as administrative agent thereunder.
Section 3.10 ABSENCE OF LITIGATION. Except as set forth in Section 3.10 of
Parent Disclosure Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Parent, threatened against Parent
or any of its subsidiaries, or any properties or rights of Parent or any of its
subsidiaries, before any Governmental Authority or body, domestic or foreign,
nor are there, to Parent's knowledge, any
<PAGE> 33
EXECUTION COPY
EXHIBIT 2.1
investigations or reviews by any Governmental Authority pending or threatened
against, relating to or affecting, Parent or any of its subsidiaries that, if
adversely determined, would, individually or in the aggregate, have a Material
Adverse Effect. Neither Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree of any court or Governmental
Authority which, individually or in the aggregate, has resulted or could
reasonably be expected to result in a Material Adverse Effect.
Section 3.11 EMPLOYMENT AND LABOR MATTERS. There are no controversies
pending or, to the knowledge of Parent, threatened, between Parent or any of its
subsidiaries and any of their respective employees, which controversies have had
or could, individually or in the aggregate, have a Material Adverse Effect.
Parent has no knowledge of any strikes or lockouts, or any material slowdowns,
work stoppages, or threats thereof, by or with respect to any employees of
Parent or any of its subsidiaries.
Section 3.12 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the
information provided by Parent or Acquisition Sub and/or by their auditors,
legal counsel, financial advisors or other consultants or advisors specifically
for use in the Proxy Statement will, on the date the Proxy Statement is first
published, sent or given to the Company's stockholders, on the date of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Registration Statement, including any amendments or
supplements thereto, will not, at the time declared effective, at the time
mailed to the Company's stockholders, at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, neither Parent nor Acquisition Sub
makes any representation or warranty with respect to any information provided by
the Company and/or by its auditors, legal counsel, financial advisors, or other
consultants or advisors specifically for use in the Registration Statement. The
Registration Statement will comply in all material respects with the provisions
of the Securities Act and any other applicable law.
Section 3.13 TAXES. Parent and its subsidiaries (for such periods as each
subsidiary was owned, directly or indirectly, by Parent) have filed all income
Tax Returns and all other material Tax Returns required to be filed by them, and
Parent and its subsidiaries have paid and discharged all Taxes due in connection
with or with respect to the periods or transactions covered by such Tax Returns
and have paid all other Taxes as are due, except such as are being contested in
good faith by appropriate proceedings (to the extent that any such proceedings
are required) and except as may be determined to be owed upon completion of any
Tax Return not yet filed based upon an extension of time to file, and there are
no other Taxes that would be due if asserted by a taxing authority, except with
respect to which Parent is maintaining reserves to the extent currently required
and except to the extent the failure to do so would not, individually or in the
aggregate, have a Material Adverse Effect. Except as does not involve or would
not result in liability to Parent or any of its subsidiaries that would have a
Material Adverse Effect:
<PAGE> 34
EXECUTION COPY
EXHIBIT 2.1
(a) there are no Tax liens on any assets of Parent or any subsidiary
thereof; and
(b) proper and accurate amounts have been (i) withheld by Parent and
its subsidiaries from their employees in compliance with the Tax withholding
provisions of applicable Federal, state and local laws, and (ii) paid over to
appropriate taxing authorities.
Section 3.14 ENVIRONMENTAL MATTERS. Except in all cases as, in the
aggregate, have not had and would not, individually or in the aggregate, have a
Material Adverse Effect, Parent and each of its subsidiaries (i) to Parent's
knowledge have obtained all applicable Environmental Permits which are required
to be obtained under all applicable Environmental Laws by Parent or its
subsidiaries (or their respective agents) which Environmental Permits are in
full force and effect; (ii) to Parent's knowledge are in compliance with all
terms and conditions of such Environmental Permits; (iii) are in compliance with
all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iv) as of the date hereof, are not aware of nor have
received notice of any past or present violations of Environmental Laws or
Environmental Permits or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with Environmental Permits or which would give rise to any
common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, against Parent or any of its subsidiaries based on
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous toxic material
or waste; and (v) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required to be
registered by Parent or its subsidiaries (or any of their respective agents)
thereunder.
Section 3.15 INTERESTED PARTY TRANSACTIONS. Except as set forth in Section
3.15 of Parent Disclosure Schedule and the Parent SEC Reports, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
Section 3.16 INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, professional liability and sprinkler
and water damage insurance policies maintained by Parent or any of its
subsidiaries are with reputable insurance carriers, provide, to Parent's
knowledge, full and adequate coverage for all normal risks incident to the
business of Parent and its subsidiaries and their respective properties and
assets and are in character and amount at least equivalent to that carried by
entities engaged in similar businesses and subject to the same or similar perils
or hazards, except as would not, individually or in the aggregate, have a
Material Adverse Effect.
Section 3.17 BROKERS. No broker, finder or investment banker (other than
Salomon Smith Barney, Inc.) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this
Agreement.
<PAGE> 35
EXECUTION COPY
EXHIBIT 2.1
Section 3.18 INVESTMENT COMPANY ACT. Each of Parent and its subsidiaries
either (i) is not an "investment company," or a company "controlled" by, or an
"affiliated company" with respect to, an "investment company," within the
meanings of the Investment Company Act, or (ii) satisfies all conditions for an
exemption from the Investment Company Act, and, accordingly, neither Parent nor
any of its subsidiaries is required to be registered under the Investment
Company Act.
Section 3.19 NO PRIOR ACTIVITIES; FINANCING.
(a) Acquisition Sub was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement. As of the date hereof, except
for obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Acquisition Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
(b) Parent has immediately available to it cash necessary to satisfy
its obligations hereunder including, without limitation, the obligation to pay
the cash portion of the Merger Consideration pursuant to the Merger and to pay
all related fees and expenses in connection with the Merger.
ARTICLE IV
CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing, which
agreement shall not be unreasonably withheld, delayed, or conditioned, the
Company shall, unless expressly authorized to do otherwise pursuant to
paragraphs (a) through (o) below, in all material respects conduct its business
and shall cause the businesses of its subsidiaries to be conducted only in the
ordinary course of business consistent with past practice, and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has a significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, directly or indirectly do, or propose
to do, any of the following without the prior written consent of Parent, which
consent shall not be unreasonably withheld or delayed:
<PAGE> 36
EXECUTION COPY
EXHIBIT 2.1
(a) amend or otherwise change the Certificate of Incorporation or
By-Laws of the Company or any of the Subsidiary Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities,
exchangeable securities or other rights of any kind to acquire any shares of
capital stock of any class, or any other ownership interest (including, without
limitation, any phantom interest) in the Company, any of its subsidiaries or
affiliates (except for (i) the issuance of shares of Common Stock issuable
pursuant to the Stock Options or other agreements listed on SCHEDULE 2.3 hereto
and (ii) the issuance of shares of Common Stock issuable to participants in the
Company's Employee Stock Purchase Plan pursuant to the terms thereof);
(c) sell, pledge, dispose or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary course
of business and in a manner consistent with past practice, (ii) disposition of
obsolete or worthless assets and (iii) sales of immaterial assets not in excess
of $300,000;
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend or make advances to its parent or the
Company, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) amend the terms
or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Common Stock or any option, warrant,
convertible or exchangeable securities or other right, directly or indirectly,
to acquire shares of Common Stock, or propose to do any of the foregoing, except
for the acceleration or termination of Stock Options pursuant to the terms of
the Company Stock Option Plans and the exercise of such Stock Options or the
termination of any other arrangement providing for the issuance of shares
thereunder;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any material property or assets, make any investment in, or make any
capital contributions to, any corporation, partnership or other business
organization or division thereof; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice or in
connection with purchases of equipment or capital improvements, make any loans
or advances (other than loans or advances to or from direct or indirect wholly
owned subsidiaries), (iii) enter into, terminate or amend any Material Contract
or agreement other than in the ordinary course of business or where such
contract, termination or amendment would not, individually or in the aggregate,
have a Material Adverse Effect; (iv) authorize any capital expenditures or
purchases of fixed assets which are, in the aggregate, in excess of $300,000; or
(v) enter into or amend any contract, agreement, commitment or arrangement to
effect any of the matters prohibited by this Section 4.1(e);
<PAGE> 37
EXECUTION COPY
EXHIBIT 2.1
(f) except as set forth in the Company Disclosure Schedule, (i)
increase the compensation or fringe benefits payable or to become payable to its
directors, officers or employees, except for increases in salary or wages of
employees of the Company or its subsidiaries in accordance with past practice
and in amounts that are in the aggregate reflected in the budgets previously
provided to Parent, (ii) except pursuant to the existing agreements set forth on
Section 4.1(f) of the Company Disclosure Schedule or with respect to payments
that do not exceed $100,000 in the aggregate or $50,000 per individual, grant
any severance or termination pay to, or enter into any severance agreement or
other agreement providing for severance payments with, any director, officer or
other employee of the Company or any of its subsidiaries, (iii) establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any current or
former directors, officers or employees, (iv) enter into any employment or
consulting agreement except with respect to new hires of non-officer employees
in the ordinary course of business or (v) accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits; except
in each of (i) through (v), as may be required by law;
(g) take any action to change material accounting policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material Tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign Tax liability
or agree to an extension of a statute of limitations, except to the extent the
amount of any such settlement has been reserved for in the financial statements
contained in the Company SEC Reports filed prior to the date of this Agreement;
(i) 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 and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the Company SEC Reports filed prior to the
date of this Agreement or incurred in the ordinary course of business and
consistent with past practice;
(j) enter into any compromise or settlement of, or take any material
action with respect to, any litigation, action, suit, claim, proceeding or
investigation other than the prosecution, defense and settlement of routine
litigation, actions, suits, claims, proceedings or investigations in the
ordinary course of business;
(k) Subject to Section 4.3 of this Agreement, adopt or enter into a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other material reorganization or any
agreement relating to an Acquisition Proposal (as defined in Section 4.3 of this
Agreement);
<PAGE> 38
EXECUTION COPY
EXHIBIT 2.1
(l) enter into any agreement, understanding or commitment that
restrains, limits or impedes the Company's ability to compete with or conduct
any business or line of business other than in the ordinary course of business
consistent with past practice;
(m) plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other program or effort
concerning the termination of employment of employees of Company or its
subsidiaries, except, only with respect to employees who do not exercise the
functions of general manager, the equivalent or higher, in the ordinary course
of business consistent with past practice;
(n) enter into any new agreement to acquire or rent accommodations in
an amount in excess of $100,000 or which will remain in effect for longer than
one year from the date hereof or with terms other than ordinary course of
business terms consistent with past practice; or
(o) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (n) above, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect in any material respect or prevent the
Company from performing, or cause the Company not to perform, its covenants
hereunder.
Section 4.2 CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. Parent
covenants and agrees that, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, unless the Company shall otherwise agree in writing, which
agreement shall not be unreasonably withheld, delayed, or conditioned, Parent
shall, unless expressly authorized to do otherwise pursuant to paragraphs (a)
through (d) below, in all material respects conduct its business and shall cause
the businesses of its subsidiaries to be conducted only in the ordinary course
of business consistent with past practice, and Parent shall use reasonable
commercial efforts to preserve substantially intact the business organization of
Parent and its subsidiaries, to keep available the services of the present
officers, employees and consultants of Parent and its subsidiaries and to
preserve the present relationships of Parent and its subsidiaries with
customers, suppliers and other persons with which Parent or any of its
subsidiaries has a significant business relations. By way of amplification and
not limitation, except as contemplated by this Agreement, neither Parent nor any
of its subsidiaries shall, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of the Company, which consent shall
not be unreasonably withheld or delayed:
(a) amend or otherwise change the Certificate of Incorporation or
By-Laws of Parent in a manner that would adversely affect the holders of Parent
Common Stock;
(b) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
Parent may declare and pay a dividend or
<PAGE> 39
EXECUTION COPY
EXHIBIT 2.1
make advances to its parent or Parent; other than such distributions ordinarily
paid on a quarterly basis with respect to certain OP Units.
(c) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of Parent, except for a merger or acquisition which will
not impair Parent's ability to consummate the Merger; and
(d) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.2 (a) through (c) above, or any action which
would make any of the representations or warranties of Parent or Acquisition Sub
contained in this Agreement untrue or incorrect in any material respect or
prevent Parent or Acquisition Sub from performing, or cause Parent or
Acquisition Sub not to perform, its covenants hereunder.
Section 4.3 NO SOLICITATION; ACQUISITION PROPOSALS.
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
representative or agent of the Company or any of its subsidiaries (including,
without limitation, any investment banker, financial advisor, attorney or
accountant retained by the Company or any of its subsidiaries) to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing information or assistance), or take any other action to facilitate
the initiation of any inquiries or proposals regarding an Acquisition Proposal
(as hereinafter defined), (ii) engage in negotiations or discussions concerning,
or provide any nonpublic information to any person relating to, any Acquisition
Proposal, or (iii) agree to approve or recommend any Acquisition Proposal;
provided, however, that nothing contained in this Section 4.3 shall prohibit the
Company or the Board from taking and disclosing to stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith reasonable
judgment of the Board after consultation with independent counsel, the failure
to so disclose would be inconsistent with its fiduciary obligations to
stockholders under applicable law; and provided, further, that, prior to the
Stockholders Meeting and to the extent that the Board determines in good faith
(after consultation with independent counsel) that not to do so would be
inconsistent with its fiduciary duties to stockholders under applicable law, (y)
the Board on behalf of the Company may upon the bona fide unsolicited request of
a Third Party (as hereinafter defined) furnish information or data (including,
without limitation, confidential information or data) relating to the Company or
its subsidiaries for the purposes of an Acquisition Proposal and participate in
negotiations with a person making an unsolicited bona fide Acquisition Proposal
and (z) following receipt of a Superior Proposal (as hereinafter defined), the
Board may withdraw or modify its recommendation relating to this Agreement or
the Merger if the Board determines in good faith after consultation with outside
legal counsel that failure to take such action would be inconsistent with its
fiduciary duties to stockholders under applicable law; provided, however, that
neither the Company nor the Board may (a) withdraw, modify or change its
recommendation relating to this Agreement, (b) approve or recommend a Superior
Proposal or (c) terminate this Agreement, unless prior to taking any of the
actions referred to in clauses (a), (b) or (c) the Company has complied with the
terms of Section 7.1(g) herein. Subject to the Company's right to terminate this
Agreement pursuant to Section 7.1(f), nothing
<PAGE> 40
EXECUTION COPY
EXHIBIT 2.1
in this Agreement and no action taken by the Board pursuant to this Section 4.3
will permit the Company to enter into any agreement or undertaking providing for
any transaction contemplated by an Acquisition Proposal for so long as this
Agreement remains in effect.
As used in this Agreement, "ACQUISITION PROPOSAL" means either (i) a
transaction pursuant to which any person (or group of persons) other than the
Parent or its affiliates (a "THIRD PARTY") acquires 50% or more of the
outstanding shares of the Common Stock of the Company pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business combination
involving the Company pursuant to which any Third Party acquires 50% or more of
the outstanding shares of the Common Stock of the Company or of the entity
surviving such merger or business combination, (iii) any other transaction
pursuant to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of subsidiaries of the Company, and
the entity surviving any merger or business combination including any of them)
of the Company having a fair market value equal to 50% or more of the fair
market value of all the assets of the Company immediately prior to such
transaction, (iv) any public announcement by a Third Party of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in any of the
foregoing, (v) a self tender offer, or (vi) any transaction subject to Rule
13(e)-3 under the Exchange Act.
As used in this Agreement, "SUPERIOR PROPOSAL" means an Acquisition
Proposal that (i) is not subject to any financing contingencies or is, in the
good faith judgment of the Board after consultation with a nationally recognized
financial advisor, reasonably capable of being financed and (ii) the Board
determines in good faith, based upon such matters as it deems relevant,
including consultation with a nationally recognized financial advisor, that the
Acquisition Proposal would, if consummated, result in a transaction more
favorable to the Company's stockholders from a financial point of view than the
Merger.
(b) Prior to providing any information to or entering into
discussions with any person in connection with an Acquisition Proposal by a
person as set forth in Section 4.3(a), the Company shall receive from such
person an executed confidentiality agreement in reasonably customary form and
shall notify Parent orally and in writing of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) or any inquiries indicating that any
person is considering making or wishes to make an Acquisition Proposal, as
promptly as practicable (but in no case later than 24 hours) after its receipt
thereof, and shall provide Parent with a copy of any written Acquisition
Proposal or amendments or supplements thereto, and shall thereafter inform
Parent on a prompt basis of (i) the status of any discussions or negotiations
with any such third party, and any material changes to the terms and conditions
of such Acquisition Proposal, and shall promptly give Parent a copy of any
information delivered to such person which has not previously been reviewed by
Parent and (ii) any request by any person for nonpublic information relating to
its or any of its subsidiaries' properties, books or records.
(c) Subject to the foregoing provisions of this Section 4.3, the
Company shall immediately cease and cause to be terminated any existing
discussions or negotiations with any person (other than Parent and Acquisition
Sub) conducted heretofore with respect to any of the foregoing. The Company
agrees not to release any third party from
<PAGE> 41
EXECUTION COPY
EXHIBIT 2.1
the confidentiality provisions of any confidentiality agreement to which the
Company is a party.
(d) The Company shall ensure that the officers and directors of the
Company and its subsidiaries and any investment banker, financial advisor,
attorney, accountant or other advisor or representative retained by the Company
are aware of the restrictions described in this Section 4.3.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 HSR ACT. As promptly as practicable after the date of this
Agreement, the Company and Parent shall, if required, file notifications under
the HSR Act in connection with the Merger and the transactions contemplated
hereby and shall respond as promptly as practicable to any inquiries and
requests received from the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION") for
additional information or documentation and from any State Attorney General or
other Governmental Authority in connection with antitrust matters.
Section 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice
and subject to restrictions contained in confidentiality agreements to which
such party is subject (from which such party shall use reasonable efforts to be
released), each party shall, and shall cause each of its subsidiaries to afford,
to the officers, employees, accountants, counsel, financial advisors and other
representatives of the other or the financing sources of Parent of Acquisition
Sub reasonable access during normal business hours, during the period prior to
the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, each party shall (and shall cause each of its
subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request,
and each party shall make available to the other the appropriate individuals
(including attorneys, accountants, and other professionals) for discussion of
its business, properties and personnel as such other party may reasonably
request. Any such investigation by any party shall not affect the
representations or warranties of such party contained in this Agreement. Each
party shall keep such information confidential in accordance with the terms of
the confidentiality letter dated June 15, 1999 (the "CONFIDENTIALITY LETTER"),
between Parent and the Company.
Section 5.3 CONSENTS; APPROVALS. Subject to Section 4.3, the Company,
Parent and Acquisition Sub shall each use their best efforts to take all
appropriate action to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement, including, without
limitation, using their best efforts to obtain all consents, waivers, approvals,
authorizations or orders of Governmental Authorities and parties to contracts
with the Company or any of its subsidiaries, and the Company, Parent and
<PAGE> 42
EXECUTION COPY
EXHIBIT 2.1
Acquisition Sub shall make all filings including, without limitation, all
filings with Governmental Authorities required in connection with the
authorization, execution and delivery of this Agreement by the Company, Parent
and Acquisition Sub, the consummation by them of the transactions contemplated
hereby and to fulfill the conditions to the Merger.
Section 5.4 INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain provisions with respect to indemnification,
advancement of expenses and exculpation at least as protective to any officer or
director as those set forth in the Certificate of Incorporation and By-Laws of
the Company, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) Parent shall cause the Surviving Corporation, to the fullest
extent permitted under applicable law, to indemnify and hold harmless, and
advance defense costs and expenses to, each present and former director, officer
or employee of the Company or any of its subsidiaries (collectively, the
"INDEMNIFIED PARTIES") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages and liabilities incurred in
connection with, and amounts paid in settlement of, any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative and wherever asserted, bought or filed, (x) arising out of or
pertaining to the transactions contemplated by this Agreement or (y) otherwise
with respect to any acts or omissions or alleged acts or omissions occurring at
or prior to the Effective Time, to the same extent as provided in the respective
Certificate of Incorporation or By-Laws of the Company or the subsidiaries or
any applicable contract or agreement as in effect on the date hereof, in each
case for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time) in which there exists no conflict between the
interests of the indemnifying party and the Indemnified Party, the indemnifying
party shall have a right to assume and direct all aspects of the defense
thereof, including settlement, and the Indemnified Party shall cooperate in the
defense of any such matter. The Indemnified Party shall have a right to
participate in (but not control) the defense of any such matter with its own
counsel and at its own expense. The indemnifying party shall not settle any such
matter unless (i) the Indemnified Party gives prior written consent, which shall
not be unreasonably withheld, or (ii) the terms of the settlement provide that
the Indemnified Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Indemnified
Party and the settlement provides the Indemnified Party with a full release and
discharges all rights against the Indemnified Party with respect to such matter.
In no event shall the indemnifying party be liable for any settlement effected
without its prior written consent; provided that if such indemnifying party
elected not to assume and direct the defense of such action, such indemnifying
party's consent to such settlement shall not be unreasonably withheld or
delayed. Any Indemnified Party wishing to claim indemnification under this
Section 5.4(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Parent and the Surviving Corporation (but the
failure so to notify shall not relieve the indemnifying party from any liability
which it may have under
<PAGE> 43
EXECUTION COPY
EXHIBIT 2.1
this Section 5.4(b) except to the extent of any damages caused by such failure
to the indemnifying party), and shall deliver to Parent and the Surviving
Corporation the undertaking contemplated by Section 145(e) of the Delaware Law.
If the indemnifying party does not assume the defense of any such action, the
Indemnified Parties as a group may retain only one law firm in each jurisdiction
to represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The
indemnity agreements of Parent and the Surviving Corporation in this Section
5.4(b) shall extend, on the same terms to, and shall inure to the benefit of and
shall be enforceable by, each person or entity who controls, or in the past
controlled, any present or former director, officer or employee of the Company
or any of its subsidiaries.
(c) For a period of six years after the Effective Time, Parent shall
cause the Surviving Corporation or any successor thereto to maintain in effect,
if available, directors, and officers' liability insurance covering actions by
directors and officers of the Company occurring at or prior to the Effective
Time and covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which has been
made available to Parent) (the "COVERED PERSONS") on terms (including the
amounts of coverage and the amounts of deductible, if any) that are comparable
to the terms now applicable to the Company's directors and officers under the
Company's current policies, and with insurers of no lesser financial standing
than the insurers issuing the Company's current policies; provided, however,
that in no event shall Parent or the Surviving Corporation be required to expend
in excess of 250% of the annual premium currently paid by the Company for such
coverage; and provided further, that if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 250% of the annual premium.
(d) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Corporation and shall be enforceable by the Indemnified Parties.
In the event that Parent or Surviving Corporation or any of their successors or
assigns (i) consolidates or merges into any other person or entity and shall not
be the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person or entity, then and in such case, proper provisions shall be made
so that the successors and assigns of Parent or the Surviving Corporation (as
the case may be) assume the obligations of Parent and the Surviving Corporation
set forth in this Section.
(e) From and after the Effective Time, Parent unconditionally
guarantees the obligations of the Surviving Corporation arising under this
Section 5.4.
Section 5.5 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this
Agreement to be materially untrue or inaccurate, or (ii) any failure of the
Company, Parent or Acquisition Sub, as the case may be, materially to comply
with or satisfy any covenant, condition or agreement to be complied with
<PAGE> 44
EXECUTION COPY
EXHIBIT 2.1
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.6 FURTHER ACTION. Upon the terms and subject to the conditions
hereof (including, without limitation, Section 4.3), each of the parties shall
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, and otherwise to satisfy or cause to be satisfied all conditions
precedent to its obligations under this Agreement. Parent shall take all action
necessary to cause Acquisition Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
Section 5.7 PUBLIC ANNOUNCEMENTS. Parent and t he Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld, delayed or conditioned; provided, however, that a
party may, without the prior consent of the other part, issue such press release
or make such public statement as may upon the advice of counsel be required by
law or the rules and regulations of the NYSE or the American Stock Exchange,
Inc., if it has used all reasonable efforts to consult with the other party.
Section 5.8 CONVEYANCE TAXES. Parent and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time.
Section 5.9 EMPLOYEE BENEFIT PLANS.
(a) Following the Effective Time, to the extent that Parent arranges
for any employees of the Company or any subsidiary of the Company to participate
in any counterpart Parent benefit plans in accordance with the eligibility
criteria thereof, (i) such participants shall receive full credit for years of
service with the Company or any subsidiary of the Company (and service otherwise
credited by the Company or any subsidiary of the Company) prior to the Effective
Time for all purposes for which such service was recognized under the Company's
Employee Plans, including, but not limited to, eligibility to participate and
vesting but not including the accrual of benefits and (ii) Parent shall cause
any and all pre-existing condition limitations, eligibility waiting periods and
evidence of incurability requirements under any group plans to be waived with
respect to such participants who are eligible to participate after the Effective
Time. Notwithstanding any of the foregoing to the contrary, none of the
provisions contained herein shall operate to duplicate any benefit provided to
any employee of the Company or the funding of any such benefit or obligate
Parent to (i) make any particular benefit plan or benefit available to any
employee, (ii) continue
<PAGE> 45
EXECUTION COPY
EXHIBIT 2.1
any particular benefit plan or benefit or (iii) refrain from terminating or
amending any particular benefit plan or benefit.
(b) Following the Effective Time, Parent shall cause the Surviving
Corporation to honor and perform, pursuant to their terms, all employee benefit
obligations to current and former employees and directors of the Company under
any Company Employee Plans; provided, however, that nothing contained herein
shall limit any reserved right in any Company Employee Plan to amend, modify,
suspend, revoke or terminate any such plan as to non-vested benefits.
Section 5.10 LISTING AND DELISTING OF SECURITIES. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger to be approved for quotation on the NYSE, subject to official
notice of issuance, prior to the Effective Time. As soon as practicable
following the Effective Time, the parties hereto shall take all action necessary
to cause the Company's Common Stock to be de-listed from the American Stock
Exchange, Inc. and de-registered under the Exchange Act.
Section 5.11 AUDITED FINANCIAL STATEMENTS. As soon as practicable, the
Company shall provide to Parent and Acquisition Sub copies of the fully audited
consolidated financial statements of the Company and its consolidated
subsidiaries for the Company's fiscal year ended December 31, 1999.
Section 5.12 PLAN OF REORGANIZATION. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable best efforts (i) to cause the Merger to qualify, and will not,
without the prior written consent of the parties hereto, knowingly take any
actions or cause any actions to be taken, or knowingly fail to take any action
or fail to cause any action to be taken, which could prevent the Merger from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code, and (ii) to obtain (in the case of the Company) or to cause to obtain (in
the case of Parent and Acquisition Sub) the opinion of counsel referred to in
Section 6.3(c) below, including the execution of the letters of representations
referred to therein. Following the Effective Time, and consistent with any such
consent, none of the Surviving Corporation, Parent or any of their affiliates
shall knowingly take any action or cause any action to be taken, or knowingly
fail to take any action or fail to cause any action to be taken, which would
cause the Merger to fail to so qualify as a reorganization under Section 368(a)
of the Code.
Section 5.13 SENIOR CREDIT FACILITY. Promptly after the Effective Time of
the Merger, the Surviving Corporation shall pay, and the Parent shall provide
such financing so as to enable the Surviving Corporation to pay, all amounts
outstanding under the Company's Revolving Credit Agreement dated as of March 31,
1997, as amended, with Fleet National Bank and Bank One, N.A.
ARTICLE VI
<PAGE> 46
EXECUTION COPY
EXHIBIT 2.1
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction or waiver to the extent permissible under law at or prior to
the Effective Time of all the following conditions:
(a) STOCKHOLDERS' APPROVAL. The Merger and this Agreement shall have
been duly approved by the Requisite Company Vote of the stockholders of the
Company. Parent and Acquisition Sub shall vote their Shares in favor of the
Merger to the extent not otherwise prohibited by law or any judgment,
injunction, decree or order of any Governmental Authority.
(b) HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been earlier terminated.
(c) LISTING. The shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been authorized for
quotation on the NYSE upon official notice of issuance.
(d) GOVERNMENTAL ACTIONS. There shall not have been any action or
proceeding brought or threatened by any Governmental Authority or any other
Person (other than, with respect to any action or proceeding brought or
threatened by a Person, as would not have a Material Adverse Effect) or any
statute, regulation, legislation, judgment, decree or order, enacted, entered,
enforced, promulgated, amended, issued or deemed applicable to the Merger by any
Governmental Authority that could have the effect of: (i) making illegal, or
otherwise directly or indirectly restraining or prohibiting or imposing material
penalties or fines or requiring the payment of material damages in connection
with the acceptance for payment of, the payment for, or the ownership, directly
or indirectly, of, some or all of the Shares by Parent or Acquisition Sub or the
consummation of the Merger; (ii) prohibiting or materially limiting, the direct
or indirect ownership or operation by the Company or by Parent of all or any
material portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or compelling Parent to dispose of or hold separate all or any
material portion of the business or assets of the Company or Parent or their
respective subsidiaries, taken as a whole, as a result of the transactions
contemplated by this Agreement; (iii) imposing or confirming material
limitations on the ability of Parent effectively to hold or to exercise full
rights of ownership of shares of capital stock of the Surviving Corporation,
including, without limitation, the right to vote any such shares of capital
stock of the Surviving Corporation on all matters properly presented to the
stockholders of the Surviving Corporation, including, without limitation, the
approval and adoption of the Agreement and the transactions contemplated
thereby; (iv) requiring divestiture by Parent or Acquisition Sub, directly or
indirectly, of any shares of capital stock of the Surviving Corporation; or (v)
which would reasonably be likely to result in a Material Adverse Effect;
PROVIDED, HOWEVER, that prior to invoking this condition, the party so invoking
this condition shall have complied with its obligations under Sections 5.3 and
5.6.
<PAGE> 47
EXECUTION COPY
EXHIBIT 2.1
(e) CONSENTS AND APPROVALS. All consents and approvals necessary to
the consummation of the Merger, including without limitations consents from
parties to loans, leases and other agreements and consents from any Governmental
Authority shall have been duly obtained other than consents and approvals the
failure to obtain which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or its subsidiaries or on Parent or its
subsidiaries; provided, however, that prior to invoking this condition, the
party so invoking this condition shall have complied with its obligations under
Sections 5.3 and 5.6.
(f) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act. No stop order suspending the
effectiveness of such Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or be threatened by the
SEC.
Section 6.2 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND ACQUISITION
SUB TO EFFECT THE MERGER. The obligations of each of Parent and Acquisition Sub
to effect the Merger and consummate the other transactions contemplated hereby
are also subject to the satisfaction or waiver by Parent and Acquisition Sub at
or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and Parent shall have received a certificate
(which certificate may be qualified by knowledge to the same extent as the
representations and warranties of the Company contained in this Agreement are so
qualified) signed on behalf of the Company by an executive officer of the
Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed or complied in all material respects with all obligations required to
be performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect.
(c) DISSENTING SHARES. The aggregate number of Dissenting Shares
shall not exceed 5% of the total number of Shares of Company Common Stock
outstanding on the Closing Date.
(d) TAX OPINION. Parent shall have received the opinion of Paul,
Weiss, Rifkind, Wharton & Garrison, counsel to the Parent, dated the Closing
Date, to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of section 368(a) of the Code
and that each party hereto will be treated as a "party to the reorganization"
within the meaning of section 368(b) of the Code. The issuance of such opinion
shall be conditioned upon the receipt by such counsel of customary
<PAGE> 48
EXECUTION COPY
EXHIBIT 2.1
representation letters from each of Parent, Acquisition Sub and the Company
substantially in the forms of those contained in the Parent officer's
certificate and the Company's officer's certificate attached hereto as Exhibit
A-1 and Exhibit A-2, respectively.
Section 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger and consummate
the other transactions contemplated hereby is also subject to the satisfaction
or waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of Parent and Acquisition Sub set forth in this Agreement
that are qualified as to materiality shall be true and correct, and the
representations and warranties of each of Parent and Acquisition Sub set forth
in this Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date, as though made on and as of the Closing Date, except to the extent
the representation or warranty is expressly limited by its terms to another
date, and the Company shall have received a certificate (which certificate may
be qualified by knowledge to the same extent as the representations and
warranties of each of Parent and Acquisition Sub contained in this Agreement are
so qualified) signed on behalf of each of Parent and Acquisition Sub by an
executive officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND ACQUISITION SUB. Each of
Parent and Acquisition Sub shall have performed or complied in all material
respects with all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent and Acquisition Sub by an executive
officer of Parent to such effect.
(c) TAX OPINION. The Company shall have received the opinion of
Nutter, McClennen & Fish, LLP, counsel to the Company, dated the Closing Date,
to the effect that the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of section 368(a) of the Code and that each
party hereto will be treated as a "party to the reorganization" within the
meaning of section 368(b) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such counsel of customary representation letters
from each of Parent, Acquisition Sub and the Company substantially in the forms
of those contained in the Parent officer's certificate and the Company's
officer's certificate attached hereto as Exhibit A-1 and Exhibit A-2,
respectively.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, notwithstanding approval thereof by the stockholders of
the Company or Parent:
<PAGE> 49
EXECUTION COPY
EXHIBIT 2.1
(a) by mutual written consent duly authorized by the boards of
directors or any committee thereof of Parent, Acquisition Sub and the Company;
(b) by either Parent or the Company if a court of competent
jurisdiction or Governmental Authority shall have issued a nonappealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger (provided
that the right to terminate this Agreement under this Section 7.1(b) shall not
be available to any party who has not complied with its obligations under
Sections 5.3 and 5.6 and such noncompliance materially contributed to the
issuance of any such order, decree or ruling or the taking of such action);
(c) by either Parent or the Company if the Effective Time shall not
have occurred on or before August 15, 2000 (or September 15, 2000 if the failure
of the Effective Time to occur shall be the result of a request for additional
information under the HSR Act or the failure to obtain any necessary
governmental or regulatory approval); provided, however, that the right to
terminate this Agreement under this Section 7.1(c) shall not be available to any
party whose breach or failure to fulfill any obligation under this Agreement has
been the cause of or resulted in such failure of the Effective Time to occur;
(d) by Parent, if the Board shall have (i) failed to recommend,
withdrawn or modified in a manner adverse to Parent or Acquisition Sub, or
publicly taken a position materially inconsistent with, its approval or
recommendation of the Merger or the transactions contemplated by this Agreement,
(ii) approved, endorsed or recommended an Acquisition Proposal, or (iii)
resolved or publicly disclosed any intention to do any of the foregoing;
(e) by Parent or the Company, (i) if any representation or warranty
of the Company or Parent, respectively, set forth in this Agreement that are
qualified by reference to materiality shall not be true and correct or any
representation or warranty of the Company or Parent, respectively, set forth in
this Agreement that is not qualified by reference to materiality shall not be
true and correct in all material respects in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, or (ii) upon a breach of or failure to perform in
any material respect any covenant or agreement on the part of the Company or
Parent, respectively, set forth in this Agreement, except in each of (i) and
(ii) above, where the failure to perform such covenants or agreements or the
failure of such representations and warranties to be so true and correct would
not have a Material Adverse Effect (either (i) or (ii) above being a
"TERMINATING BREACH"); PROVIDED, HOWEVER, that, if such Terminating Breach is
curable by the Company or Parent, as the case may be, through the exercise of
its reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this Section
7.1(e), and provided further that the right to terminate this Agreement pursuant
to this Section 7.1(e) shall not be available to any party whose breach of or
failure to fulfill its obligations under this Agreement resulted in the failure
of any such condition;
<PAGE> 50
EXECUTION COPY
EXHIBIT 2.1
(f) by Parent or the Company if this Agreement and the Merger shall
fail to receive the Requisite Company Vote for adoption at the Stockholders
Meeting or any adjournment or postponement thereof;
(g) by the Company, following the receipt by the Company after the
date hereof, under circumstances not involving any breach of the provisions of
Section 4.3, of a Superior Proposal, if the Board, after consultation with
outside legal counsel, shall have determined in good faith that the failure to
terminate this Agreement would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law, provided that (i) the Company has
complied with all provisions of Section 4.3, including the notice provisions
therein, (ii) the Company enters into a definitive agreement providing for the
transactions contemplated by such Acquisition Proposal immediately following
such termination,] (iii) the Board shall have given Parent at least five days
prior written notice of its determination to terminate this Agreement pursuant
to this Section 7.1(g) and shall have afforded Parent a reasonable opportunity
within such five day period to amend the terms of this Agreement and (iv) such
termination shall not be effective until the Company shall have paid to Parent
the Termination Fee (as defined below) in accordance with provisions of Section
7.3; and
(h) by the Company if the Average Trading Price is less than $2.25 or
by the Parent if the Average Trading Price is more than $3.75.
Section 7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 7.1, there shall be no liability on the part of
any party hereto or any of its affiliates, directors, officers, employees or
stockholders except as set forth in Sections 2.22, 5.2, 5.7, 7.3 and Article
VIII and this Agreement shall otherwise forthwith become void. Except as
otherwise provided in Section 7.3, nothing herein shall relieve any party from
liability for any willful breach of any of its representations and warranties or
the breach of any of its covenants or agreements set forth in this Agreement.
Section 7.3 FEES AND EXPENSES.
(a) Except as otherwise set forth in this Agreement, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated, except that all fees and expenses incurred in
connection with the filing of the Proxy Statement, the printing and mailing of
the Proxy Materials and filings required under the HSR Act shall be shared
equally by Parent and the Company.
(b) The Company shall pay Parent a fee, including Parent's and
Acquisition Sub's actual and reasonable out-of-pocket expenses incurred in
connection with this Agreement and the transactions contemplated hereby, of
$1,800,000 (the "TERMINATION FEE") if this Agreement is terminated by Parent
pursuant to Section 7.1(d) or Section 7.1(e) or by the Company pursuant to
Section 7.1(g).
(c) In the event this Agreement is terminated by either party
pursuant to Section 7.1(f), the Company shall reimburse Parent for actual and
reasonable out-of-pocket
<PAGE> 51
EXECUTION COPY
EXHIBIT 2.1
expenses incurred in connection with this Agreement and the transactions
contemplated hereof, up to a maximum of $750,000.
(d) The Termination Fee payable pursuant to Section 7.1(g), Section
7.3(b) or Section 7.3(c) shall be paid by wire transfer in immediately available
funds within three (3) business days of the termination of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as otherwise provided in this Section 8.1, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties, covenants and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be, except that this Section
8.1 shall not limit any covenant or any agreement of the parties which by its
terms contemplates performance after the Effective Time and which shall survive
in accordance with its respective terms. The Confidentiality Letter shall
survive termination of this Agreement as provided therein.
Section 8.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Acquisition Sub:
MERISTAR HOTELS & RESORTS, INC
1010 Wisconsin Ave.
Washington, D.C. 20007
Telecopier No.: 202-295-1026
Telephone No.: 202-295-2316
Attention: Christopher L. Bennett, Esq.
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6014
Telecopier No.: 212-757-3990
Telephone No.: 212-373-3000
Attention: Richard S. Boris, Esq.
<PAGE> 52
EXECUTION COPY
EXHIBIT 2.1
(b) If to the Company:
BridgeStreet Accommodations, Inc.
2242 Pinnacle Parkway
Twinsburg, OH 44087-9904
Telecopier No.: 1-330-405-6060
Telephone No.: 1-330-405-6061
Attention: President
With a copy to:
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Telecopier No.: (617) 310-9597
Telephone No.: (617) 439-2595
Attention: Constantine Alexander, Esq.
Section 8.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) AFFILIATE means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) BENEFICIAL OWNER with respect to any shares of Common Stock means
a person who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 of the Exchange Act) beneficially owns, directly or indirectly, (ii)
which such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote pursuant to
any agreement, arrangement or understanding, or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person or any
of its affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares;
(c) BUSINESS DAY means any day other than a day on which banks in New
York are required or authorized to be closed;
(d) CONTROL (including the terms CONTROLLED BY, and UNDER COMMON
CONTROL WITH) means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether
<PAGE> 53
EXECUTION COPY
EXHIBIT 2.1
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) KNOWLEDGE means, with respect to any matter in question, actual
knowledge of any executive officer of the entity in question with respect to
such matter after making reasonable inquiry of officers and other employees
charged with senior administrative or operational responsibility of such
matters;
(f) PERSON means an individual, corporation, partnership, limited
liability company, association, joint venture, trust, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of the
Exchange Act); and
(g) SUBSIDIARY or SUBSIDIARIES of the Company, the Surviving
Corporation, Parent or any other person means any person or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
Section 8.4 AMENDMENT. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective boards of directors at any
time prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Company, no amendment may be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
Section 8.5 WAIVER. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 8.6 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.7 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely
<PAGE> 54
EXECUTION COPY
EXHIBIT 2.1
as possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
Section 8.8 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein.
Section 8.9 ASSIGNMENT; GUARANTEE OF ACQUISITION SUB OBLIGATIONS. This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent and Acquisition Sub may assign all or any of their rights hereunder to
any affiliate provided that no such assignment shall relieve the assigning party
of its obligations hereunder.
Section 8.10 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 5.4 (which is intended to be for the benefit of the Indemnified Parties
and may be enforced by such Indemnified Parties).
Section 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 8.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
Section 8.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 8.14 INTERPRETATION. The parties hereto acknowledge that certain
matters set forth in the Company Disclosure Schedule and certain matters set
forth in the Parent Disclosure Schedule are included for informational purposes
only, notwithstanding the fact that, because they do not rise above applicable
materiality thresholds or otherwise, they would not be required to be set forth
therein by the terms of this Agreement. The parties agree that disclosure of
such matters shall not be taken as an admission by the Company or Parent, as the
case may be, that such disclosure is required to be made under the terms of any
provision of this Agreement and in no event shall the disclosure of such matters
be deemed or interpreted to broaden or otherwise amplify the representations and
warranties contained in this Agreement or to imply that such matters are or are
not material and neither party shall use, in any dispute
<PAGE> 55
EXECUTION COPY
EXHIBIT 2.1
between the parties, the fact of any such disclosure as evidence of what is or
is not material for purposes of this Agreement.
<PAGE> 56
EXECUTION COPY
EXHIBIT 2.1
IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
MERISTAR HOTELS & RESORTS, INC.
By: /s/ Christopher L. Bennett
--------------------------
Name: Christopher L. Bennett
------------------------
TITLE: VICE PRESIDENT, LEGAL AND SECRETARY
MERISTAR BROOKLYN, INC.
BY: /s/ CHRISTOPHER L. BENNETT
--------------------------
NAME: CHRISTOPHER L. BENNETT
----------------------
TITLE: VICE PRESIDENT, LEGAL AND SECRETARY
BRIDGESTREET ACCOMMODATIONS, INC.
BY: /s/ JOHN E. DANNEBERG
---------------------
NAME: JOHN E. DANNEBERG
-----------------
TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE> 1
EXHIBIT 10.1
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of March 23, 2000 (this "AGREEMENT"), by
and among MERISTAR HOTELS & RESORTS, INC., a Delaware corporation ("PARENT"),
MERISTAR BROOKLYN, INC., a Delaware corporation and wholly owned subsidiary of
Parent ("ACQUISITION SUB"), and the shareholders of BRIDGESTREET ACCOMMODATIONS,
INC., a Delaware corporation (the "COMPANY"), listed on SCHEDULE I hereto (each,
a "STOCKHOLDER" and, collectively, the "STOCKHOLDERS").
WHEREAS, Parent, Acquisition Sub and the Company propose to enter into an
Agreement and Plan of Merger, dated as of the date hereof (the "MERGER
AGREEMENT"), which provides for, among other things, the merger of Acquisition
Sub with and into the Company (the "MERGER");
WHEREAS, as of the date hereof, the Stockholders are holders of record or
Beneficially Own (as defined herein) shares of Common Stock; and
WHEREAS, as a condition to the willingness of Parent and Acquisition Sub to
enter into the Merger Agreement, Parent and Acquisition Sub have required that
each Stockholder agrees, and in order to induce Parent and Acquisition Sub to
enter into the Merger Agreement, each Stockholder has agreed, severally and not
jointly, to enter into this Agreement with respect to all of the shares of
Company Common Stock now held of record or Beneficially Owned and which may
hereafter be acquired by such Stockholder or the Beneficial Ownership of which
such Stockholder may hereafter acquire during the period from and including the
date hereof through and including the date on which this Agreement is terminated
pursuant to Section 7.1 hereof (not including such shares of Company Common
Stock subject to outstanding options until such time as such shares are acquired
by such Stockholder upon exercise thereof) (collectively, the "SHARES").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.1 GENERAL. Capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement.
1
<PAGE> 2
Section 1.2 BENEFICIAL OWNERSHIP. For purposes of this Agreement,
"BENEFICIALLY OWN ," "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect
to any securities shall mean "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing.
ARTICLE 2
VOTING OF SHARES
Section 2.1 AGREEMENT TO VOTE THE SHARES. Each of the Stockholders hereby
agrees as follows:
(a) to appear, or cause the holder of record on any applicable record date
with respect to any Shares held of record or Beneficially Owned by such
Stockholder (the "RECORD HOLDER") to appear, in person or by proxy, for the
purpose of obtaining a quorum at any annual or special meeting of Stockholders
of the Company and at any adjournment thereof at which matters relating to the
Merger, the Merger Agreement (as amended from time to time) or any transaction
contemplated by the Merger Agreement are considered;
(b) at any meeting of the Stockholders of the Company however called, and
in any action by consent of the Stockholders of the Company, to vote, or cause
to be voted by the Record Holder, in person or by proxy, the Shares held of
record or Beneficially Owned by such Stockholder in favor as required of the
Merger, the Merger Agreement (as amended from time to time) and the transactions
contemplated by the Merger Agreement; and
(c) at any meeting of the shareholders of the Company however called, and
in any action by consent of the shareholders of the Company, to vote or cause to
be voted by the Record Holder, in person or by proxy, the Shares held of record
or Beneficially Owned by such Stockholder against (i) any acquisition or
purchase of a substantial amount of assets of, or any equity interest in, the
Company or any of its Subsidiaries or any tender offer (including a self tender
offer) or exchange offer, merger, consolidation, business combination, sale of
substantially all assets, sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries (other than the transactions contemplated by the Merger Agreement),
(ii) any other proposal or material corporate transaction the consummation of
which would or could reasonably be expected to impede, interfere with, prevent
or materially delay the consummation of the Merger or of any of the transactions
contemplated by the Merger Agreement or this Agreement or (iii) any proposal or
action that would reasonably be expected to result in a breach of any covenant,
representation or warranty of the Company set forth in the Merger Agreement
(collectively, "ADVERSE PROPOSALS").
2
<PAGE> 3
Section 2.2 IRREVOCABLE PROXY . EACH SHAREHOLDER HEREBY APPOINTS PARENT AND
ANY DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, SUCH SHAREHOLDER'S PROXY AND
ATTORNEY-IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE
GENERAL CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO
VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT TO SUCH SHAREHOLDER'S SHARES IN
ACCORDANCE WITH SECTION 2.2 HEREOF. THIS PROXY IS GIVEN TO SECURE THE
PERFORMANCE OF THE DUTIES OF SUCH SHAREHOLDER UNDER THIS AGREEMENT. EACH AFFIRMS
THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. EACH
SHAREHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS
MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY.
Section 2.3 NO OWNERSHIP INTEREST. Except as set forth in this Article 2
and in Article 3 hereof, nothing contained in this Agreement shall be deemed to
vest in Parent or Acquisition Sub any direct or indirect ownership or incidence
of ownership of or with respect to any Shares. All rights, ownership and
economic benefits of and relating to the Shares shall remain and belong to the
Stockholders, and neither Parent nor Acquisition Sub shall have any authority to
manage, direct, restrict, regulate, govern, or administer any of the policies or
operations of the Company or exercise any power or authority to direct the
Stockholders in the voting of any of the Shares except as otherwise provided
herein, or the performance of the Stockholders' duties or responsibilities as
shareholders of the Company.
ARTICLE 3
OPTION
Section 3.1 GRANT OF THE OPTION. Each Stockholder hereby grants to Parent
an irrevocable option (each, an "OPTION" and, collectively, the "OPTIONS") to
purchase such Stockholder's Shares on the terms and subject to the conditions
set forth herein in cash at a price per share equivalent to the value of the
Merger Consideration (as defined in the Merger Agreement) (the "PURCHASE
PRICE"); PROVIDED, HOWEVER, that if Parent, Acquisition Sub or any affiliate of
either such company subsequently enters into any agreement or arrangement to
acquire the Company, by merger, tender offer, asset acquisition or otherwise,
for consideration on a per share basis that is greater than the Merger
Consideration (a "SUBSEQUENT OFFER"), the Purchase Price will be increased to an
amount in cash equal to the value of the Subsequent Offer. In the event a
Subsequent Offer is made following the exercise of some or all of the Options
granted hereunder, the Parent shall promptly pay to the Stockholder by wire
transfer an amount equal to (x) the Subsequent Offer multiplied by the number of
shares for which the Option granted by such Stockholder has been exercised minus
(y) the aggregate Purchase Price paid for that portion of the Option exercised.
For purposes of
3
<PAGE> 4
this Agreement, the Average Trading Price shall be calculated based on the
average of the closing prices for a share of Parent Common Stock as reported on
the NYSE Composite Transaction Tape for the ten trading days ending three
trading days prior to the date on which the Options become exercisable. If the
Merger Agreement is terminated (otherwise than pursuant to Section 7.1(a),
Section 7.1(b), Section 7.1(c), Section 7.1(e), Section 7.1(f) or Section 7.1(h)
thereof under circumstances in which the Company is entitled to so terminate the
Merger Agreement (each, a "Company Termination")) in accordance with its terms
for reasons other than the failure of Parent or Acquisition Sub to fulfill their
respective obligations under the Merger Agreement, then (and only then) the
Options shall become exercisable (in whole but not in part) and remain
exercisable (in whole but not in part) until the date that is 20 days after the
date of the occurrence of the event described above (the applicable period of
exercisability being the "OPTION PERIOD").
Section 3.2 EXERCISE OF THE OPTION.
(a) Parent may exercise all of the Options, in whole but not in part, at
any time or from time to time during the Option Period. Notwithstanding anything
in this Agreement to the contrary, Parent shall be entitled to purchase all
Shares in respect of which it shall have exercised an Option in accordance with
the terms hereof prior to the expiration of the Option Period, and the
expiration of the Option Period shall not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such expiration.
(b) If Parent wishes to exercise an Option, it shall deliver to the
applicable Stockholder (each a "SELLING STOCKHOLDER") a written notice (an
"EXERCISE NOTICE") to that effect which specifies a date (an "OPTION CLOSING
DATE") not earlier than three business days after the date such Exercise Notice
is delivered for the consummation of the purchase and sale of such Shares (an
"OPTION CLOSING"). If the Option Closing cannot be effected on the Option
Closing Date specified in the Exercise Notice by reason of any applicable
judgment, decree, order, law or regulation, or because any applicable waiting
period under the HSR Act shall not have expired or been terminated, (i) the
Stockholders shall promptly take all such actions as may be reasonably requested
by Parent, and shall otherwise fully cooperate with Parent, to use such
Stockholder's reasonable efforts to cause the elimination of all such
impediments to the Option Closing and (ii) the Option Closing Date specified in
the Exercise Notice shall be extended to the third business day following the
elimination of all such impediments. The place of the Option Closing shall be at
the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019, and the time of the Option Closing shall be
10:00 a.m. (Eastern Time) on the Option Closing Date.
Section 3.3 PAYMENT AND DELIVERY OF THE CERTIFICATES. At any Option
Closing, Parent shall deliver to each Selling Stockholder, by wire transfer of
immediately available funds to such account as shall have been designated by
such Selling Stockholder to Parent prior to the Option Closing, the Purchase
Price payable in respect of the Shares to be purchased from such Selling
Stockholder at the Option Closing, and each Selling Stockholder shall
4
<PAGE> 5
deliver to Parent such Shares, free and clear of all Liens, with the certificate
or certificates evidencing such Shares being duly endorsed for transfer by such
Selling Stockholder and accompanied by all powers of attorney and/or other
instruments necessary to convey valid and unencumbered title thereto to Parent,
and shall assign to Parent (pursuant to a written instrument in form and
substance satisfactory to Parent) all rights that such Selling Stockholder may
have to require the Company to register such Shares under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"SECURITIES Act").
Section 3.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of
any change in the capital stock of the Company by reason of a stock dividend,
subdivision, reclassification, recapitalization, split, combination, exchange of
shares, extraordinary distribution or similar transaction, the type and number
or amount of shares, securities or other property subject to each of the
Options, and the Purchase Price payable therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that (a) Parent shall receive upon exercise of any Option
the type and number or amount of shares, securities or property that Parent
would have retained and/or been entitled to receive in respect of the applicable
Selling Stockholder's Shares if the Option had been exercised immediately prior
to such event relating to the Company or the record date therefor, as
applicable, and (b) the applicable Selling Stockholder shall receive upon
exercise of any Option granted by such Selling Stockholder the amount of cash
that such Selling Stockholder would have received as a result of the exercise of
the Option if the Option had been exercised immediately prior to such event
relating to the Company or the record date therefor, as applicable. The
provisions of this Section 3.4 shall apply in a like manner to successive stock
dividends, subdivisions, reclassifications, recapitalizations, splits,
combinations, exchanges of shares, extraordinary distributions or similar
transactions.
Section 3.5 ACQUIRED SHARES. In the event that (i) Shares are acquired by
Parent pursuant to the exercise of the Options (such acquired Shares being the
"ACQUIRED SHARES"), and (ii) Parent thereafter sells, transfers or disposes of
the Acquired Shares within eighteen months after the acquisition of such
Acquired Shares (any such sale, transfer or disposition of Acquired Shares
occurring within such eighteen month period being a "SALE"); Parent shall
promptly pay to the Selling Stockholders (pro rata, in proportion to the number
of Acquired Shares purchased from each Stockholder) an amount in cash equal to
the positive difference (if any) between the aggregate proceeds received by
Parent in the Sale (net of selling commissions, if any) and the aggregate
Purchase Price paid by Parent for the Acquired Shares sold, transferred or
disposed of in such Sale. Parent shall effect any Sale of Acquired Shares only
to an unaffiliated party in a bona fide arm's-length transaction.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
5
<PAGE> 6
Each of the Stockholders hereby represents and warrants, severally and not
jointly, to each of Parent and Acquisition Sub as follows:
Section 4.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Such Stockholder has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. Where such Stockholder is a corporation, partnership or other entity,
the execution and delivery of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby have
been duly and validly authorized by the board of directors or other governing
body of such Stockholder, and no other proceedings on the part of such
Stockholder are necessary to authorize this Agreement or to consummate such
transactions and where such Stockholder is an individual, such individual has
the capacity to enter into this Agreement. This Agreement has been duly and
validly executed and delivered by such Stockholder and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by general principles
governing the availability of equitable remedies.
Section 4.2 NO CONFLICT.
(a) The execution and delivery of this Agreement by such Stockholder does
not, and the performance of this Agreement by such Stockholder shall not, (i)
where such Stockholder is a corporation, partnership or other entity, conflict
with or violate the organizational documents of such Stockholder, (ii) conflict
with or violate any agreement, arrangement, law, rule, regulation, order,
judgment or decree to which such Stockholder is a party or by which such
Stockholder (or the Shares held of record or Beneficially Owned by such
Stockholder) is bound or affected or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien (as defined
below) on any of the Shares held of record or Beneficially Owned by such
Stockholder pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such Stockholder is a party or by which such Stockholder (or the Shares
held of record or Beneficially Owned by such Stockholder) is bound or affected.
(b) The execution and delivery of this Agreement by such Stockholder does
not, and the performance of this Agreement by such Stockholder shall not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental entity except for applicable requirements, if
any, of federal or state securities and antitrust laws and except where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent the performance by such
Stockholder of its obligations under this Agreement.
6
<PAGE> 7
Section 4.3 TITLE TO THE SHARES. As of the date hereof, such Stockholder is
the sole record or Beneficial Owner of the Shares listed opposite the name of
such Stockholder on SCHEDULE I hereto and has full and unrestricted power to
dispose of and to vote such Shares. The Shares listed opposite the name of such
Stockholder on SCHEDULE I hereto are all the securities of the Company either
held of record or Beneficially Owned by such Stockholder. Such Stockholder has
not appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Shares held of record or Beneficially Owned by
such Stockholder. The Shares listed opposite the name of such Stockholder on
SCHEDULE I hereto are owned free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, limitations on such
Stockholder's voting rights, charges and other encumbrances of any nature
whatsoever ("LIENS"). The transfer by such Stockholder of its Shares to
Acquisition Sub pursuant to the Merger or the applicable Option shall pass to
and unconditionally vest in Acquisition Sub good and valid title to such Shares,
free and clear of all Liens.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION SUB
Each of Parent and Acquisition Sub hereby represents and warrants,
severally and not jointly, to each of the Stockholders as follows:
Section 5.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Acquisition Sub has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Acquisition Sub and the consummation by Parent and Acquisition Sub
of the transactions contemplated hereby have been duly and validly authorized by
the board of directors or other governing body of Parent and Acquisition Sub,
and no other proceedings on the part of Parent or Acquisition sub are necessary
to authorize this Agreement or to consummate such transactions. This Agreement
has been duly and validly executed and delivered by each of Parent and
Acquisition Sub and, assuming the due authorization, execution and delivery by
the other parties hereto, constitutes a legal, valid and binding obligation of
Parent and Acquisition Sub, enforceable against Parent and Acquisition Sub in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by general principles governing the availability of
equitable remedies.
Section 5.2 NO CONFLICT.
(a) The execution and delivery of this Agreement by each of Parent and
Acquisition Sub does not, and the performance of this Agreement by Parent and
Acquisition Sub shall not, (i) conflict with or violate the organizational
documents of Parent or
7
<PAGE> 8
Acquisition Sub, (ii) conflict with or violate any agreement, arrangement, law,
rule, regulation, order, judgment or decree to which Parent or Acquisition Sub
is a party or by which Parent or Acquisition Sub is bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse or time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or Acquisition Sub
is a party or by which Parent or Acquisition Sub is bound or affected.
(b) The execution and delivery of this Agreement by each of Parent and
Acquisition Sub does not, and the performance of this Agreement by Parent and
Acquisition Sub shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental entity except for
applicable requirements, if any, of federal or state securities and antitrust
laws and except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent the performance by Parent or Acquisition Sub of their obligations under
this Agreement.
Section 5.3 SECURITIES LAW COMPLIANCE. The Options and the Shares to be
acquired upon exercise of the Options are being and shall be acquired by Parent
without a view to public distribution thereof otherwise than in compliance with
the Securities Act and applicable state securities laws and shall not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act and in compliance with
applicable state securities laws. Neither Parent nor Acquisition Sub will effect
any offer or sale of Shares which would cause any Stockholder to violate the
registration requirements of the Securities Act, or the registration or
qualification requirements of the securities laws of any jurisdiction.
ARTICLE 6
COVENANTS OF THE SHAREHOLDERS
Section 6.1 NO INCONSISTENT AGREEMENTS. Each Stockholder hereby represents,
warrants, covenants and agrees that, except as expressly provided by this
Agreement and the Merger Agreement, such Stockholder has not and shall not, and
will not permit any Person under such Stockholder's control (including any
Record Holder) to, (i) enter into any voting agreement or grant a proxy or power
of attorney with respect to the Shares held of record or Beneficially Owned by
such Stockholder or deposit such Shares into a voting trust agreement or (ii)
take any action that would reasonably be expected to make any representation or
warranty contained herein untrue or incorrect or have the effect of impairing
the ability of such Stockholder to perform such Stockholder's obligations under
this Agreement or impeding, interfering with, preventing or delaying the
consummation of the Merger or of any of the transactions contemplated by the
Merger Agreement or this Agreement.
8
<PAGE> 9
Section 6.2 TRANSFER OF TITLE. Each Stockholder hereby covenants and agrees
that, except as expressly provided by the Merger Agreement or this Agreement,
such Stockholder will not, prior to the termination of this Agreement, either
directly or indirectly, offer or otherwise agree to sell, assign, pledge,
hypothecate, transfer, exchange, or dispose of any Shares or options, warrants
or other convertible securities to acquire or purchase shares of Company Common
Stock (collectively, "DERIVATIVE SECURITIES") or any other securities or rights
convertible into or exchangeable for shares of Company Common Stock, held of
record or Beneficially Owned either directly or indirectly by such Stockholder
or with respect to which such Stockholder has the power of disposition, whether
now or hereafter acquired, without the prior written consent of Parent or
Acquisition Sub, unless the Person to whom Shares or Derivative Securities have
been sold, assigned, pledged, hypothecated, transferred, exchanged or disposed
agrees to be bound by and become a party to this Agreement. Each Stockholder
hereby agrees and consents to the entry of stop transfer instructions by Parent
or Acquisition Sub against the transfer of any Shares inconsistent with the
terms of this Section 6.2.
Section 6.3 NO SOLICITATION. Except as otherwise provided under Section
7.11 hereto, no Stockholder shall, nor shall such Stockholder authorize or
permit any of its directors, officers, employees, investment bankers,
accountants, attorneys or other agents or representatives, directly or
indirectly to, (i) solicit, initiate, encourage (including by way of furnishing
information or assistance) or take any other action to facilitate, any inquiry
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, an Adverse Proposal or agree to or endorse any Adverse Proposal or
(ii) propose, enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other Person any information
with respect to the Company's business, properties or assets or any of the
foregoing, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or seek
any of the foregoing. Except as otherwise provided under Section 7.11 hereto,
each Stockholder shall immediately cease and cause to be terminated all existing
discussions or negotiations with any Persons conducted heretofore with respect
to, or that could reasonably be expected to lead to, any Adverse Proposal.
Section 6.4 WAIVER OF APPRAISAL RIGHTS OR FIRST OFFER RIGHTS. Each
Stockholder hereby waives any rights of appraisal or rights to dissent from the
Merger that such Stockholder may have. No Stockholder shall exercise any
purchase right or right of first refusal that it may have with respect to any
securities of the Company owned by any other Person in connection with any
tender by such other Person of such securities pursuant to the Merger.
Section 6.5 COOPERATION. Each Stockholder shall cooperate fully with Parent
and Acquisition Sub in connection with their respective reasonable best efforts
to fulfill the conditions to the Merger set forth under the Merger Agreement.
9
<PAGE> 10
ARTICLE 7
MISCELLANEOUS
Section 7.1 TERMINATION. This Agreement shall terminate upon the earlier to
occur of (i) the Effective Time, (ii) the date on which the Option Period
expires (or, if later, the date on which the last Option Closing occurs) and
(iii) a Company Termination. Upon such termination, no party shall have any
further obligations or liabilities hereunder; PROVIDED, HOWEVER, that nothing in
this Agreement shall relieve any party from liability for the breach of any of
its representations, warranties, covenants and agreements set forth in this
Agreement prior to such termination.
Section 7.2 ADDITIONAL SHARES. If, after the date hereof, a Stockholder
acquires record ownership or Beneficial Ownership of any additional shares of
Company Common Stock (any such shares shall be referred to herein as "ADDITIONAL
SHARES"), including, without limitation, upon exercise or conversion of any
Derivative Security or through any stock dividend or stock split, the provisions
of this Agreement applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been outstanding Shares as of
the date hereof. The provisions of the immediately preceding sentence shall be
effective with respect to Additional Shares without action by any Person
immediately upon the acquisition by a Stockholder of record or Beneficial
Ownership of such Additional Shares.
Section 7.3 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 7.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among Parent, Acquisition Sub and the Stockholders with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both written and oral, among Parent, Acquisition Sub and the Stockholders with
respect to the subject matter hereof.
Section 7.5 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 7.6 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
this Agreement is 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 hereby shall negotiate in good faith
10
<PAGE> 11
to modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law in a
mutually acceptable manner in order that the terms of this Agreement remain as
originally contemplated.
Section 7.7 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made and shall be effective upon receipt, if delivered personally, upon
receipt of a transmission confirmation if sent by facsimile (with a confirming
copy sent by overnight courier) and on the next business day if sent by Federal
Express, United Parcel Service, Express Mail or other reputable overnight
courier to the parties at the following addresses (or at such other address for
a party as shall be specified by notice):
If to a Stockholder to such Stockholder's address set forth on SCHEDULE I
hereto.
If to Parent or Acquisition Sub, to:
MeriStar Hotels & Resorts, Inc.
1010 Wisconsin Avenue
Washington, D.C. 20007
Attention: Christopher L. Bennett
Telecopier No.: 202-295-1026
Telephone No.: 202-295-2316
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: Richard S. Borisoff, Esq.
Telecopier No.: 212-757-3990
Telephone No.: 212-373-3000
Section 7.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state without giving
effect to the provisions thereof relating to conflicts of law.
Section 7.9 OBLIGATIONS OF STOCKHOLDERS. The obligations of the
Stockholders hereunder shall be "several" and not "joint" or "joint and
several." Without limiting the generality of the foregoing, under no
circumstances will any Stockholder have any liability or obligation with respect
to any misrepresentation or breach of covenant of any other Stockholder.
11
<PAGE> 12
Section 7.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
Section 7.11 OFFICERS AND DIRECTORS. No person who is or becomes (during
the term of this Agreement) a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer, and nothing herein will limit or affect, or give rise to any liability
to any Stockholder by virtue of, any actions taken by any Stockholder solely in
his or her capacity as an officer or director of the Company in exercising its
rights under the Merger Agreement and the transactions contemplated thereby, and
no such actions shall be deemed a breach or default under this Agreement.
Section 7.12 FEES AND EXPENSES. Each party hereto shall pay its own
expenses incident to preparing, entering into and performing its obligations
under this Agreement and the consummation of the transactions contemplated
hereunder.
Section 7.13 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by any Stockholder without
the prior written consent of Parent, and any such assignment or delegation that
is not consented to shall be null and void. This Agreement, together with any
rights, interests, or obligations of Parent hereunder, may be assigned or
delegated, in whole or in part, by Parent without the consent of or any action
by any Stockholder upon notice by Parent to each Stockholder affected thereby as
herein provided. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns (including without limitation any person
to whom any Shares are sold, transferred or assigned).
Section 7.14 FURTHER ASSURANCES. Each Stockholder shall execute and deliver
such other documents and instruments and take such further actions as may be
necessary or appropriate or as may be reasonably requested by Parent in order to
ensure that Parent receives the full benefit of this Agreement.
12
<PAGE> 13
IN WITNESS WHEREOF, each of the Stockholders, Parent and Acquisition Sub
have caused this Agreement to be duly executed on the date hereof.
MERISTAR HOTELS & RESORTS, INC.
By: /s/ Christopher L. Bennett
------------------------------------------
Name: Christopher L. Bennett
Title: Vice President, Legal and Secretary
MERISTAR BROOKLYN, INC.
By: /s/ Christopher L. Bennett
------------------------------------------
Name: Christopher L. Bennett
Title: Vice President, Legal and Secretary
SHAREHOLDERS:
/s/ Lynda D. Clutchey
----------------------------------------------
Lynda D. Clutchey
/s/ John E. Danneberg
----------------------------------------------
John E. Danneberg
/s/ David B. Hammond
----------------------------------------------
David B. Hammond
/s/ William N. Hulett, III
----------------------------------------------
William N. Hulett, III
/s/ Stephen J. Ruzika
----------------------------------------------
Stephen J. Ruzika
13
<PAGE> 14
/s/ Jerry Sue Thornton
----------------------------------------------
Jerry Sue Thornton
/s/ Paul M. Verrochi
----------------------------------------------
Paul M. Verrochi
14
