==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)
BRISTOL HOTEL COMPANY
(Name of Issuer)
COMMON STOCK
$.01 PAR VALUE
(Title of Class of Securities)
--------------
110039104
(CUSIP Number)
BASS PLC
BASS AMERICA INC.
HOLIDAY CORPORATION
(Names of Persons Filing Statement)
WILLIAM L. ROSOFF
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Tel. No.: (212) 450-4000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
April 28, 1997
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this Schedule
13D, and is filing this statement because of Rule 13d-1(b)(3) or (4), check the
following: [ ]
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SCHEDULE 13D
CUSIP No. 110039104 Page 2 of __ Pages
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BASS PLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UK
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH
8 SHARED VOTING POWER
9,361,308
9 SOLE DISPOSITIVE POWER
10 SHARED DISPOSITIVE POWER
9,361,308
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.1%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 110039104 Page 3 of __ Pages
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BASS AMERICA INC.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UK
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH
8 SHARED VOTING POWER
6,970,022
9 SOLE DISPOSITIVE POWER
10 SHARED DISPOSITIVE POWER
6,970,022
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.9%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 110039104 Page 4 of __ Pages
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HOLIDAY CORPORATION
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UK
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH
8 SHARED VOTING POWER
2,391,386
9 SOLE DISPOSITIVE POWER
10 SHARED DISPOSITIVE POWER
2,391,386
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.2%
14 TYPE OF REPORTING PERSON*
CO
Item 1. Security and Issuer.
The class of equity securities to which this statement relates
is the Common Stock, $0.01 par value per share (the "Shares"), of Bristol
Hotel Company, a Delaware corporation (the "Issuer"). The principal executive
offices of the Issuer are located at 14285 Midway Road, Suite 340, Dallas,
Texas 75244.
Item 2. Identity and Background.
The name of the persons filing this statement are Holiday
Corporation, a Delaware corporation ("HC"), Bass America, Inc., a Delaware
corporation ("BAI") and Bass plc, an English public limited company ("Bass").
The address of the principal business and the principal office
of HC is Three Ravinia Drive, Suite 2900, Atlanta, Georgia 30346. The name,
business address, present principal occupation or employment, and citizenship
of each director and executive officer of HC is set forth on Schedule A.
The address of the principal business and the principal office
of BAI is 1105 North Market Street, Suite 1046, Wilmington, Delaware 19801.
The name, business address, present principal occupation or employment, and
citizenship of each director and executive officer of BAI is set forth on
Schedule B.
The address of the principal business address and the principal
office of Bass is 20 North Audley Street, London W1Y1WE. The name, business
address, present principal occupation or employment, and citizenship of each
director of Bass is set forth on Schedule C.
Bass is a United Kingdom holding company that is the
ultimate parent of HC and BAI. BAI provides financing to certain United
States subsidiaries of Bass. HC licenses the trademarks known as "Holiday
Inns" and "Crowne Plaza" and, prior to the merger referred to below, owned
all the outstanding securities of Holiday Inns, Inc., a Tennessee
corporation ("HII").
During the last five years, none of Bass, BAI or HC, nor any
other person controlling Bass, BAI or HC nor, to the best of each of their
knowledge, any of the persons listed on Schedules A, B and C attached hereto,
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration.
In accordance with the terms and conditions of the Agreement
and Plan of Merger, dated as of December 15, 1996, as amended by Amendment No.
1 thereto dated as of April 1, 1997, among HC, HII and Issuer (the "Merger
Agreement"), HII was merged (the "Merger") with and into Issuer. HC received
2,391,286 Shares as consideration therefor and indebtedness of HII to BAI in
the principal amount of $199,533,217 assumed by Issuer pursuant the Merger was
exchanged immediately after the Merger for 6,970,022 Shares. A copy of the
Agreement is attached hereto as Exhibit 1, which exhibit is incorporated
herein by reference.
Item 4. Purpose of Transaction.
Each of Bass, HC and BAI has acquired the Shares for
investment. None of Bass, HC or BAI has plans or proposals which relate to or
would result in any of the transactions described in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a)(i) HC has acquired and, for the purpose of Rule 13d-3
promulgated under the Exchange Act, beneficially owns 2,391,286 Shares,
representing approximately 9.2% of the outstanding Shares of the Issuer;
(a)(ii) BAI has acquired and, for the purpose of Rule 13d-3
promulgated under the Exchange Act, beneficially owns 6,970,022 Shares,
representing approximately 26.9% of the outstanding Shares of the Issuer; and
(a)(iii) Bass, for purposes of Rule 13d-3 promulagated under
the Exchange Act, beneficially owns 9,361,308 Shares, representing
approximately 36.1% of the outstanding Shares of the Issuer.
Except as set forth in this Item 5, none of Bass, HC or BAI,
nor any other person controlling, Bass, BAI or HC, nor, to the best of their
knowledge, any persons named in Schedules A, B and C hereto owns beneficially
any Shares.
(b)(i) HC has shared power to vote and to dispose of 2,391,286
Shares.
(b)(ii) BAI has shared power to vote and to dispose of
6,970,022 Shares.
(b)(iii) Bass has shared power to vote and to dispose of
9,361,308 Shares.
(c) None other than the transactions described in Item 3.
(d) Inapplicable.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
A copy of the Merger Agreement is attached hereto as Exhibit 1
and incorporated herein by reference.
A copy of the Stockholders' Agreement dated as of April 28,
1997 by and among United/Harvey Holdings, L.P., HC, BAI, Bass and Issuer is
attached hereto as Exhibit 2 and incorporated herein by reference.
Except for the Agreements referred to above, to the knowledge
of Bass, BAI and HC, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) between the persons enumerated in Item 2,
and any other person, with respect to any securities of the Issuer, including,
but not limited to, transfer or voting of any of the securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees
of profits, division of profits or loss, or the giving or withholding of
proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Agreement and Plan of Merger dated as of December
15, 1996, as amended by Amendment No. 1 thereto dated as of April 1, 1997,
among HC, HII and Issuer
Exhibit 2: Stockholders' Agreement dated as of April 28, 1997
by and among United/Harvey Holdings, L.P., HC, BAI, Bass and Issuer.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Date: May 7, 1997
BASS AMERICA INCORPORATED
By: /s/ Michael L. Goodson
---------------------------------
Name: Michael L. Goodson
Title: President
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: May 7, 1997
HOLIDAY CORPORATION
By: /s/ Michael L. Goodson
---------------------------------
Name: Michael L. Goodson
Title: Vice President
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: May 7, 1997
BASS PLC
By: /s/ Tony Portno
---------------------------------
Name: Tony Portno
Title: Director
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF BAI
The name, business address, title, present principal occupation
or employment of each of the directors and executive officers of BAI are set
forth below. If no business address is given the director's or officer's
business address is 1105 North Market Street, Suite 1046, Wilmington
Delaware, 19801. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to BAI. Unless otherwise indicated, all
of the persons listed below are citizens of the United States of America.
Present Principal Occupation Including Name and
Name and Business Address Address(1) of Employer
- ------------------------- -----------------------------------------------
Directors
Julian Hank Baumann...... Director, Vice President and Secretary and
Director, Vice President and Secretary of
Richards Layton & Finger
Michael L. Goodson....... Director, Chairman of the Board of Directors, and
President
Anthony E. Stern......... Director, Treasurer, Vice President; British
Citizen
Present Principal Occupation Including Name
Name and Business Address and Address(2) of Employer
- ------------------------- -------------------------------------------
Executive Officers
(Who Are Not Directors)
David P. Fontello........ Assistant Secretary
- -----------
(1) Same address as director's or officer's business address except where
indicated.
(2) Same address as director's or officer's business address except where
indicated.
SCHEDULE B
DIRECTORS AND EXECUTIVE OFFICERS OF HC
The name, business address, title, present principal occupation
or employment of each of the directors and executive officers of HC are set
forth below. If no business address is given the director's or officer's
business address is Three Ravinia Drive, Suite 2900, Atlanta, GA 30346.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to HC. Unless otherwise indicated, all of the persons listed
below are citizens of the United States of America.
Present Principal Occupation Including Name and
Name and Business Address Address(1) of Employer
- ------------------------- -------------------------------------------------
Directors
Thomas R. Oliver......... Director, Chairman, Chief Executive Officer,
President
Craig H. Hunt............ Director, President of Americas Franchise Division
Martin J. Reavley........ Director, Executive Vice President and Chief
Financial Officer; British Citizen
Present Principal Occupation Including Name
Name and Business Address and Address(2) of Employer
- ------------------------- --------------------------------------------
Executive Officers
(Who Are Not Directors)
Robert D. Hill........... Executive Vice President, General Counsel
and Secretary
Michael J. Rumke......... Executive Vice President, Human Resources
John T. Sweetwood........ Executive Vice President and Chief Marketing
Officer
Morton H. Aronson........ Assistant Secretary
Vice President and Associate General
Counsel - Franchise
Chris J. Ballad.......... Controller
Vice President; British Citizen
J. Max Gayler............ Vice President, Franchise Relations
and System Quality
Michael L. Goodson....... Treasurer and
Vice President, Tax & Treasury
Elaine R. Pope........... Assistant Secretary
Steven W. Smith.......... Assistant Secretary
- ------------
(1) Same address as director's or officer's business address except where
indicated.
(2) Same address as director's or officer's business address except where
indicated.
SCHEDULE C
DIRECTORS AND EXECUTIVE OFFICERS OF BASS
The name, business address, title, present principal occupation
or employment of each of the directors and executive officers of Bass are set
forth below. If no business address is given the director's or officer's
business address is 20 North Audley Street, London W1Y1WE. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
Bass. Unless otherwise indicated, all of the persons listed below are British
citizens.
Present Principal Occupation Including Name and
Name and Business Address Address(1) of Employer
- ------------------------- -----------------------------------------------
Directors
Sir Ian Prosser........... Chairman and Chief Executive
Roger Carr................ Chief Executive of Williams Holdings plc
Tim Clarke................ Chief Executive of Bass Taverns
Robert C. Larson.......... Chairman of the Taubman Realty Group and Vice
Chairman of Taubman Centres Inc.; U.S. Citizen
Iain Napier............... Chief Executive of Bass Brewers
Sir Peter Middleton....... Chairman of Barclays de Zoete Wedd
Sir Geoffrey Mulcahy...... Chief Executive of King-Fisher plc
Richard North............. Finance Director and Chairman of Britvic Soft
Drinks
Sir Michael Perry......... Deputy Chairman of Dunlop Slazenger Group
Limited
Tony Portno............... Chairman of Bass Brewers, Bass International
Brewers and Bass Leisure
Present Principal Occupation Including Name and
Name and Business Address Address(2) of Employer
- ------------------------- -----------------------------------------------
Executive Officers
(Who Are Not Directors)
Thomas R. Oliver.......... Chief Executive Officer of Holiday Inn
Worldwide; U.S. Citizen
F. Spencer Wigley......... Company Secretary
- -------------
(1) Same address as director's or officer's business address except where
indicated.
(2) Same address as director's or officer's business address except where
indicated.
AGREEMENT AND PLAN OF MERGER
dated as of
December 15, 1996,
as amended as of April 1, 1997,
among
HOLIDAY CORPORATION,
HOLIDAY INNS, INC.
and
BRISTOL HOTEL COMPANY
TABLE OF CONTENTS
_____________
Page
----
ARTICLE 1
Definitions
Section 1.01. Definitions.............................................2
ARTICLE 2
The Merger
Section 2.01. The Merger.............................................12
Section 2.02. Closing................................................12
Section 2.03. Conversion of Shares...................................12
Section 2.04. Surrender and Payment..................................13
Section 2.05. HII Intercompany Debt..................................13
Section 2.06. Debt Exchange..........................................13
Section 2.07. Working Capital Statement..............................13
Section 2.08. Working Capital Adjustment.............................15
Section 2.09. Capital Expenditures...................................15
ARTICLE 3
The Surviving Corporation
Section 3.01. Certificate of Incorporation...........................17
Section 3.02. Bylaws.................................................17
Section 3.03. Directors and Officers.................................17
ARTICLE 4
Certain Pre-merger Transactions
Section 4.01. Contribution of Assets and Assumption of Liabilities...17
Section 4.02. Exchange...............................................17
ARTICLE 5
Representations and Warranties of HII and HC
Section 5.01. Corporate Organization and Qualification...............18
Section 5.02. Corporate Authority....................................18
Section 5.03. No Violations; Consents and Approvals..................19
Section 5.04. Capital Stock..........................................20
Section 5.05. Retained Companies.....................................20
Section 5.06. Information............................................21
Section 5.07. HII Operating Statements, Etc..........................21
Section 5.08. Absence of Certain Changes or Events...................22
Section 5.09. Compliance with Applicable Laws........................22
Section 5.10. Retained Real Property.................................23
Section 5.11. Litigation.............................................24
Section 5.12. Taxes..................................................24
Section 5.13. Employee Benefit Plans.................................25
Section 5.14. Environmental Matters..................................26
Section 5.15. Brokers and Finders....................................26
Section 5.16. Employees..............................................26
Section 5.17. Contracts..............................................26
Section 5.18. No Representations or Warranties.......................27
ARTICLE 6
Representations and Warranties of Acquiror
Section 6.01. Corporate Organization and Qualification...............27
Section 6.02. Corporate Authority....................................27
Section 6.03. No Violations; Consents and Approvals..................28
Section 6.04. Capital Stock..........................................29
Section 6.05. Subsidiaries...........................................30
Section 6.06. Information............................................30
Section 6.07. SEC Filings............................................31
Section 6.08. Absence of Certain Events and Changes..................31
Section 6.09. Compliance with Applicable Laws........................31
Section 6.10. Acquiror Real Property.................................32
Section 6.11. Litigation.............................................32
Section 6.12. Taxes..................................................33
Section 6.13. Environmental Matters..................................33
Section 6.14. Brokers and Finders....................................34
Section 6.15. Employees..............................................34
Section 6.16. Financing..............................................34
Section 6.17. Capital Expenditure Plan...............................34
Section 6.18. No Representations or Warranties.......................34
ARTICLE 7
Covenants of HII and HC
Section 7.01. Conduct of HII and HC..................................35
Section 7.02. Notices of Certain Events..............................39
Section 7.03. Liquor and Other Licenses..............................39
Section 7.04. Financial Statements...................................40
ARTICLE 8
Covenants of Acquiror
Section 8.01. Conduct of Acquiror....................................40
Section 8.02. Notices of Certain Events..............................42
Section 8.03. Tax-Free Contribution, Exchange and Merger.............42
Section 8.04. HII Names..............................................43
Section 8.05. Employee Communications................................44
ARTICLE 9
Covenants of Acquiror, HC and HII
Section 9.01. Access to Information..................................44
Section 9.02. Reasonable Efforts.....................................45
Section 9.03. Certain Filings........................................45
Section 9.04. Public Announcements...................................45
Section 9.05. Further Assurances.....................................46
Section 9.06. Meetings of Stockholders...............................46
Section 9.07. Franchise Agreements...................................46
Section 9.08. Certain Contracts......................................46
Section 9.09. Environmental and Structural Matters...................46
ARTICLE 10
Employee Benefits
Section 10.01. Maintenance of Benefits...............................47
Section 10.02. Severance Obligations.................................48
Section 10.03. Savings Plan..........................................49
Section 10.04. Nonqualified Plans....................................50
Section 10.05. Group Health Plans; Workers' Compensation.............50
Section 10.06. Executive Medical and Dental Plan.....................51
Section 10.07. Severance Pay Plan....................................51
Section 10.08. COBRA.................................................51
Section 10.09. Collective Bargaining Agreements......................51
Section 10.10. Relocation Expenses...................................52
Section 10.11. Vacation and Sick Leave...............................52
Section 10.12. Loyalty Bonuses.......................................52
Section 10.13. WARN..................................................52
Section 10.14. Cooperation...........................................53
ARTICLE 11
Conditions to the Merger
Section 11.01. Conditions to the Obligations of Each Party...........53
Section 11.02. Conditions to the Obligations of HII..................54
Section 11.03. Conditions to the Obligations of Acquiror.............55
ARTICLE 12
Survival; Indemnification
Section 12.01. Survival..............................................56
Section 12.02. Indemnification.......................................56
Section 12.03. Indemnification Procedures............................58
ARTICLE 13
Termination
Section 13.01. Termination...........................................60
Section 13.02. Effect of Termination.................................61
ARTICLE 14
Miscellaneous
Section 14.01. Entire Agreement......................................61
Section 14.02. Notices...............................................61
Section 14.03. Amendments; No Waivers................................62
Section 14.04. Expenses..............................................63
Section 14.05. Successors and Assigns................................63
Section 14.06. Governing Law.........................................63
Section 14.07. Counterparts; Effectiveness...........................63
Section 14.08. Defined Terms.........................................63
Section 14.09. Schedules.............................................63
Section 14.10. Knowledge.............................................64
Section 14.11. Consent to Jurisdiction...............................64
SCHEDULES
<TABLE>
<CAPTION>
Schedule Title
- ---------------------------- -----------------------------------
<S> <C>
Schedule 1.01(a)(1) Contributed Assets
Schedule 1.01(a)(2) Core Employees
Schedule 1.01(a)(3)(A) Permitted Liens--Retained Companies
Schedule 1.01(a)(3)(B) Permitted Liens--Acquiror
Schedule 1.01(a)(4) Retained Companies
Schedule 2.05(a) Valuation of Hotels
Schedule 2.07(a) Adjustments to Working Capital
Schedule 5.03 Retained Companies' Consents
Schedule 5.05 Retained Assets
Schedule 5.07(a)(i) Corporate Allocations
Schedule 5.07(a)(ii) HII Operating Schedules
Schedule 5.07(b) Hotels - Opening Year and Room Count
Schedule 5.08 Certain Changes or Events
Schedule 5.09 Compliance with Applicable Laws
Schedule 5.10(a)(i) Retained Real Property - Owned
Schedule 5.10(a)(ii) Retained Real Property - Leased
Schedule 5.10(a)(iii) Retained Real Property - Joint Ventures or Partnership
Schedule 5.10(a)(iv) Retained Real Property - Management Agreements
Schedule 5.10(c) Retained Real Property - Deficiencies in Operating
Condition and Repair
Schedule 5.11 Litigation
Schedule 5.12(b) Taxes - Waivers and Extensions
Schedule 5.12(e) Representations and Covenants of HC
Schedule 5.13(a) HII Employee Plans
Schedule 5.13(d) HII Benefit Arrangements
Schedule 5.14 Environmental Matters
Schedule 5.16 Collective Bargaining Agreements
Schedule 5.17 Contracts
Schedule 6.03 Acquiror Consents
Schedule 6.04 Capital Stock
Schedule 6.05 Subsidiaries - List
Schedule 6.08 Certain Events and Changes
Schedule 6.09 Compliance with Applicable Laws
Schedule 6.10(a)(i) Acquiror Real Property - Owned
Schedule 6.10(a)(ii) Acquiror Real Property - Leased
Schedule 6.10(a)(iii) Acquiror Real Property - Joint Ventures or Partnerships
Schedule 6.11 Litigation
Schedule 6.12(a) Representations and Covenants of Acquiror
Schedule 6.13 Environmental Matters
Schedule 6.15 Collective Bargaining Agreements
Schedule 7.01(c) Conduct of HII and HC - Existing Acquisition Contractual
Obligations
Schedule 7.01(d) Conduct of HII and HC - Dispositions
Schedule 8.01(d) Conduct of Acquiror - Dispositions
Schedule 9.07(1) Hotels Subject to New Franchise Agreements
Schedule 9.07(2) Acquiror Hotels to be Converted to New Brands
Schedule 9.08 Certain Contracts
Schedule 10.01(b) Employee Plans and Benefit Arrangements
Schedule 10.10 Retained Companies' Employees
Schedule 11.03(c) Conditions to the Obligation of Acquiror - Acquiror
Required Consents
Schedule 14.10(a) Knowledge - HII or HC
Schedule 14.10(b) Knowledge - Acquiror
</TABLE>
EXHIBITS
<TABLE>
<CAPTION>
Exhibit Title
- ------------- ------------------------------------------------------------
<S> <C>
Exhibit A Form of the Contribution and Assumption Agreement
Exhibit B Form of the Stockholders Agreement
Exhibit C Form of the Hotel Properties Agreement
Exhibit D Form of the Registration Rights Agreement
Exhibit E Form of the Franchise Agreements
Exhibit F Description of the San Francisco Agreement of Purchase
and Sale
Exhibit G Description of the Canadian Agreement of Purchase and
Sale
Exhibit H Description of the Contingency Agreement
Exhibit I Form of the Certificate of Incorporation of the Surviving
Corporation
Exhibit J Form of the Bylaws of the Surviving Corporation
</TABLE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of
December 15, 1996, as amended as of April 1, 1997, among Holiday
Corporation, a Delaware corporation ("HC"), Holiday Inns, Inc., a Tennessee
corporation and wholly owned subsidiary of HC ("HII"), and Bristol Hotel
Company, a Delaware corporation ("Acquiror").
W I T N E S S E T H:
WHEREAS, HC and HII have (i) determined to enter into this
Agreement which, among other things, provides for HII to merge with and
into Acquiror, with Acquiror as the surviving corporation (the "Merger"),
as a result of which HC will become a stockholder of Acquiror, and (ii)
approved a contribution and assumption agreement substantially in the form
of Exhibit A attached hereto (the "Contribution Agreement"), pursuant to
which and subject to the terms of which HII will contribute all of its
assets and liabilities other than the Retained Business (as defined herein)
to New Spinco, a Delaware corporation to be formed in connection with the
Contribution (as defined herein) ("New Spinco");
WHEREAS, Acquiror has informed HC that it is unwilling to
acquire in the Merger any assets or liabilities of HII other than those
relating solely to the Retained Business as provided herein and in the
Contribution Agreement and the purpose of the Contribution Agreement is to
make possible the Merger by divesting HII of the businesses, operations and
liabilities to be conducted by New Spinco.
WHEREAS, following the time of the Contribution and prior to
the Effective Time, HII shall, in a partial liquidation, exchange with HC
all outstanding shares of common stock, par value $0.01 per share, of New
Spinco ("New Spinco Common Stock") for 900 shares of HII Common Stock (as
defined herein) owned by HC (the "Exchange");
WHEREAS, the respective Boards of Directors of HC, HII and
Acquiror have determined that, following the Contribution and the Exchange,
the Merger and the other transactions contemplated under this Agreement
would be in the best interest of their respective corporations and
stockholders and are consistent with, and in furtherance of, their
respective businesses, strategies and goals;
WHEREAS, in a related transaction immediately after the
Merger, Acquiror shall (i) subject to the adjustments described herein,
exchange a portion of the amount of HII Intercompany Debt (as defined
herein) assumed by Acquiror pursuant to the Merger for 6,981,832 shares of
Acquiror Stock (as defined herein) and (ii) repay the portion of HII
Intercompany Debt remaining after such exchange in cash;
WHEREAS, it is the intention of the parties to this
Agreement that for federal income tax purposes (a) the Contribution and the
Exchange shall qualify as a "reorganization" within the meaning of Section
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code"),
and that the Exchange shall constitute a tax-free distribution under
Section 355 of the Code and (b) the Merger shall qualify as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code in
which no gain or loss is recognized; and
WHEREAS, in connection with this Agreement, the parties
hereto, or, if applicable, their respective Affiliates, have, subject to
certain conditions, agreed to enter into, a stockholders agreement, a hotel
properties agreement, a registration rights agreement and franchise
agreements, substantially in the form of Exhibits B through E,
respectively, attached hereto and have agreed to enter into asset purchase
agreements, in accordance with the descriptions in Exhibits F and G
attached hereto.
NOW, THEREFORE, in consideration of the promises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms used herein
shall have the following meanings:
"Acquiror Material Adverse Effect" means a Material Adverse
Effect on Acquiror and its Subsidiaries, taken as a whole.
"Acquiror SEC Documents" means all reports, schedules,
forms, statements and other documents required to be filed by Acquiror with
the SEC under the Securities Act and the Exchange Act since December 12,
1995.
"Acquiror Stock" means the common stock, par value $0.01 per
share, of Acquiror.
"Affiliate" means, with respect to any Person, any other
Person who is directly or indirectly controlling, controlled by or under
the common control with such Person; provided that no shareholder of
Acquiror shall be deemed an Affiliate of any other stockholder of Acquiror
solely by reason of any investment in Acquiror. For the purposes of this
definition, the term "control", when used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise.
"Asset Purchase Agreements" means the Canadian Agreement of
Purchase and Sale and of the San Francisco Agreement of Purchase and Sale.
"Base Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to
time as its Prime Rate.
"Benefit Arrangement" means any employment, severance or
similar contract or arrangement whether or not written or any plan, policy,
fund, program or contract or arrangement (whether or not written) providing
for compensation, bonus, profit-sharing, stock option or other stock
related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that is not an
Employee Plan.
"Building Codes" means, with respect to any Retained Real
Property, all applicable requirements of all building, construction, fire,
life-safety and similar Laws relating to the construction, use and
occupancy of such Retained Real Property as in effect and applicable as of
the relevant time; provided that Building Codes shall not include (i)
requirements thereof that first become effective after the Effective Time
and (ii) the Americans with Disabilities Act or other applicable handicap
access laws.
"Canadian Agreement of Purchase and Sale" means the
Agreement of Purchase and Sale between Holiday Inns of Canada Ltd. and
Bristol Hotel Asset Co., the terms of which shall be substantially in
accordance with the description thereof on Exhibit G.
"Canadian Hotels" means the Hotels (as defined in the
Canadian Agreement of Purchase and Sale).
"Carve-out Business" means the Retained Business, the
business conducted by the San Francisco Hotel and the business conducted by
the Canadian Hotels.
"COBRA Coverage" means the continuation coverage required by
Section 4980B(f) of the Code.
"Confidentiality Agreement" means the Confidentiality
Agreements dated as of June 14, 1996 and September 14, 1996 among Bass plc,
HII and Acquiror.
"Contingency Agreement" means the Contingency Agreement
among HC, HII and Acquiror the terms of which shall be substantially in
accordance with the description thereof on Exhibit H.
"Contract" means any note, bond, mortgage, indenture, lease,
contract, obligation, commitment or agreement (whether written or oral).
"Contributed Assets" means all Assets (as defined in the
Contribution Agreement) of HII and its Subsidiaries, other than the
Retained Assets, including but not limited to the interests in the Hotels
listed on Schedule 1.01(a)(i) and the franchise business.
"Contributed Liabilities" means all Liabilities (as defined
in the Contribution Agreement) of HII and its Subsidiaries other than the
Retained Liabilities including without limitation any costs, expenses or
liabilities incurred by the Retained Companies in connection with the
Transactions prior to the Effective Time and, without limiting the
generality or effect of the foregoing, all liabilities or obligations,
whether arising by contract or otherwise to any Person relating to,
resulting from or arising out of any franchise or similar agreement or any
of HII's franchising business, whether such liability arises or is first
asserted prior to or after the Effective Time.
"Contribution" means the contribution of the Contributed
Assets to New Spinco and the assumption of the Contributed Liabilities by
New Spinco contemplated by Article 2 of the Contribution Agreement.
"Core Employees" shall mean those 145 employees listed on
Schedule 1.01(a)(2) hereto.
"Damages" means any damage (including without limitation
punitive damages if assessed or amended in a third-party action), loss
(including without limitation lost profits), liability, cost or expense
(including without limitation reasonable expenses of investigation and
reasonable attorneys' fees and expenses).
"DGCL" means the General Corporation Law of the State of
Delaware.
"Employee Plan" means any "employee benefit plan," as
defined in Section 3(3) of ERISA.
"Environmental Laws" means any applicable federal, state,
local or foreign law, regulation or rule, each as in effect as of the date
hereof and as of the Effective Time, relating to the environment or to
pollutants, contaminants or wastes or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substance, material or waste.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single employer
under Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Environmental Liabilities" means Liabilities, whether
accrued, contingent, absolute, determined, determinable or otherwise, which
arise out of or in connection with (i) the Hotels, (ii) any Environmental
Law and (iii) actions occurring or conditions existing on or prior to the
Closing Date (including without limitation those matters identified
pursuant to Section 9.09 hereof).
"Franchise Agreements" means the franchise agreements, each
substantially in one of the forms attached as Exhibit E, to be entered
into, pursuant to Section 9.07, by HIFI and Acquiror or the Subsidiaries of
Acquiror reasonably approved by HIFI.
"GAAP" means United States generally accepted accounting
principles consistently applied.
"Governmental Entity" means any government or any court,
arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, federal, state, local
or foreign.
"Group Health Plans" means the Holiday Inns, Inc. Life
Insurance and Health Care Benefit Plan.
"HIFI" means Holiday Inns Franchising, Inc., a Delaware
corporation.
"HII By-laws" means the by-laws of HII, as amended.
"HII Charter" means the articles of incorporation of HII, as
amended.
"HII Common Stock" means the common stock, par value $1.50,
of HII.
"HII Intercompany Debt" means the debt in the principal
amount of $500 million owed by HII to BAI, unless adjusted in accordance
with this Agreement.
"Holiday Parties" means HC and HII.
"Hotel" means each of the hotels listed on Schedule
5.10(a)(i) through (a)(iv), which may be amended at the option of HC prior
to February 1, 1997 to add the Holiday Inn Salt Lake City Airport Hotel,
including the Retained Real Property used in connection with the operations
of such hotel and all furniture, fixtures, furnishings, equipment,
attachments, inventory and other tangible and intangible personal property
located in or about, or used exclusively in connection with, such Retained
Real Property, to the extent the same constitute Retained Assets.
"Hotel Properties Agreement" means the Hotel Properties
Agreement to be dated the date of the Effective Time between HC and
Acquiror, substantially in the form of Exhibit C hereto.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
"HSR Filings" means any filings required under the HSR Act.
"Intellectual Property" means domestic and foreign patents,
patent applications, invention disclosures to be filed or awaiting filing
determinations, trademark and service mark applications, registered
trademarks, registered service marks, registered copyrights, trademarks,
service marks and trade names.
"Laws" means all applicable statutes, laws, regulations,
rules, judgments, orders and decrees of Governmental Entities.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, restriction on voting or
transfer, encumbrance, adverse claim or defect in title of any kind
whatsoever in respect of such property. For the purposes hereof, a Person
shall be deemed to own subject to a Lien any property or asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such property or asset.
"Material Adverse Effect" means, with respect to any entity
(or group of entities taken as a whole), such state of facts, event, change
or effect as has had, or could reasonably be expected to have, a material
adverse effect on the business, results of operations, financial condition
or prospects of such entity (or, if with respect thereto, of such group of
entities taken as a whole) other than events, changes or developments
relating to the economy in general or resulting from industry-wide
developments affecting companies in similar businesses, or on the ability
of such entity (or group of entities) to consummate the transactions
contemplated hereby, including the Contribution, the Exchange and the
Merger, or to perform in all material respects its obligations under any of
the Transaction Documents to which it is or will be a party; provided that
any determination of whether any state of facts, event, change or effect
would have a Material Adverse Effect on the Retained Companies shall be
made giving effect to the transactions contemplated by the Contribution
Agreement.
"Multiemployer Plan" means each Employee Plan that is a
Multiemployer Plan, as defined in Section 3(37) of ERISA.
"Nonqualified Plans" means the Holiday Inns, Inc.
Nonqualified Savings Plan, the Executive Deferred Compensation Plan, the
Deferred Compensation Plan and the Supplemental Executive Retirement Plan.
"NYSE" means the New York Stock Exchange, Inc.
"Permit" means any license, franchise, permit, concession,
order, approval or registration from, of or with a Governmental Entity.
"Permitted Liens" means those Liens (i) listed on Schedule
1.01(a)(3)(A), with respect to the Retained Companies, (ii) listed on
Schedule 1.01(a)(3)(B), with respect to Acquiror, (iii) for Taxes not yet
due or payable or being contested in good faith and for which appropriate
reserves have been taken, (iv) that constitute mechanics', carriers',
workers' or like liens with respect to obligations that are not overdue or
are being contested in good faith and for which appropriate reserves have
been taken, (v) that constitute leases or tenancies of parts or areas of
the property in question, (vi) that individually or in the aggregate would
not and could not reasonably be expected to have a material adverse effect
on the use or value of the property to which the Lien relates or (vii) that
are created, suffered or assumed by Acquiror.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Pre-Effective Returns" means all Tax Returns and reports
required to be filed prior to the Effective Time which include any of the
Retained Companies.
"Proxy Statement" means the proxy statement and form of
proxies relating to the issuance of Acquiror Stock in the Merger and the
adoption of this Agreement as filed with the SEC and delivered to the
stockholders of Acquiror.
"Qualifying Event" shall have the meaning set forth in
Section 4980(f)(3) of the Code.
"Registration Rights Agreement" means the Registration
Rights among HC, Bass America Inc., United/Harvey Holdings, L.P. and
Acquiror, which shall be substantially in the form attached hereto as
Exhibit D .
"Retained Assets" shall have the meaning set forth in the
Contribution Agreement.
"Retained Business" means the business conducted using the
Retained Assets and the Retained Liabilities but excluding without
limitation the Contributed Assets and the Contributed Liabilities to be
transferred to or assumed by New Spinco pursuant to the Contribution
Agreement.
"Retained Companies" means HII and its direct and indirect
Subsidiaries in which any of HII and its direct and indirect Subsidiaries
has an interest, each such Person being listed on Schedule 1.01(a)(4), but
excluding those companies to be transferred to New Spinco pursuant to the
Contribution Agreement.
"Retained Companies' Employees" means the employees of the
Retained Companies at the Hotels and the San Francisco Hotel as of the
Effective Time.
"Retained Companies Material Adverse Effect" means a
Material Adverse Effect on the Retained Companies, taken as a whole.
"Retained Liabilities" shall have the meaning set forth in
the Contribution Agreement.
"San Francisco Agreement of Purchase and Sale" means the
Agreement of Purchase and Sale between Holiday Inns B.V. and Acquiror, the
terms of which shall be substantially in accordance with the description
thereof on Exhibit F.
"San Francisco Hotel" means the Hotel (as defined in the San
Francisco Agreement of Purchase and Sale).
"Savings Plan" means the Holiday Inns, Inc. Savings and
Retirement Plan.
"SEC" means the Securities Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Stockholders' Agreement" means the Amended and Restated
Stockholders' Agreement to be dated the date of the Effective Time among
Acquiror, United/Harvey Holdings, L.P., HC, Bass plc and Bass America,
Inc., substantially in the form of Exhibit B hereto.
"Structural Deficiency" or "Structural Defects" means, with
respect to any Retained Real Property, any failure or imminent failure of
any major structural (such as, without limitation, foundation, load-bearing
walls and columns and roof), mechanical (such as, without limitation,
HVAC), electrical and plumbing components of such Retained Real Property
(or any part thereof) to perform the function for which it was designed, or
any failure of such Retained Real Property (or any part thereof) to be in
compliance with applicable Building Codes.
"Subsidiary" means, with respect to any Person, any entity
of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"Tax" (including with correlative meaning, the terms "Taxes"
and "Taxable") means (A) all forms of taxation, whenever created or
imposed, and whether imposed by a local, municipal, governmental, state,
foreign, federal or other body (the "Taxing Authority") and, without
limiting the generality of the foregoing, shall include any income, gross
receipts, ad valorem, excise, value-added, sales, use, transfer, franchise,
license, stamp, occupation, withholding (on amounts paid to or by a
Person), employment, payroll, property, environmental tax, real estate tax
or assessment, premium or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any
Taxing Authority responsible for the imposition of any such tax, (B) any
liability for the payment of any amounts of the type described in (A) as a
result of being a member of an affiliated, consolidated, combined or
unitary group, or being a party to any agreement or arrangement whereby the
liability for payments of such amounts was determined or taken into account
with reference to the liability of any other Person, and (C) liability for
the payment of any amounts as a result of being party or subject to any tax
sharing agreement or with respect to the payment of any amounts of the type
described in (A) or (B) as a result of any express or implied obligations
to indemnify any other Person.
"Tax Return" means any return, report, statement,
information statement and the like required to be filed with any authority
with respect to Taxes.
"TBCA" means the Tennessee Business Corporation Act.
"Title IV Plan" means an Employee Plan subject to Title IV
of ERISA other than any Multiemployer Plan.
"Transaction Documents" means this Agreement, the
Contribution Agreement, the Stockholders' Agreement, the Hotel Properties
Agreement, the Asset Purchase Agreements, the Franchise Agreements, the
Registration Rights Agreement and any other documents relating to each of
the foregoing agreements.
"Transactions" means all transactions contemplated by the
Transaction Documents.
(b) The following terms shall have the meanings assigned to
such terms in the following sections:
Term Section
----- -------
Acquiror Consents 6.03(a)
Acquiror Permits 6.02
Acquiror Real Property 6.10
Acquiror Securities 6.04(b)
Acquiror Subsidiary Securities 6.05(b)
Adverse Tax Development 11.02(c)
Affected Employee 10.02
Articles of Merger 2.01(a)
BAI 2.06
Capex Notes 2.09(b)
Capital Expenditure 2.09(a)
Capital Expenditure Period 2.09(a)
Capital Expenditure Statement 2.09(a)
Certificate of Merger 2.01(a)
Closing 2.02
Commitment 6.16
Contingency Date 13.01(b)
Effective Time 2.01(a)
Executive Medical Plan 10.06
Existing Acquiror Credit Agreement 8.01(A)(c)
Final Estimated Cost 9.09(b)
Final Working Capital 2.08
Financial Statements 7.04
HC Report 9.09(b)
HII Affiliated Group 5.12(a)
HII Shares 5.04(a)
Holiday Indemnitees 12.02(c)
indemnified party 12.03(a)
indemnifying party 12.03(a)
Individual Item 12.02(a)
Initial Report 9.09(a)
IRS 7.01(B)(d)
IRS Ruling 7.01(B)(d)
Joint Venture 5.10(a)
Management Agreement 5.10(a)
Merger Consideration 2.03(b)
1993 - 1995 Operating Statements 5.07
1996 Operating Statements 5.07
Retained Company Plan 5.13(a)
Retained Companies' Consents 5.03(a)
Retained Companies' Permits 5.03(a)
Retained Companies' Savings Plan 10.03(b)
Retained Company Securities 5.05(b)
Retained Real Property 5.10(a)
Severance Payments 10.02
Surviving Corporation 2.01(b)
Total Revenues 2.09(b)
Working Capital 2.07(a)
Working Capital Statement 2.07(a)
ARTICLE 2
The Merger
Section 2.01. The Merger. (a) As soon as practicable after
satisfaction or, to the extent permitted hereunder, waiver of all conditions
to the Merger set forth in this Agreement, HII and Acquiror will file a
certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware and an Articles of Merger (the "Articles of
Merger") with the Secretary of State of the State of Tennessee and make all
other filings or recordings required by the DGCL and the TBCA in connection
with the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is specified in the Certificate of Merger
(the "Effective Time").
(b) At the Effective Time, HII shall be merged with and into
Acquiror in accordance with the DGCL and the TBCA whereupon the separate
existence of HII shall cease, and Acquiror shall be the surviving
corporation (as such, the "Surviving Corporation").
(c) From and after the Effective Time, Acquiror shall possess all the
rights, privileges and powers and be subject to all of the restrictions,
disabilities and duties of HII and Acquiror, all as provided under the DGCL
and the TBCA.
Section 2.02. Closing. Unless this Agreement has
terminated and the transactions contemplated under this Agreement have been
abandoned pursuant to Section 13.01 and subject to the fulfillment or, if
permitted, waiver of the conditions set forth in Article 11, the closing of
the Merger (the "Closing") will take place at a location in New York City
to be mutually agreed upon prior to the Closing as promptly as practicable
(and in any event within two business days) following the fulfillment or,
if permissible, waiver of the conditions of Article 11, unless another date
or time is agreed to in writing by Acquiror and the Holiday Parties.
Section 2.03. Conversion of Shares. At the Effective Time:
(a) each outstanding share of HII Common Stock held by HII as
treasury stock immediately prior to the Effective Time shall be canceled,
and no payment shall be made with respect thereto;
(b) except as otherwise provided in Section 2.03(a) above, the 100
shares of HII Common Stock outstanding immediately prior to the Effective
Time will be converted into the right to receive in the aggregate 2,391,286
shares (the "Merger Consideration") of duly authorized, validly issued,
fully paid and nonassessable shares of Acquiror Stock.
Section 2.04. Surrender and Payment. Upon surrender to
Acquiror of a certificate or certificates representing the 100 shares of
HII Common Stock outstanding immediately prior to the Effective Time, HC
will be entitled to receive Acquiror Stock issuable in respect of such
shares. Until so surrendered, each such certificate shall, as of and after
the Effective Time, represent for all purposes, only the right to receive
such Acquiror Stock.
Section 2.05. HII Intercompany Debt. At the Effective
Time, the amount of HII Intercompany Debt outstanding shall be $500
million; provided that if, upon the mutual agreement of the parties hereto,
any of the Hotels listed on Schedule 2.05(a) shall cease to be a Retained
Asset, the amount of the HII Intercompany Debt shall be reduced by the
amount listed opposite such Hotel's name on Schedule 2.05(a) and the
Contributed Liabilities shall be increased by a like amount.
Section 2.06. Debt Exchange. Immediately following the
Effective Time, Acquiror shall (i) exchange principal amount $199,854,939
of the HII Intercompany Debt assumed by Acquiror pursuant to the Merger for
6,981,832 shares of Acquiror Stock and (ii) repay the portion of the HII
Intercompany Debt remaining after such exchange in a certified or official
bank check payable in immediately available funds to Bass America Inc.
("BAI"); provided that if the amount of HII Intercompany Debt is reduced
pursuant to Section 2.05, the number of shares and cash exchanged for HII
Intercompany Debt pursuant to this Section 2.06 shall be reduced such that
the total number of shares and cash received by HC and BAI collectively
pursuant to the Merger and the debt exchange is reduced pro rata.
Section 2.07. Working Capital Statement. (a) As promptly as
practicable and in any event within 90 days after the Effective Time, HC
will cause to be prepared and delivered to Acquiror a working capital
statement, together with an unqualified report of Deloitte & Touche LLP
thereon, and a certificate based on such working capital statement setting
forth HC's calculation of Working Capital. The working capital statement
contemplated hereby (the "Working Capital Statement") shall, in accordance
with Schedule 2.07(a), fairly present the Working Capital position of HII
immediately prior to the Effective Time and after giving effect to the
Contribution and the Exchange. HC will afford Acquiror the opportunity to
participate in and review HC's preparation of the Working Capital
Statement, including without limitation the opportunity to observe any
physical inventory count and other accounting procedures and a reasonable
opportunity to review HC's final draft of the Working Capital Statement
prior to the delivery thereof to Acquiror as hereafter provided. If
Acquiror and HC agree upon such computation within the 90-day period
referred to above, the remaining provisions of this Section 2.07 will not
apply; if Acquiror and HC do not so agree, then the Working Capital
Statement prepared by HC will be delivered by HC to Acquiror and the
remaining provisions of this Section 2.07 will apply. "Working Capital"
shall be calculated as set forth in Schedule 2.07(a).
(b) If Acquiror disagrees with HC's calculation of Working Capital
delivered pursuant to Section 2.07(a), Acquiror may, within 90 days after
delivery of the documents referred to in Section 2.07(a) deliver a notice
to HC disagreeing with such calculation and setting forth Acquiror's
calculation of such amount. Any such notice of disagreement shall specify
in reasonable detail those items or amounts as to which Acquiror disagrees,
and Acquiror shall be deemed to have agreed with all other items and
amounts contained in the Working Capital Statement and the calculation of
Working Capital delivered pursuant to Section 2.07(a).
(c) If a notice of disagreement shall be delivered pursuant to
Section 2.07(b), Acquiror and HC shall cause Coopers & Lybrand LLP or
another firm of independent accountants of nationally recognized standing
reasonably satisfactory to Acquiror and HC (who shall not have any material
relationship with Acquiror or HC) promptly to review this Agreement and the
disputed items or amounts for the purpose of calculating Working Capital.
In making such calculation, such independent accountants shall consider
only those items or amounts in the Working Capital Statement or HC's
calculation of Working Capital as to which Acquiror has disagreed and such
other issues as may be impacted by the issues as to which Acquiror has
disagreed. Such independent accountants shall deliver to Acquiror and HC,
as promptly as practicable, a report setting forth such calculation. Such
report shall be final and binding upon Acquiror and HC. The cost of such
review and report shall be borne by HC if the difference between Final
Working Capital and HC's calculation of Working Capital delivered pursuant
to Section 2.07(a) is greater than the difference between Final Working
Capital and Acquiror's calculation of Working Capital delivered pursuant to
Section 2.07(b) and by Acquiror if the first such difference is less than
the second such difference and otherwise equally by Acquiror and HC.
(d) Acquiror and HC agree that they will, and agree to cause their
respective independent accountants and HII to, cooperate and assist in the
preparation of the Working Capital Statement and the calculation of Working
Capital and in the conduct of the audits and reviews referred to in this
Section, including without limitation the making available to the extent
necessary of books, records, work papers and personnel.
Section 2.08. Working Capital Adjustment. (a) If Final
Working Capital exceeds $0, Acquiror shall pay to New Spinco, in the manner
and with interest as provided in Section 2.08(b), the amount of such
excess. If Final Working Capital is less than $0, HC shall pay to
Acquiror, in the manner and with interest as provided in Section 2.08(b),
the amount of such deficiency. "Final Working Capital" means the Working
Capital as agreed by Acquiror and HC pursuant to Section 2.07(a), or (ii)
if a notice of disagreement is delivered pursuant to Section 2.07(b), as
shown in the independent accountant's calculation delivered pursuant to
Section 2.07(c); provided that, in no event shall Final Working Capital be
more than HC's calculation of Working Capital delivered pursuant to Section
2.07(a) or less than Acquiror's calculation of Working Capital delivered
pursuant to Section 2.07(b).
(b) Any payment by Acquiror pursuant to Section 2.08(a) shall be
made under a contingent note from HII to New Spinco (such contingent note
having been delivered to New Spinco prior to the Effective Time and being
in form reasonably acceptable to Acquiror) and any such payment or other
payment contemplated by Section 2.08(a) shall be made within 10 days after
the Working Capital has been determined by delivery by Acquiror in payment
of the contingent note of a certified or official bank check payable in
immediately available funds to New Spinco or by causing such payments to be
credited to the account of New Spinco as may be designated by it. Any
payment due Acquiror pursuant to Section 2.08(a) shall be made within 10
days after Working Capital has been determined by delivery by HC of a
certified or official bank check in immediately available funds to Acquiror
or by causing such payment to be credited to the account of Acquiror
designated by it. The amount of any payment to be made pursuant to this
Section shall bear interest from and including the Effective Time to but
excluding the date of payment at a rate per annum equal to the Base Rate in
effect from time to time during the period from the Effective Time to the
date of payment. Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on the basis of a
year of 365 days and the actual number of days elapsed.
Section 2.09. Capital Expenditures. (a) As promptly as
practicable and in any event within 90 days after the Effective Time, HC
shall deliver to Acquiror a statement of capital expenditures setting forth
the Capital Expenditures made on the Hotels from and including October 1,
1996 to and including the date of the Effective Time (the "Capital
Expenditure Period") together with an unqualified opinion of Deloitte &
Touche thereon. The statement of capital expenditures contemplated hereby
(the "Capital Expenditure Statement") shall fairly present the Capital
Expenditures during the Capital Expenditure Period. HC will afford
Acquiror the opportunity to participate in and review HC's preparation of
the Capital Expenditure Statement. "Capital Expenditures" means the cost
incurred in making additions to, improvements to and replacements of Hotels
owned or leased by any Retained Company, that in accordance with Holiday
Inn Worldwide's normal accounting practice, provided that such practice is
in accordance with the Uniform System of Accounts for Hotels and GAAP, are
to be capitalized rather than expensed.
(b) HII shall borrow from BAI under a revolving credit
facility (the "Capex Notes") the amounts spent on Capital Expenditures it
believes in good faith to be in excess of the sum of $15,000,000 and 4% of
Total Revenues during the Capital Expenditure Period for the portion of the
Capital Expenditure Period then elapsed as such amounts become due and
payable. Upon determination of the amount of Capital Expenditures pursuant to
Section 2.09(a), the amount outstanding under the Capex Notes shall be
automatically adjusted so that the principal amount thereof shall be equal to
the excess of the amount spent on Capital Expenditures during the Capital
Expenditure Period over the sum of $15,000,000 and 4% of Total Revenues for
the Capital Expenditure Period and the amount of the Capex Notes outstanding
shall be deemed to be such adjusted amount for all purposes hereunder.
Acquiror shall assume the Capex Notes pursuant to the Merger and repay the
Capex Notes within 10 days after Capital Expenditures has been determined
according to Section 2.09(a) by delivery by Acquiror of a certified or
official bank check in immediately available funds to BAI or by causing such
payment to be credited to the account of BAI designated by it. If Capital
Expenditures, determined according to Section 2.09(a), are less than the sum
of $15,000,000 and 4% of Total Revenues for the Capital Expenditure Period,
HC shall pay to Acquiror within 10 days after Capital Expenditures have been
determined the amount of such deficiency by delivery by HC of a certified or
official bank check in immediately available funds to Acquiror or by causing
such payment to be credited to the account of Acquiror designated by it. The
amount of any payment to be made pursuant to this Section shall bear interest
from and including the Effective Time to but excluding the date of payment at
a rate per annum equal to the Base Rate in effect from time to time during the
period from the Effective Time to the date of payment. Such interest shall be
payable at the same time as the payment to which it relates and shall be
calculated daily on the basis of a year of 365 days and the actual number of
days elapsed. "Total Revenues" means, with respect to any period all revenues
and income derived directly or indirectly from the use or operation of any
Hotel owned or leased by any Retained Company (including, without limitation,
total room sales, food and beverage sales, telephone, telegraph and telex
revenues, rental or other payments from lessees, sublessees and
concessionaires (but not the gross receipts of such lessees, sublessees or
concessionaires), and the actual cash proceeds of business interruption, use,
occupancy or similar insurance).
ARTICLE 3
The Surviving Corporation
Section 3.01. Certificate of Incorporation. The
certificate of incorporation of the Surviving Corporation shall be
substantially in the form of Exhibit I hereto until amended in accordance
with DGCL and other applicable laws.
Section 3.02. Bylaws. The bylaws of the Surviving
Corporation shall be substantially in the form of Exhibit J hereto until
amended in accordance with DGCL and other applicable laws.
Section 3.03. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed and
qualified in accordance with applicable law, (a) the directors of the
Surviving Corporation shall be as provided for in Section 2.01 of the
Stockholders' Agreement, and (b) the officers of Acquiror at the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE 4
Certain Pre-merger Transactions
Section 4.01. Contribution of Assets and Assumption of
Liabilities. HII and New Spinco will consummate the Contribution pursuant
to the terms of, and subject to the conditions to, the Contribution
Agreement, prior to the Effective Time.
Section 4.02. Exchange. Following the Contribution and
prior to the Effective Time, HII shall, in a partial liquidation, exchange
with HC all outstanding shares of New Spinco Common Stock for 900 shares of
HII Common Stock.
ARTICLE 5
Representations and Warranties of HII and HC
Except as otherwise indicated herein, each of HII and HC hereby
represents and warrants to Acquiror as follows:
Section 5.01. Corporate Organization and Qualification.
Each of the Holiday Parties and the other Retained Companies is a
corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction in which it is organized. Each of the Holiday
Parties and the other Retained Companies is duly qualified, or licensed to
do business and in good standing as a foreign corporation, in each
jurisdiction in which the properties owned, leased or operated, or the
business conducted, by it require such qualification, except for any such
failure so to qualify, or be licensed or be in good standing which would
not, individually or in the aggregate, have a Retained Companies Material
Adverse Effect. Each of the Holiday Parties and the other Retained
Companies has the requisite corporate power and authority to own and
operate its properties and carry on its businesses as they are now being or
will be (immediately after the Contribution) conducted. Each of the
Holiday Parties and the other Retained Companies have heretofore made
available to Acquiror complete and correct copies of the charter and by-
laws of such Person, each as amended to date and currently in full force-
and effect.
Section 5.02. Corporate Authority. Each Holiday Party has
the requisite corporate power and authority to execute, deliver and perform
each Transaction Document to which it is a party and to consummate the
transactions contemplated thereby. The execution, delivery and performance
of each Transaction Document by each Holiday Party that is a party thereto
and the consummation by HII of the Contribution, the Exchange, the Merger
and of the other transactions contemplated to be performed by it under the
Transaction Documents have been duly authorized by all necessary corporate
actions, including without limitation, the approval of this Agreement by
HII's Board of Directors and HC as the sole shareholder of HII, and no
other corporate proceedings on the part of any Holiday Party are necessary
to authorize any Transaction Document or to consummate the transactions so
contemplated. Each Transaction Document to which a Holiday Party is a
party is, or when executed and delivered will be, a valid and binding
agreement of such party, enforceable against such party in accordance with
the terms thereof except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of the court before which any proceeding
therefore may be brought.
Section 5.03. No Violations; Consents and Approvals. (a)
None of the execution, delivery or performance by any Holiday Party of each
Transaction Document to which it is a party or the consummation by any
Holiday Party of the transactions contemplated thereby will conflict with,
or result in a violation or breach of, or constitute a default (with or
without notice or lapse of time or both) under, or give rise to any right
of termination, amendment, cancellation or acceleration of any material
obligation or loss of a material benefit under, or result in the creation
of a Lien (other than a Permitted Lien) upon, any of the properties or
assets (including without limitation the Retained Assets) of the Retained
Companies under (i) the charter or bylaws of the Retained Companies, (ii)
subject to obtaining the third-party consents set forth in Schedule 5.03
(the "Retained Companies' Consents"), any loan or credit agreement, note,
bond, mortgage, indenture, lease (other than tenant leases), Management
Agreement or Joint Venture agreement applicable to any Retained Company, or
any of their respective properties or assets, (iii) other agreements,
instruments, or any permits, concessions, franchises, licenses, variances,
exemptions, orders and approvals of all Governmental Entities applicable to
any Retained Company, or any of their respective properties or assets
("Retained Companies' Permits"), or (iv) subject to the governmental
filings and other matters referred to in Section 5.03(b), any Law
applicable to the Retained Companies or any of their respective properties
or assets (including without limitation the Retained Assets), other than,
in the case of clauses (iii) and (iv), any such conflicts, violations,
defaults, rights, losses or Liens that, individually or in the aggregate,
could not reasonably be expected to have a Retained Companies Material
Adverse Effect.
(b) Except for the filing of the Certificate of Merger, the Articles
of Merger, applicable HSR Filings and other consents, approvals, orders,
authorizations, registrations, declarations, filings and agreements
expressly provided for in the Transaction Documents, no consent, approval,
order, authorization of, or registration, declaration or filing with, any
Governmental Entity is required with respect to HC, HII or any of the other
Retained Companies in connection with the execution, delivery or
performance by each of HC and HII of each Transaction Document to which it
is or will be a party or the consummation by HC or HII, as the case may be,
of the transactions contemplated thereby, except for consents, approvals,
orders, authorizations, registrations, declarations or filings the failure
of which to obtain or to make would not, individually or in the aggregate,
have a Retained Companies Material Adverse Effect.
Section 5.04. Capital Stock. The authorized capital stock
of HII consists of 120,000,000 shares of HII Common Stock. As of the date
hereof and immediately prior to the Contribution, there are and will be
issued and outstanding 1,000 shares of HII Common Stock, all of which are,
as of the date hereof, owned by HC and no shares are, as of the date
hereof, held as treasury stock. After the Contribution and the Exchange
there will be outstanding 100 shares of HII common stock (the "HII
Shares"), all of which are and will be owned by HC.
(b) The HII Shares have been duly authorized and validly issued and
are fully paid and non-assessable. Except for the HII Shares, there are no
outstanding (i) shares of capital stock or other voting securities of HII,
(ii) securities of HII convertible into or exchangeable for shares of
capital stock or other voting securities of HII, (iii) options or other
rights to acquire from HII, or other obligations of HII to issue, any
capital stock, other voting securities or securities convertible into or
exchangeable for capital stock or voting securities of HII, or (iv) bonds,
debentures, notes or other obligations or securities other than HII Shares
the holders of which have the right to vote with the stockholders on any
matter (the items in clauses (i), (ii), (iii) and (iv) being referred to
collectively as the "HII Securities"). There will be, immediately after
the Exchange, no outstanding obligations of any Retained Company to
repurchase, redeem or otherwise acquire any HII Securities. No class of
capital stock of HII is entitled to preemptive rights.
(c) HC is and as of immediately prior to the Effective Time will be,
the sole record and beneficial owner of all of the HII Shares, free and
clear of any Lien and any other limitation or restriction (including
without limitation any restriction on the right to vote, sell or otherwise
dispose of such HII Shares), and will transfer and deliver to Acquiror at
the Effective Time valid title to such HII Shares free or clear of any Lien
or any such limitation or restriction.
Section 5.05. Retained Companies. (a) Schedule 5.05
completely and correctly (i) lists each Hotel and the identity of the
Retained
Company, Joint Venture or other Person that owns or holds an interest in
the Hotel and the nature of that ownership or other interest in the Hotel;
and (ii) sets forth the name and jurisdiction of incorporation or
organization of each Retained Company identified in (i).
(b) Except as disclosed in Schedule 5.05, all of the outstanding
capital stock of, or other voting securities or ownership interests in,
each Retained Company has been duly authorized and validly issued and are
fully paid and non-assessable and are owned solely by HII, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other voting securities or
ownership interests). Except as listed on Schedule 5.05, there are no
outstanding (i) shares of capital stock or other voting securities of, or
ownership interest in, any Retained Company, (ii) securities of any
Retained Company convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Retained
Company, or (iii) options or other rights to acquire from any Retained
Company, or other obligation of any Retained Company to issue, any capital
stock or other voting securities of, or ownership interests in, or any
securities convertible into or exchangeable for any capital stock or other
voting securities of, or ownership interests in, any Retained Company (the
items in clauses (i), (ii) and (iii) being referred to collectively as the
"Retained Company Securities"). There will be, immediately after the
Exchange and immediately prior to the Effective Time, no outstanding
obligations of any Retained Company to repurchase, redeem or otherwise
acquire any outstanding Retained Company Securities.
(c) Upon completion of the Contribution and the Exchange, except
for interests in the Retained Companies and Joint Ventures identified in
Schedule 5.05, none of the Retained Companies will own, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity.
Section 5.06. Information. (a) None of the information
supplied or to be supplied by any Holiday Party or any Affiliate thereof or
any of their respective representatives for inclusion or incorporation by
reference in the Proxy Statement will at the time such Proxy Statement is
filed with the SEC and at the time of the mailing of the Proxy Statement to
the stockholders of Acquiror contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. No representation is made by
any Holiday Party with respect to statements made in the Proxy Statement
based on information supplied by Acquiror or any of its Subsidiaries for
inclusion therein, or with respect to information concerning Acquiror or
any of its Subsidiaries incorporated by reference therein.
Section 5.07. HII Operating Statements, Etc. (a) Except
as set forth on Schedule 5.07(a)(i), the 1996 HII Operating Statements
fairly present the results of operations of each Hotel for the periods set
forth therein. The 1993-1995 Operating Statements fairly present the
results of operations of each Hotel for the periods set forth therein,
except for the corporate allocations of costs and revenues actually made by
HII for those years in a manner consistent with those allocations set forth
in Schedule 5.07(a)(i). As used herein, the "1996 HII Operating
Statements" and the "1993-1995 Operating Statements" means the operating
statements for the years ended September 30, 1996, and 1995, 1994 and 1993,
respectively. Each of the 1993-1995 and 1996 Operating Statements has been
prepared in accordance with GAAP, except as identified on Schedule
5.07(a)(ii), and is based on the books and records maintained for each
Hotel.
(b) For each Hotel, Schedule 5.07(b) lists both the year in
which such hotel opened and the total number of rooms available in such
Hotel.
(c) As of the Effective Time, the Retained Companies will
have no liabilities, actual or contingent, except (i) for the Retained
Liabilities, (ii) for those Liabilities as to which Acquiror is indemnified
under Article 12 and (iii) as reflected in the Working Capital Statement.
Section 5.08. Absence of Certain Changes or Events. Except as
disclosed in Schedule 5.08, or as otherwise contemplated by the Transaction
Documents, since September 30, 1996, HII and the other Retained Companies have
conducted the Retained Business in the ordinary course, consistent with past
practices, and there have not been (i) any events, changes or developments
which would have, individually or in the aggregate, a Retained Companies
Material Adverse Effect, (ii) any change by the Holiday Parties in their
accounting methods, principles or practices, (iii) any entering into,
establishment or amendment of, any Holiday Employee Plan or any other increase
in the compensation payable or to become payable to any Retained Companies'
Employee, except for annual plan renewals and as otherwise noted on the
Schedules or (iv) any revaluation for financial statement purposes by HII or
any of the other Retained Companies of any asset (including without limitation
any writing down of the value of any property, investment or asset or writing
off of notes or accounts receivable).
Section 5.09. Compliance with Applicable Laws. Except as
listed in Schedule 5.09, the Retained Companies are in compliance with the
Retained Companies' Permits and all Laws applicable to them, except where
the failure to be in compliance would not, individually or in the
aggregate, have a Retained Companies Material Adverse Effect. The Retained
Companies have not received any written notice of any administrative, civil
or criminal investigation or audit (other than Tax audits) by any
Governmental Entity relating to the Retained Business that, individually or
in the aggregate, would have a Retained Companies Material Adverse Effect.
The Retained Business has all Permits that are required in order to permit
it to carry on its business as it is presently conducted, except those
Permits which the failure to have would not, individually or in the
aggregate, have a Retained Companies Material Adverse Effect. All such
Permits relating to the Retained Business are in full force and effect,
except for any such Permit as to which the failure so to be in full force
and effect would not, individually or in the aggregate, have a Retained
Companies Material Adverse Effect. This Section 5.09 does not relate to
real property matters (for which Section 5.10 is applicable), Tax matters
(for which Section 5.12 is applicable), employee benefits matters (for
which Section 5.13 is applicable) or environmental matters (for which
Section 5.14 is applicable).
Section 5.10. Retained Real Property. Schedules 5.10(a)(i)
through (a)(iv) describes all real properties owned, held or used by the
Retained Companies (each a "Retained Real Property"), (i) Schedule
5.10(a)(i) lists the Retained Real Properties owned by the Retained
Companies, (ii) Schedule 5.10(a)(ii) lists the Retained Real Properties
held by the Retained Companies under leases and the leases under which the
same are held, (iii) Schedule 5.10(a)(iii) lists the Retained Real
Properties held by the Retained Companies under joint ventures or
partnerships (each a "Joint Venture") and the joint venture or partnership
agreements under which the same are held , and (iv) Schedule 5.10(a)(iv)
lists each management agreement (each a "Management Agreement") to which a
Retained Company is a party and the hotels that are the subject of such
Management Agreements and the owners and lessors of those properties.
(b) Each lease, Joint Venture agreement and Management Agreement
described in Schedules 5.10(a)(i) through (a)(iv) is valid, binding and
enforceable in accordance with its material terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of rights generally and to general principles of equity,
neither the applicable Retained Company nor, to the knowledge of HII, any
other party thereto is in default under any material provision of such
lease or agreement, and to the knowledge of HII no event or circumstance
has occurred which, with notice or lapse of time or both, would constitute
a default under any material provision of such lease or agreement.
(c) Except as set forth on Schedule 5.10(c), the facilities and
equipment owned by the Retained Companies and each Joint Venture and the
facilities under Management Agreements are in good operating condition and
repair and have been reasonably maintained except for such condition and
repair as would not have a Material Adverse Effect on the operations of
such facility.
(d) Each Retained Company listed on Schedules 5.10(a)(i) through
(a)(iv) as being the owner or lessee of a Retained Real Property has
insurable fee simple title to, or an insurable leasehold interest in, such
Retained Real Property. No such Retained Real Property (i) is subject to
any Liens other than Permitted Liens or (ii) is subject to any
encumbrances, easements, exceptions, encroachments, protrusions, options,
rights of first refusal, rights of first offer, other purchase rights or
any other title matters that are generally objectionable to purchasers of
similar assets or their secured lenders, except for such matters that do
not, individually or in the aggregate, have a material adverse effect on
the use or value of such Retained Real Property.
Section 5.11. Litigation. Except as disclosed in Schedule
5.11, there are no civil, criminal or administrative actions, suits,
claims, hearings, investigations or proceedings pending or, to the
knowledge of HII, threatened against any of the Retained Companies that,
individually or in the aggregate, would if decided adversely have a
Retained Companies Material Adverse Effect. Except as disclosed in
Schedule 5.11, there are no outstanding judgments, orders, decrees,
stipulations or awards against any of the Retained Companies or their
respective properties or businesses that would, individually or in the
aggregate, have a Retained Companies Material Adverse Effect. This Section
5.11 does not relate to environmental matters (for which Section 5.14 is
applicable).
Section 5.12. Taxes. (a) HII and each other entity with which
HII is included as a member of a consolidated group for tax purposes
(collectively, the "HII Affiliated Group") has filed, or will file or cause
to be filed, with the appropriate United States, state, local and foreign
Governmental Entities, all material Tax Returns required to be filed by it
on or prior to the Effective Time (taking into account all extensions of
due dates) and such Tax Returns were true, complete and correct in all
material respects (as to Tax Returns not filed as of the date of this
Agreement but filed at or prior to the Effective Time, will be true,
complete and correct in all material respects) and reflected (or will so
reflect) the liability for taxes of HII and each of its Subsidiaries, and
each member of the HII Affiliated Group has paid or adequately reserved or
provided for all Taxes shown thereon as owing.
(b) Except as set forth on Schedule 5.12(b), the Retained Companies
have not waived or extended any applicable statute of limitations relating
to the assessment of any federal, state or local Taxes relating to the
Retained Business.
(c) There is no Tax sharing or allocation agreement under which any
Retained Company will have any obligations after the Effective Time.
(d) HII is not, and immediately prior to the Effective Time will not
be, an investment company within the meaning of Section 368(a)(2)(F)(iii)
or (iv) of the Code.
(e) The representations and covenants of HC in Schedule 5.12(e) are
incorporated herein by reference.
Section 5.13. Employee Benefit Plans. (a) Schedule 5.13(a)
identifies each Employee Plan that is entered into, maintained, administered
or contributed to, as the case may be, by HII or any of its ERISA Affiliates,
and under which any such Person has any liability or obligation, or which
covers any Retained Companies' Employee or any former employee of the Retained
Companies ("Retained Company Plan"). HII has furnished or made available to
Acquiror copies of such Employee Plans (and, if applicable, related trust
agreements) and all amendments thereto and summary plan descriptions thereof
together with the annual reports (Form 5500 including, if applicable, Schedule
B thereto) and the most recent actuarial valuation reports prepared in
connection with any such Employee Plan during the past three years. No
Retained Company Plan is a Multiemployer Plan or a Title IV Plan.
(b) Neither HII nor any of its ERISA Affiliates has engaged in, or
is a successor or parent corporation to an entity that has engaged in, a
transaction described in Section 4069 of ERISA.
(c) Each Retained Company Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service and, to the knowledge of HII, no event has
occurred since the date of such determination letter to adversely affect the
qualified status of such Employee Plan. There are no matters for which a
filing has to be made under the IRS' Voluntary Compliance Resolution Program
and each such Employee Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all applicable Laws.
(d) Schedule 5.13(d) identifies each Benefit Arrangement that is
entered into, maintained, administered or contributed to, as the case may
be, by HII or any of its ERISA Affiliates, or under which any such Person
has any liability or obligation, or which covers any Retained Companies'
Employee or any former employee of the Retained Companies. HII has
furnished or made available to Acquiror copies or descriptions of each such
Benefit Arrangement (and, if applicable, related trust agreements) and all
amendments thereto and summary plan and descriptions thereof. Each such
Benefit Arrangement has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable Laws.
Section 5.14. Environmental Matters. Except as set forth in
Schedule 5.14:
(a) No notice, notification, demand, request for information, citation,
summons, complaint or order has been received by or is pending, or to the
knowledge of the Holiday Parties, is threatened by any Person against the
Retained Business, other than where such notice, notification, demand, request
for information, citation, summons, complaint or order has been fully
resolved, or where such resolution, individually or in the aggregate, would
not result in a Retained Companies Material Adverse Effect;
(b) Since January 1, 1994, there has been no environmental
investigation conducted in relation to any Hotel with respect to any matter
which would, individually or in the aggregate, have a Retained Companies
Material Adverse Effect; and
(c) To the knowledge of HII, no Retained Company has any liability or
obligation, fixed or contingent, under, or is in violation of, any
Environmental Law, which, individually or in the aggregate, would have a
Retained Companies Material Adverse Effect.
Section 5.15. Brokers and Finders. None of HII or any of its
directors, officers or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in
connection with the transactions contemplated hereby, except that Bass plc has
retained Lazard Freres & Co. LLC as its financial advisor, the fees and
expenses of which shall be paid by HC.
Section 5.16. Employees. There is no labor strike or work
stoppage pending or, to the knowledge of the Holiday Parties, threatened
against any of the Retained Companies. Except as set forth on Schedule
5.16, none of the Retained Companies is on the date hereof a party to any
collective bargaining agreement relating to its employees.
Section 5.17. Contracts. Except as disclosed in Schedule
5.17, neither HII nor any of the other Retained Companies is in breach or
default under any Contract, except where such breach or default would not,
individually or in the aggregate, have a Retained Companies Material
Adverse Effect. To the knowledge of HII, as of the date of this Agreement,
none of the other parties to any Contract that is material to the operation
or value of the Retained Business is (with or without the lapse of time or
the giving of notice, or both) in breach or default, except for those
breaches or defaults which would not, individually or in the aggregate,
have a Retained Companies Material Adverse Effect.
Section 5.18. No Representations or Warranties. The
Holiday Parties acknowledge that none of Acquiror or its Subsidiaries, any
of their Affiliates or any other Person has made any representation or
warranty, expressed or implied, as to the accuracy or completeness of any
information regarding any of Acquiror or its Subsidiaries not included in
the Transaction Documents, and none of Acquiror or its Subsidiaries or
Affiliates or any other Person will have or be subject to any liability to
the Holiday Parties or any of their respective Subsidiaries, any of their
Affiliates or any other Person resulting from the distribution to the
Holiday Parties or any Subsidiary's use of, any such information. The
Holiday Parties further acknowledge that, except as expressly set forth in
the Transaction Documents, there are no representations or warranties of
any kind, expressed or implied, with respect to any of Acquiror or any of
its Subsidiaries.
ARTICLE 6
Representations and Warranties of Acquiror
Acquiror represents and warrants that, except as disclosed in
Acquiror SEC Reports filed prior to the date hereof:
Section 6.01. Corporate Organization and Qualification.
Each of Acquiror and its Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and is duly qualified or licensed to do business and
in good standing as a foreign corporation in each jurisdiction in which the
properties owned, leased or operated, or the businesses conducted, by it
require such qualification or license, except for any such failure so to
qualify, or be licensed or be in good standing which would not,
individually or in the aggregate, have an Acquiror Material Adverse Effect.
Acquiror and its Subsidiaries have the requisite corporate power and
authority to carry on its businesses as they are now being conducted.
Acquiror has heretofore made available to HC complete and correct copies of
the certificate of incorporation and by-laws of Acquiror, each as amended
to date and currently in full force and effect.
Section 6.02. Corporate Authority. Acquiror has the
requisite corporate power and authority to execute, deliver and, subject to
the approval of the Merger and the authorization of the issuance of shares
of Acquiror Stock in the Merger by the stockholders of Acquiror, perform
each Transaction Document to which it is a party and to consummate the
transactions contemplated thereby. The execution, delivery and performance
by Acquiror of each Transaction Document to which it is a party and the
consummation by it of the transactions contemplated thereby have been duly
authorized by its Board of Directors, and no other corporate proceedings on
its part are or will be necessary to authorize each Transaction Document to
which it is a party or to consummate the transactions contemplated thereby,
subject to the approval of the adoption of this Agreement and the
authorization of the issuance of shares of Acquiror Stock in connection
with the Merger by the stockholders of Acquiror. Each Transaction Document
to which Acquiror is a party is, or when executed and delivered will be, a
valid and binding agreement of Acquiror, enforceable against Acquiror in
accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, and except that
the availability of equitable remedies, including specific performance, may
be subject to the discretion of the court before which any proceeding
therefore may be brought.
Section 6.03. No Violations; Consents and Approvals.
(a) None of the execution, delivery or performance by any of Acquiror or its
Subsidiaries of each Transaction Document to which it is a party or the
consummation by any of Acquiror and its Subsidiaries of the transactions
contemplated thereby will conflict with, or result in a violation or breach
of, or constitute a default (with or without notice or lapse of time or
both) under, or give rise to any right of termination, amendment,
cancellation or acceleration of any material obligation or loss of a
material benefit under, or result in the creation of a Lien upon, any of
the properties or assets of Acquiror and its Subsidiaries under (i) the
charters or bylaws, or comparable documents of Acquiror and its
Subsidiaries, (ii) subject to obtaining the third-party consents set forth
in Schedule 6.03 (the "Acquiror Consents"), any loan or credit agreement,
note, bond, mortgage, indenture, lease, management or joint venture
agreement, (iii) other agreements, instruments, or any permits,
concessions, franchises, licenses, variances, exemptions, orders and
approvals of all Governmental Entities applicable to Acquiror and its
Subsidiaries, or any of their respective properties or assets (the
"Acquiror's Permits") , or (iv) subject to the governmental filings and
other matters referred to in Section 6.03(b), any Law applicable to
Acquiror or its Subsidiaries or any of their respective properties or
assets other than, in the case of clauses (iii) and (iv), any such
conflicts, violations, defaults, rights, losses or Liens that, individually
or in the aggregate, could not reasonably be expected to have an Acquiror
Material Adverse Effect.
(b) Except for the filing of the Certificate of Merger, the Articles
of Merger, applicable HSR Filings and other consents, approvals, orders,
authorizations, registrations, declarations, filings and agreements
expressly provided for in the Transaction Documents, and except for filings
under the Exchange Act, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required with respect to Acquiror or any of its Subsidiaries, in connection
with the execution, delivery or performance by Acquiror of each Transaction
Document to which it is or will be a party or the consummation by it of the
transactions contemplated thereby except for consents, approvals, orders,
authorizations, registrations, declarations or filings the failure of which
to obtain or to make would not, individually or in the aggregate, have an
Acquiror Material Adverse Effect.
Section 6.04. Capital Stock. (a) The authorized capital stock
of Acquiror consists solely of (i) 75,000,000 shares of Acquiror Stock, of
which an aggregate of 16,565,840 shares of Acquiror Stock were issued and
outstanding as of the close of business on December 12, 1996 and no shares
were held in the treasury of Acquiror as of the close of business on
December 12, 1996; and (ii) 25,000,000 shares of preferred stock, par value
$0.01 per share, of Acquiror, of which no shares were issued and
outstanding on December 12, 1996. As of the close of business on December
12, 1996, there were outstanding under Acquiror Option Plans options to
purchase an aggregate of 883,843 shares of Acquiror Stock (subject to
adjustment on the terms set forth in Acquiror Option Plans). As of
December 12, 1996, Acquiror had no shares of its capital stock reserved for
issuance other than shares of Acquiror Stock reserved for issuance pursuant
to Acquiror Option Plans. Except as set forth above, as of the date of
this Agreement, there are no securities convertible into or exchangeable
for, or options, warrants, calls, subscriptions, rights or Contracts of any
kind to which Acquiror or any of its Subsidiaries is a party to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Acquiror or of any of
its Subsidiaries.
(b) All of the outstanding shares of capital stock of Acquiror have
been duly authorized and validly issued and are fully paid and non-
assessable. All of the shares of Acquiror Stock to be issued in the Merger
are duly authorized and, when issued in accordance with the terms of this
Agreement (including the approval by the stockholders of Acquiror of the
issuance thereof), will be duly and validly issued, fully paid, non-
assessable and free of preemptive rights. Except as listed in Schedule
6.04, there are no outstanding (i) shares of capital stock or other voting
securities of Acquiror, (ii) securities of Acquiror convertible into or
exchangeable for shares of capital stock or other voting securities of
Acquiror, (iii) options or other rights to acquire from Acquiror, or other
obligations of Acquiror to issue, any capital stock, other voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of Acquiror or (iv) bonds, debentures, notes or other
obligations or securities other than Acquiror Common Stock the holders of
which have the right to vote with the stockholders on any matter (the items
in clauses (i), (ii), (iii) and (iv) being referred to collectively as the
"Acquiror Securities"). There are no outstanding obligations of Acquiror
to repurchase, redeem or otherwise acquire any Acquiror Securities. No
class of capital stock of Acquiror is entitled to preemptive rights.
Section 6.05. Subsidiaries. (a) Schedule 6.05 lists the
name and jurisdiction of incorporation or organization of each Subsidiary
of Acquiror.
(b) Except as disclosed in Schedule 6.05, all of the outstanding capital
stock of, or other voting securities or ownership interests in, each
Subsidiary of Acquiror, has been duly authorized and validly issued and is
fully paid and non-assessable and is owned by Acquiror, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other voting securities or
ownership interests). Except as listed on Schedule 6.05(b)(2), there are
no outstanding (i) shares of capital stock or other voting securities of,
or ownership interest in, any Subsidiary of Acquiror, (ii) securities of
any Subsidiary of Acquiror convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any such
Subsidiary, (iii) options or other rights to acquire from Acquiror or its
Subsidiaries, or other obligation of Acquiror or any of its Subsidiary to
issue, any capital stock or other voting securities of, or ownership
interests in, or any securities convertible into or exchangeable for any
capital stock or other voting securities of, or ownership interests in, any
Subsidiary of Acquiror, or (iv) bonds, debentures, notes or other
obligations or securities of any subsidiary of Acquiror, the holders of
which have the right to vote with the stockholders of such Subsidiary on
any matter (the items in clauses (i), (ii), (iii) and (iv) being referred
to collectively as the "Acquiror Subsidiary Securities"). There are no
outstanding obligations of Acquiror or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding Acquiror Subsidiary
Securities.
Section 6.06. Information. (a) The financial statements of
Acquiror included in Acquiror SEC Documents have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, with respect
to any unaudited financial statement, the absence of footnote disclosures
and subject to normal year-end adjustments and other adjustments described
therein). Each of the consolidated balance sheets of Acquiror and its
Subsidiaries fairly presents in all material respects the consolidated
financial position of Acquiror and its Subsidiaries as of its date and each
of the consolidated statements of income, cash flows and stockholders'
equity of Acquiror and its Subsidiaries fairly presents in all material
respects the consolidated results of operations, cash flows and retained
earnings, as the case may be, of Acquiror and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
normal year-end adjustments and other adjustments described therein), in
each case in accordance with GAAP.
(b) None of the information supplied or to be supplied by Acquiror
or its representatives for inclusion or incorporation by reference in the
Proxy Statement will at the time such Proxy Statement is filed with the SEC
and at the time of the mailing of the Proxy Statement to the stockholders
of Acquiror contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No representation is made by Acquiror with respect
to statements made in the Proxy Statement based on information supplied by
the Holiday Parties or any of their respective Subsidiaries for inclusion
therein or with respect to information concerning the Holiday Parties or
any of their respective Subsidiaries incorporated by reference therein.
Section 6.07. SEC Filings. (a) Acquiror has filed the
Acquiror SEC Documents. As of its filing date, each Acquiror SEC Document
filed, as amended or supplemented, if applicable, (i) complied in all
material respects with the applicable requirements of the Securities Act or
the Exchange Act, as applicable and the rules and regulations thereunder
and (ii) did not, at the time it was filed (and at the effective date
thereof, in the case of a registration statement), contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 6.08. Absence of Certain Events and Changes.
Except as disclosed in Schedule 6.08 or as otherwise contemplated by the
Transaction Documents, since September 30, 1996 Acquiror and its
Subsidiaries have conducted their respective businesses in the ordinary
course, consistent with past practices, and there have not been any events,
changes or developments which would have, individually or in the aggregate,
an Acquiror Material Adverse Effect.
Section 6.09. Compliance with Applicable Laws. Except as
disclosed in Schedule 6.09, Acquiror and its Subsidiaries are in compliance
with all Acquiror Permits and Laws applicable to them, except where the
failure to be in compliance would not individually or in the aggregate,
have an Acquiror Material Adverse Effect. None of Acquiror or any of its
Subsidiaries has received any written notice of any administrative, civil
or criminal investigation or audit (other than Tax audits) by any
Governmental Entity that, individually or in the aggregate, would have an
Acquiror Material Adverse Effect. Each of Acquiror and its Subsidiaries
has all Permits that are required in order to permit it to carry on its
business as it is presently conducted, except those Permits which the
failure to have would not, individually or in the aggregate, have an
Acquiror Material Adverse Effect. All Permits are in full force and
effect, except for any such Permit as to which the failure so to be in full
force and effect would not, individually or in the aggregate, have an
Acquiror Material Adverse Effect. This Section 6.09 does not relate to Tax
matters (for which Section 6.12 is applicable) or environmental matters
(for which Section 6.13 is applicable).
Section 6.10. Acquiror Real Property. (a) Schedules 6.10(a)(i)
through (a)(iv) describes all real properties owned, held or used by
Acquiror and its Subsidiaries as of the date hereof (each an "Acquiror Real
Property"), (i) Schedule 6.10(a)(i) describes Acquiror Real Properties
owned by Acquiror and its Subsidiaries as of the date hereof, (ii)
Schedule 6.10(a)(ii) describes Acquiror Real Properties held by Acquiror
and its Subsidiaries under leases as of the date hereof and the leases
under which the same are held, and (iii) Schedule 6.10(a)(iii) describes
Acquiror Real Properties held by Acquiror and its Subsidiaries as of the
date hereof under joint ventures or partnerships and the joint venture or
partnership agreements under which the same are held.
(b) Each lease, joint venture agreement and partnership
agreement described in Schedules 6.10(a)(i) through (a)(iv) is, to the
knowledge of Acquiror, valid, binding and enforceable in accordance with
its material terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of rights generally
and to general principles of equity, neither Acquiror or its Subsidiary (as
applicable) nor, to the knowledge of Acquiror, any other party thereto is
in default under any material provision of such lease or agreement, and to
the knowledge of Acquiror, no event or circumstance has occurred which,
with notice or lapse of time or both, would constitute a default under any
material provision of such lease or agreement, except in each case to the
extent that any invalidity, unenforceability or default, individually or in
the aggregate, would not have an Acquiror Material Adverse Effect.
Section 6.11. Litigation. Except as disclosed in Schedule 6.11,
there are no civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of
Acquiror, threatened, against Acquiror or any of its Subsidiaries that,
individually or in the aggregate, would, if decided adversely, have an
Acquiror Material Adverse Effect. Except as disclosed in Schedule 6.11,
there are no outstanding judgments, orders, decrees, stipulations or awards
against Acquiror or any of its Subsidiaries or their respective properties
or businesses that would, individually or in the aggregate, have an
Acquiror Material Adverse Effect. This Section 6.11 does not relate to
environmental matters (for which Section 6.13 is applicable).
Section 6.12. Taxes. (a) The representations and covenants of
Acquiror in Schedule 6.12(a) are incorporated herein by reference.
(b) Absent a final determination to the contrary by the competent Tax
Authority, Acquiror shall treat the Merger as a tax-free "reorganization",
within the meaning of Section 368(a)(1)(A), in which no gain or loss is
recognized, for all Tax purposes.
(c) All Tax Returns required to be filed by Acquiror before the date
hereof have been filed, and all Taxes shown as due and payable on such
Returns have been timely paid, except to the extent that the failure to
file or to file timely, individually or in the aggregate, could not be
reasonably expected to have an Acquiror Material Adverse Effect.
(d) There are no claims or investigations pending or, to the
knowledge of Acquiror, threatened relating to Taxes that individually or in
the aggregate, could be reasonably expected to have an Acquiror Material
Effect on Acquiror and its Subsidiaries, and none of Acquiror or any of its
Subsidiaries have waived or extended any applicable statute of limitations
in connection with the assessment of federal, state or local Taxes relating
to Acquiror and its Subsidiaries.
(e) There is no Tax sharing or allocation agreement under which
Acquiror or any of its Subsidiaries will have any obligations after the
Effective Time.
Section 6.13. Environmental Matters. Except as set forth in
Schedule 6.13:
(a) No notice, notification, demand, request for information,
citation, summons, complaint or order has been received by, or is pending
or, to the knowledge of Acquiror, is threatened by any Person against,
Acquiror or any of its Subsidiaries, other than where such notice,
notification, demand, request for information, citation, summons, complaint
or order has been fully resolved, or where such resolution would not,
individually or in the aggregate, result in an Acquiror Material Adverse
Effect;
(b) Since January 1, 1994, there has been no environmental
investigation conducted of which Acquiror has knowledge in relation to
Acquiror or any of its Subsidiaries or any property or facility owned,
leased or operated by Acquiror or any of its Subsidiaries with respect to
any matter which would, individually or in the aggregate, have an Acquiror
Material Adverse Effect, which has not been delivered to HC at least five
days prior to the date hereof; and
(c) To the knowledge of Acquiror, none of Acquiror or any of its
Subsidiaries has any liability or obligation, fixed or contingent, under, or
is in violation of, any Environmental Law, which, individually or in the
aggregate, could reasonably be expected to have an Acquiror Material Adverse
Effect.
Section 6.14. Brokers and Finders. None of Acquiror or any
of its directors, officers or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders
fees in connection with the transactions contemplated hereby, except that
Acquiror has retained Merrill Lynch & Co. as its financial advisor, the
fees and expenses of which shall be paid by Acquiror.
Section 6.15. Employees. There is no labor strike or work
stoppage pending or, to the knowledge of Acquiror, threatened against
Acquiror or any of its Subsidiaries. Except as set forth in Schedule 6.15,
none of Acquiror or its Subsidiaries is on the date hereof a party to any
collective bargaining agreement relating to its employees, that
individually or in the aggregate, would have an Acquiror Material Adverse
Effect.
Section 6.16. Financing. Acquiror has entered into the
Commitment (the "Commitment") as previously delivered to HC.
Section 6.17. Capital Expenditure Plan. Acquiror has
adopted a capital expenditure plan, pursuant to which it plans to spend an
additional $150 million to further upgrade the hotels acquired pursuant to
the Merger and Asset Purchase Agreements.
Section 6.18. No Representations or Warranties. Acquiror
acknowledges that none of the Holiday Parties, any of their Affiliates or
any other Person has made any representation or warranty, expressed or
implied, as to the accuracy or completeness of any information regarding
any of HII, HC, New Spinco or the Retained Business not included in the
Transaction Documents, and none of the Holiday Parties or any of their
Affiliates or any other Person will have or be subject to any liability to
Acquiror or any of its Subsidiaries, any of their Affiliates or any other
Person resulting from the distribution to Acquiror or Acquiror's or any of
Acquiror's Subsidiaries' use of, any such information. Acquiror further
acknowledges that, except as expressly set forth in the Transaction
Documents, there are no representations or warranties of any kind,
expressed or implied, with respect to any of HII, HC, New Spinco or the
Retained Companies.
ARTICLE 7
Covenants of HII and HC
Section 7.01. Conduct of HII and HC. (A) During the
period from the date of this Agreement and continuing until the Effective
Time, each of the Holiday Parties as to itself and the Retained Companies
(with respect to the conduct of the Retained Business) agrees that, except
for the Contribution, the Exchange and as otherwise contemplated by the
Transaction Documents, HII will, and will cause each of the other Retained
Companies to, conduct the Retained Business in the ordinary course thereof
consistent with past practice and in compliance in all material respects
with all applicable Laws and Permits and, to the extent consistent
therewith, use reasonable efforts to (a) preserve intact the Hotels, (b)
keep available the services of their current officers and other key
employees, and (c) preserve their relationships with those Persons having
business dealings with them to the end that their goodwill and ongoing
businesses will be unimpaired at the Effective Time. Without limiting the
generality or effect of the foregoing, and except as otherwise expressly
provided in this Agreement or the Contribution Agreement, prior to the
Effective Time, HII will not, and will not permit any of the other Retained
Companies to:
(a) Issuance of Securities. Issue, transfer, sell, dispose of or
pledge, or authorize or agree to the issuance, transfer, sale or
disposition or pledge by any of the Retained Companies (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) of, any shares of capital stock or any
voting securities of any of the Retained Companies, or any options or other
securities convertible into or exchangeable for any such shares of capital
stock or any voting securities of any of the Retained Companies or amend
any of the terms of any such securities or agreements relating to such
capital stock outstanding on the date hereof, other than the issuance,
transfer, sale or disposition by a wholly-owned Subsidiary of its capital
stock to its parent.
(b) Governing Documents. Amend the HII Charter or HII By-laws or
the certificate of incorporation or by-laws or comparable organizational
documents of any Retained Company.
(c) No Acquisitions. (i) Acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any property
or business or (ii) make or agree to make any other investment in any person
(whether by means of loan, capital contribution, purchase of capital stock
or other securities or otherwise) that would be part of the Retained
Business, except for acquisitions or investments by HII pursuant to the
existing contractual obligations listed in Schedule 7.01(c) or investments
in any entity that was a Retained Business before giving effect to such
investment.
(d) No Dispositions. Sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of the assets of the Retained Business other than in the ordinary
course of business consistent with past practice or pursuant to the
existing contractual commitments and other arrangements, each as listed in
Schedule 7.01(d).
(e) Benefit Plans. Except as required by Law, (i) adopt any plan,
arrangement or policy which would become an Employee Plan or amend an Employee
Plan to the extent such adoption or amendment would create or increase any
liability or obligation on the part of the Retained Business that will not
either (A) be fully performed or satisfied prior to the Effective Time or (B)
be assumed by New Spinco or one of its Subsidiaries pursuant to the
Contribution Agreement or (ii) adopt any increase in or establishment of any
bonus, insurance, welfare, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including without limitation the
granting of stock options, stock appreciation rights performance awards or
restricted stock awards) or stock purchase rights or plans.
(f) Pay Increases. Other than in the ordinary course of the
Retained Business consistent with past practices, (i) grant any increases
in the base compensation of any Retained Companies' Employee except for
increases in the base compensation of any Retained Companies' Employees
scheduled to go into effect on January 1, 1997 as previously provided to
Acquiror or (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required by any of the Employee Plans as in
effect on the date hereof to any Retained Companies' Employee.
(g) Liens. Create, incur, suffer to exist or assume any Lien on the
Retained Assets, except for Permitted Liens.
(h) Tax-Free Contribution, Exchange and Merger. Take or cause to be
taken prior to the Effective Time any action that would disqualify the
Contribution and the Exchange from being treated as a "reorganization"
within the meaning of Section 368(a)(1)(D) of the Code or the Exchange from
being treated as tax-free under Section 355 of the Code or the Merger from
being treated as a "reorganization" within the meaning of Section
368(a)(1)(A) of the Code.
(i) Representation and Warranties. Take or agree or commit to take any
action that would make any representation and warranty of HII or HC hereunder
inaccurate in any material respect at, or as of any time prior to, the
Effective Time.
(j) The Contribution Agreement. Terminate, amend, modify or waive
compliance with any of the terms or conditions of the Contribution Agreement
directly or indirectly affecting the Retained Assets or the Retained
Liabilities or affecting the rights or obligations of HII thereunder from and
after the Effective Time.
(k) Certain Transactions. Adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of HII or any of the other
Retained Companies (other than the Contribution, the Exchange and the
Merger).
(l) Certain Contracts. Enter into any contract providing for
acceleration of payment of any liability or performance of any benefit or
payment or other consequence as a result of a change of control of HII or
any of the Retained Companies or enter into any contract, arrangement or
understanding requiring the lease or purchase of equipment, materials,
supplies or services over a period greater than 12 months, which is not
cancelable without penalty on 30 days' or less notice or involves the
payment by HII or any of the Retained Companies of more than $100,000
unless such purchase or lease is necessary to correct, on an emergency
basis, any condition that could be reasonably expected to affect adversely
the life, safety or health of the customers and employees of the Retained
Business.
(m) Other Actions. Enter into any contract, agreement, commitment
or arrangement, or take any corporate or other action, to do any of the
foregoing.
(B) Without limiting the generality or effect of the above,
and except as otherwise expressly provided in this Agreement or the
Contribution Agreement, prior to the Effective Time, HII will, and will cause
the other Retained Companies to:
(a) Further Covenants. (i) Prepare and timely file with the
relevant Taxing Authority all material Pre-Effective Returns; (ii)
promptly notify Acquiror of any action, suit, proceeding, claim or audit
pending against or with respect to the Retained Companies in respect of any
Taxes where there is a reasonable possibility of a determination or
decision which would materially increase the Tax liabilities of any of the
Retained Companies (other than Taxes for which New Spinco has assumed
liability under the Contribution Agreement); and (iii) not, without the
prior written consent of Acquiror, change any of the Tax elections,
accounting methods, conventions or principles which relate to the Retained
Business that has the effect of increasing the Retained Liabilities of the
Retained Companies.
(b) Maintenance of Properties. Continue to maintain and repair all
property material to the operation of the Retained Business in a manner
consistent with past practice.
(c) Asset Purchase Agreements. Use its reasonable efforts to
cause the Asset Purchase Agreements to become effective and to cause the
closing of each Asset Purchase Agreement to take place simultaneously with the
closing of this Agreement.
(d) IRS Ruling. To obtain as promptly as possible (i) an
advance letter ruling from the Internal Revenue Service (the "IRS") in
response to the HII ruling request submitted to the IRS on November 12, 1996,
to the effect that the Contribution and Exchange will be a "reorganization"
within the meaning of Section 368(a)(1)(D) of the Code and will be tax-free
under Section 355 of the Code (the "IRS Ruling") and (ii) an opinion of Davis
Polk & Wardwell to the effect that the Merger constitutes a tax-free
reorganization under Section 368(a)(1)(A) of the Code in which no gain or loss
is recognized.
(e) Representation Letter. To deliver to Acquiror a
representation letter substantially in the form of the HC representation
letter attached hereto as Schedule 5.12(e).
(f) Drop-down; Consents. Use its reasonable efforts to
cooperate with Acquiror to (i) contribute certain of the Retained Assets to
one or more wholly owned Subsidiaries of HII and (ii) obtain certain consents,
subordination and/or estoppel agreements with respect to ground leases, Joint
Venture agreements, Management Agreements and other material contracts as
required by Acquiror's lenders in connection with the Transactions; provided
that HII will not be required to incur any expense, obligation or liability in
connection with such efforts.
Section 7.02. Notices of Certain Events. HII and HC shall promptly
notify Acquiror of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions, other than consents, the failure of which to obtain would not
have a Retained Companies Material Adverse Effect;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by the Transaction Documents;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or
involving or otherwise affecting the Retained Business which, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to Section 5.11 or which relate to the consummation of the
transactions contemplated by this Agreement; and
(d) any fact, event or circumstance which makes any
representation or warranty of the Holiday Parties herein untrue or incorrect
in any material respect or involves a breach of any covenant herein of the
Holiday Parties.
Section 7.03. Liquor and Other Licenses. (a) The Holiday
Parties shall cooperate, and prior to the Effective Time shall cause the
Retained Business to cooperate, with Acquiror in connection with obtaining
the regulatory approvals of the transactions contemplated by this Agreement
as may be required by any Governmental Entities administering laws
regulating the sale of alcoholic beverages, including but not limited to
Acquiror obtaining, by transfer or otherwise, such approvals for, and/or
the issuance of all liquor, cabaret and other federal, state and local
licenses necessary to maintain the continuity of service of alcoholic
beverages. If any such regulatory approval or license issuances shall not
be obtained by Acquiror prior to the Effective Time, HC shall, after the
Effective Time, cooperate with Acquiror, at Acquiror's sole expense, to
maintain continuity of the liquor service as well as the continuity of the
same forms of business operations conducted at, in or upon each property by
the Retained Companies or Acquiror and its Subsidiaries immediately before
the Effective Time. Nothing herein shall require any holder of any liquor,
cabaret or other federal, state or local license to permit any unlicensed
person to unlawfully exercise any privilege under such license or to have
any unlawful interest in liquor inventory or in revenues from any business
operated under such license.
(b) After the Effective Time, the Holiday Parties and Acquiror shall
communicate and cooperate regarding the application of alcoholic beverage laws
to Acquiror's business and the businesses of the Holiday Parties and their
Affiliates.
Section 7.04. Financial Statements. HC will cause to be
delivered to Acquiror as promptly as practicable the financial statements
of the Carve-out Business required to be filed in the Proxy Statement
together with an unqualified opinion of Deloitte & Touche thereon (the
"Financial Statements"). The Financial Statements will be prepared in
accordance with GAAP, consistently applied, and present fairly, in all
material respects, the financial position and results of operations for the
Carve-out Business as of and for the periods set forth therein.
ARTICLE 8
Covenants of Acquiror
Section 8.01. Conduct of Acquiror. (A) During the period
from the date of this Agreement and continuing until the Effective Time,
Acquiror agrees as to itself and its Subsidiaries that, except as otherwise
contemplated by the Transaction Documents or agreed by HC and Acquiror,
Acquiror will, and will cause each of its Subsidiaries to, conduct the
business of Acquiror in the ordinary course thereof consistent with past
practice and in compliance in all material respects with all applicable
Laws and Permits and, to the extent consistent therewith, use reasonable
efforts to (a) preserve intact the business of Acquiror and each of its
Subsidiaries, (b) to keep available the services of their current officers
and other key employees, and (c) preserve their relationships with those
Persons having business dealings with them to the end that their goodwill
and ongoing businesses will be unimpaired at the Effective Time (as used
hereafter in this Article 8, "Acquiror" means "Acquiror and its
Subsidiaries"). Without limiting the generality or effect of the
foregoing, and except as aforesaid or as otherwise expressly provided in
this Agreement or the Contribution Agreement, prior to the Effective Time,
Acquiror will not:
(a) Issuance of Securities. Issue, transfer, sell, dispose of, or
pledge, or authorize or agree to the issuance, transfer, sale or
disposition or pledge by Acquiror (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) of , any shares of capital stock or any voting securities of
Acquiror, or any options or other securities convertible into or
exchangeable for any such shares of capital stock or any voting securities
of Acquiror or amend any of the terms of any such securities or agreements
relating to such capital stock outstanding on the date hereof, other than
pursuant to employee or director plans filed as exhibits to Acquiror SEC
Documents or the issuance, transfer, sale or disposition by a wholly-owned
Subsidiary of its capital stock to its parent.
(b) Governing Documents. Amend Acquiror's charter or by-laws or
comparable organizational documents.
(c) Debt. Debt of Acquiror, determined on a consolidated basis,
shall not prior to the Effective Time be in excess of the indebtedness
permitted to be incurred by Acquiror pursuant to the Term Credit Agreement,
dated December 12, 1995, among Bristol Hotel Asset Company, Bankers Trust
Company, as agent, and the lenders party thereto (the "Existing Acquiror
Credit Agreement"), without giving effect to any amendment, modification or
waiver thereof or thereunder, plus $25 million aggregate principal amount
of additional indebtedness at any time outstanding.
(d) No Dispositions. Sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of Acquiror's hotels other than pursuant to the existing
contractual commitments or other arrangements, each as listed in Schedule
8.01(d).
(e) Representation and Warranties. Take or agree or commit to take
any action that would make any representation and warranty of Acquiror
hereunder inaccurate in any material respect at, or as of any time prior
to, the Effective Time.
(f) Accounting Principles. Change any of its accounting principles,
except as may be required by GAAP.
(g) Other Actions. Enter into any contract, agreement, commitment
or arrangement, or take any corporate or other action, to do any of the
foregoing.
Notwithstanding the foregoing, Acquiror may take any action
that otherwise would be prohibited under this Section 8.01(A), (i) if such
action could not reasonably be expected to involve the expenditure or
incurrence of obligations of more than $25 million, (ii) if, in the case of
any action referred to in subsection 8.01(d) above, the proceeds for the
hotel to be disposed of, which when added to the proceeds received for
hotels the disposition of which would be prohibited by subsection 8.01(d),
is less than $25 million, or (iii) with the prior written consent of HC.
Section 8.02. Notices of Certain Events. Acquiror shall
promptly notify HC and HII of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions, other than consents, the failure of which to obtain would not
have an Acquiror Material Adverse Effect;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by the Transaction Documents;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or
involving or otherwise affecting the Retained Business which, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to Section 6.11 or which relate to the consummation of the
transactions contemplated by this Agreement; and
(d) any fact, event or circumstance which makes any representation or
warranty of Acquiror herein untrue or incorrect in any material respect or
involves a breach of any covenant herein of Acquiror.
Section 8.03. Tax-Free Contribution, Exchange and Merger.
(a) (i) Prior to the Effective Time, each of HC, HII and Acquiror will not,
and will not permit any of its respective Affiliates to, and (ii)
thereafter Acquiror (to the extent of actual knowledge of likely
disqualification), will not, and will not permit any of its respective
Affiliates (other than HC and its Affiliates, which shall not be considered
Affiliates of Acquiror for purposes of this Section 8.03) to take or cause
or permit to be taken, any action that would disqualify the Contribution
and the Exchange from being treated as a "reorganization" within the
meaning of Section 368(a)(1)(D) of the Code or the Exchange from being
treated as tax-free under Section 355 of the Code or the Merger from being
treated as a "reorganization" within the meaning of Section 368(a)(1)(A) of
the Code. During the one-year period after the Effective Time:
(i) Acquiror shall continue or cause to be continued the historic
business of HII within the meaning of Treasury Regulations Section 1.368-
1(d) and not sell, transfer, distribute or otherwise dispose of a
significant portion (within the meaning of Treasury Regulations Section
1.3681-(d)) of the Hotels, except that Acquiror may contribute some of or
all of the Hotels to one or more a wholly owned subsidiaries if such
contributions do not give rise to the recognition of gain under Section 351
of the Code and otherwise qualifies under Section 368(a)(2)(C) of the Code;
and
(ii) Acquiror shall not adopt a plan of liquidation or initiate and
enter into an agreement of merger, a redemption or other transaction
pursuant to which the corporate legal existence of Acquiror would
terminate or the outstanding stock of Acquiror would, in a taxable
transaction, be converted into cash, other property or the stock or
securities of any other issuer,
unless Acquiror first obtains an opinion, in form and substance
satisfactory to HC, of Jones, Day, Reavis & Pogue or other nationally
recognized tax counsel satisfactory to HC, to the effect that the proposed
action will not result in the Exchange or the Merger failing to qualify for
tax-free treatment under Sections 368(a)(1)(D) and 355 of the Code and Section
368(a)(1)(A) of the Code, respectively.
(b) Acquiror shall reasonably cooperate with, as and to the extent
reasonably requested by HII, in connection with the obtaining of (i) the
advance letter ruling from the IRS in response to the ruling request
submitted to the IRS on November 12, 1996 to the effect that the
Contribution and Exchange will be a "reorganization" within the meaning of
Section 368(a)(1)(D) of the Code and will be tax-free under Section 355 of
the Code, and (ii) an opinion of Davis Polk & Wardwell to the effect that
the Merger constitutes a tax-free reorganization under Section 368(a)(1)(A)
of the Code.
(c) Acquiror shall provide to HII a representation letter
substantially in the form of Acquiror representation letter attached hereto as
Schedule 6.12(a).
Section 8.04. HII Names. Acquiror understands that the names
"Holiday Inn" and "Crowne Plaza" are the names applied to the international
system of hotels operated or licensed by HII and/or its affiliates and defined
as the "System" in the Franchise Agreements. Acquiror recognizes the
exclusive right of HII and, following the Effective Time, New Spinco and its
permitted assigns to the System, including the names "Holiday Inn" and "Crowne
Plaza" and all service marks, trademarks, copyrights, trade names, patents or
other trade registrations now or hereafter held or applied for in connection
therewith, and hereby disclaims any right, title or interest therein,
regardless of the legal protection afforded the service marks, trademarks,
patents, trade names, copyrighted items or other trade registrations of HII
and, following the Effective Time, New Spinco and its permitted assigns.
Acquiror agrees not to use the names "Holiday Inn" and "Crowne Plaza", the
words "Holiday" or "Bass" or any combination or any variation of such names or
words, or any other trademarks, trade names, service marks, patents,
copyrighted items or other trade registrations of HII, HC or any parent,
Subsidiary (direct or indirect) or related entity, or any of their permitted
assigns, in connection with the operation of any Hotel or any hotel listed on
Schedule 9.07(2) except in accordance with and subject to the terms and
conditions of the Franchise Agreement relating to such Hotel or hotel.
Accordingly, and notwithstanding any other provisions hereof, prior to the
Effective Time, HC will change the name of each Retained Company the name of
which includes the word "Holiday," "Crowne Plaza" or "Bass", so that the name
of such Retained Company no longer includes such word.
Section 8.05. Employee Communications. Prior to the
Effective Time, HII and Acquiror shall each use their reasonable efforts to
cooperate in making any required communications with Transferred Employees
with respect to employee benefit plans maintained by HII or Acquiror and
with respect to other matters arising in connection with the Merger.
ARTICLE 9
Covenants of Acquiror, HC and HII
The parties hereto agree that:
Section 9.01. Access to Information. From the date hereof
until the Effective Time, each of the parties hereto will give the other
party, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to its and
its Subsidiaries' offices, properties, books and records, will furnish to
the other party such financial and operating data and other information as
such Persons may reasonably request and as is reasonably related to the
Transactions and will instruct their respective employees, counsel and
financial advisors to cooperate with the other party in its investigation
of the business of HII and the other Retained Companies or Acquiror and its
Subsidiaries, as applicable. Any information exchanged among the parties
pursuant to this Section 9.01 shall be subject to the terms of the
Confidentiality Agreement. As this Section 9.01 applies to HC and HII,
such parties need not provide any information relating to their respective
franchising businesses unless (i) access to such information is reasonable
under the circumstances (as determined by HC or HII, as the case may be, in
good faith), and (ii) such information relates directly to the Retained
Business. Acquiror agrees that in no event shall the above-described
access to information include the right to perform any soil, groundwater or
other physical sampling or testing without the prior written consent of HC,
which consent shall not be unreasonably withheld or delayed.
Section 9.02. Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations
to consummate the Transactions, including without limitation all actions
necessary, proper and advisable to ensure that each Management Agreement or
interest in a Joint Venture to which any Retained Company is a party is, if
required, assigned to Acquiror; provided, however, that in connection with
the foregoing neither Acquiror nor any of its Subsidiaries will be required
to commit to any divestiture or hold separate or similar transaction and
otherwise take or commit to take any action, in each case, that materially
limits its freedom of action with respect to, or its ability to retain, HII
or any of the other Retained Companies or any material portion of the
assets (including without limitation the Hotels) of the Retained Companies
existing and material businesses or assets (as of the date hereof) of
Acquiror or any of Acquiror's Subsidiaries.
(B) Without limiting the generality or effect of the above,
and except as otherwise expressly provided in this Agreement, prior to
February 7, 1997, HC and Acquiror shall negotiate in good faith and use their
reasonable efforts to agree upon the forms of (i) the Asset Purchase
Agreements and (ii) the Contingency Agreement.
Section 9.03. Certain Filings. (a) Acquiror shall use
reasonable efforts to prepare and file promptly with the SEC a preliminary
proxy statement.
(b) HII, HC and Acquiror shall cooperate with each other and provide
to each other all information necessary in order to prepare the Proxy
Statement and any other required filings. The information provided by HII,
HC and Acquiror for use in the Proxy Statement and such other filings shall
at all times prior to the Effective Time be true and correct in all
material respects and shall not omit to state any material fact required to
be stated therein or necessary in order to make such information not false
or misleading. Each such filing shall, when filed with the SEC or any
other Governmental Entity, comply in all material respects with all
applicable requirements of law.
Section 9.04. Public Announcements. Acquiror, HC and HII
will consult and agree, such agreement not to be unreasonably withheld,
with each other before (i) with respect to any date between the Effective
Time and the first anniversary of the Effective Time, issuing any press
release relating to the Transactions or (ii) with respect to any date
between the date hereof and the Effective Time, issuing any press release
or making any public statement relating to the Transactions and, except as
may be required by applicable law, Governmental Entity or any securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation and agreement.
Section 9.05. Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of HII, any
deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of HII, any other actions and things reasonably necessary
to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets of HII acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
Section 9.06. Meetings of Stockholders. Acquiror shall
take all action necessary, in accordance with applicable law and its
charter and bylaws, to duly call, give notice of, convene and hold a
meeting of its stockholders to consider and vote upon the adoption of this
Agreement and the issuance of Acquiror Stock in the Merger. The
stockholder vote required for the adoption and approval of such
transactions shall be the vote required by the DGCL and Acquiror's
certificate of incorporation.
Section 9.07. Franchise Agreements. At the Effective Time,
HIFI and Acquiror, or a Subsidiary of Acquiror reasonably acceptable to
HIFI, shall enter into Franchise Agreements with respect to the Hotels
identified on Schedule 9.07(1). At the Effective Time, HIFI and Acquiror,
or a Subsidiary of Acquiror reasonably acceptable to HIFI, shall also have
entered into Franchise Agreements with respect to the conversion of the
properties identified on Schedule 9.07(2) to the brands listed on Schedule
9.07(2).
Section 9.08. Certain Contracts. HC and Acquiror shall use
their reasonable good faith efforts to negotiate with the parties to each
of the contracts listed on Schedule 9.08 with a view toward securing and
equitably allocating the benefits originally contemplated by HII to be
derived from such contracts.
Section 9.09. Environmental and Structural Matters. (a)
HC agrees that, during the 80 calendar days following the date hereof,
Acquiror may, at its own cost and expense, perform Phase I environmental
audits and/or engineering audits of the Hotels owned by the Joint Ventures
and of the Hotels which are owned or leased by the Retained Companies.
Such audits shall be performed by an independent third party consultant
reasonably satisfactory to HC, and shall be provided to HC in the form of a
written report or reports (each an "Initial Report") within 5 days after
Acquiror's receipt thereof. To the extent recommended in such Phase I
environmental audits or structural audits and with the prior written
consent of HC, which consent will not be unreasonably withheld or delayed,
Acquiror may conduct Phase II environmental audits and other follow-
up testing and investigations prior to the Effective Time and Acquiror agrees
to provide to HC, promptly after Acquiror's receipt thereof, but in no event
later than five days after the receipt thereof, the results of such audits,
testing or investigation.
(b) If HC determines in good faith that any recommendation or cost
estimate in any Initial Report is erroneous, HC may, at its own cost and
expense, retain an independent third party consultant, which consultant is
listed on Bankers Trust Company's list of approved consultants, to review such
Initial Reports and, if applicable, any Phase II or other reports prepared as
permitted in clause (a) above. If HC delivers to Acquiror, within 10 days
following the date HC received the Initial Report or, if applicable, any
subsequent Acquiror Reports, a report or reports (each an "HC Report") setting
forth such consultant's maximum estimated cost of repairing or remediating any
violation of an Environmental Law, any violation of a Building Code, or any
other Structural Deficiency, then the "Final Estimated Cost" with respect to
each such matter shall be deemed to be such consultant's maximum estimated
cost set forth in the HC Report. With respect to any matter for which a cost
estimate is identified in the Initial Report and with respect to which HC does
not object as provided above, then the maximum estimated cost set forth in the
Initial Report shall be deemed to be the Final Estimated Cost for such matter.
Acquiror and HC agree to cooperate in preparing any such reports and to
provide each other with reasonably available information relating to such
reports.
ARTICLE 10
Employee Benefits
Section 10.01. Maintenance of Benefits. (a) For a period
of 12 months following the Effective Time, Acquiror shall, subject to the
following provisions of this paragraph, (i) provide Retained Companies'
Employees with the same base pay levels and comparable long-term and short-
term incentive compensation bonus opportunities as were in place
immediately prior (x) to the date hereof, to the extent such pay levels and
bonus opportunities were modified between the date hereof and the Effective
Time other than in accordance with this Agreement and (y) to the Effective
Time, to the extent such pay levels and bonus plans were not modified after
the date hereof or were modified after the date hereof in accordance with
this Agreement and (ii) provide the Retained Companies' Employees with
compensation and benefits comparable to the Savings Plan, the Group Health
Plans, the Nonqualified Plans and the Additional Welfare Plans for the
benefit of those Retained Companies' Employees who participated in such
plans immediately prior to the Effective Time. Not less than 30 days after
the date hereof, Acquiror shall deliver to the Finance Director of Bass plc
a written analysis of the comparability of the various benefits noted in
subsection (ii) above, together with a proposal for Acquiror to provide to
Retained Companies' Employees additional compensation and/or benefits if
required to ensure comparability. If the comparability of the various
benefits referred to in the preceding sentence is approved by the Finance
Director of Bass plc, such benefits will be deemed to be comparable with
those provided to Retained Companies' Employees prior to the Effective
Time. If such benefits are not so approved, Acquiror may provide such
benefits to Retained Companies' Employees as it shall determine; provided,
however, that such benefits shall be comparable in the aggregate to those
provided to Retained Companies' Employees prior to the Effective Time. It
is understood that in providing such comparable benefits Acquiror shall
utilize additional cash compensation if it determines not to amend or
otherwise revise benefits under an Acquiror Benefit Arrangement or Employee
Plan. Notwithstanding any other provision hereof, (x) nothing herein will
confer third-party beneficiary rights on any individual Retained Companies'
Employee or group of Retained Companies' Employees, (y) nothing herein will
prohibit Acquiror from substituting any compensation or benefit plan,
program, arrangement or structure for Retained Companies' Employees so long
as such Retained Companies' Employees are treated on substantially the same
basis as similarly situated employees of Acquiror and its Subsidiaries
prior to the Merger, provided that comparability of the various benefits
noted in subsection (ii) above is maintained and (z) nothing herein will
limit Acquiror's or its Subsidiaries' rights to terminate the employment of
any Retained Companies' Employee as of or following the Effective Time.
(b) Acquiror will give the Retained Companies' Employees full credit
for purposes of eligibility and vesting under any plans or arrangements
maintained by Acquiror for such employees' service recognized for such
purposes under the Employee Plans and Benefit Arrangements listed on
Schedule 10.01(b). All Acquiror Employee Plans and Benefit Arrangements
shall (i) recognize all service with HII for eligibility purposes, (ii)
waive all pre-existing condition exclusions for all eligible Retained
Companies' Employees and (iii) credit each such Retained Companies'
Employee for purposes of deductible limits with amounts so credited with
respect to that portion of the calendar year preceding the Effective Time.
Section 10.02. Severance Obligations. New Spinco shall be
responsible for making all severance payments and making all required
filings and withholdings relating thereto, pursuant to the current Holiday
Inns, Inc. Human Resource severance policy ("Severance Payments") due
those Core Employees who (i) are not employees of New Spinco or any
Affiliate thereof six months after the Effective Time and (ii) who have not
accepted employment with Acquiror or any Affiliate thereof after the
Effective Time (an "Affected Employee") at substantially the same
compensation rate as noted in Section 10.01(a)(i) above; provided that
Acquiror shall, not later than 10 days following the date Severance
Payments are made by New Spinco, (i) reimburse New Spinco for 50% of the
actual severance paid to severed Core Employees; provided that the total
amount of reimbursements pursuant to this clause (i) shall not exceed
$625,000 and (ii) reimburse New Spinco for 100% of any payments in respect
of accrued and unused vacation paid to Affected Employees and not reflected
in the Working Capital Statement. Acquiror and New Spinco agree to treat
any payment made to New Spinco pursuant to the preceding sentence as a
reimbursement for severance payments made by New Spinco on behalf of
Acquiror.
Section 10.03. Savings Plan. (a) Effective as of the Effective
Time, HC shall cause New Spinco to take all action required or deemed
appropriate to cause New Spinco to adopt and become the sponsor of and the
employer under, and to assume the obligations with respect to the New
Spinco Employees under, the Savings Plan and to amend the Savings Plan to
cause the active participation of the Retained Companies' Employees therein
to cease as of the Effective Time.
(b) Effective as of the Effective Time, Acquiror shall establish or
designate a defined contribution retirement plan, which shall be qualified
under Section 401(a) and 401(k) of the Code (the "Retained Companies' Savings
Plan") covering the Retained Companies' Employees.
(c) As soon as practicable after the Effective Time, following
receipt by Acquiror of a favorable determination letter, or Acquiror's
certification to New Spinco in a manner reasonably acceptable to New
Spinco, that the Retained Companies' Savings Plan is qualified under the
applicable provisions of the Code, HC shall cause the trustee of the
Savings Plan to transfer in respect of the account balances of the Retained
Companies' Employees assets in cash or in kind, as the trustee shall
determine, valued as of the date of transfer, to the trustee of the
Retained Companies' Savings Plan. Following such transfer of accounts, (i)
New Spinco shall have no further liability whatsoever (either under this
Agreement or otherwise) with respect to participants in the Retained
Companies' Savings Plan and (ii) Acquiror shall have no further liability
whatsoever (either under this Agreement or otherwise) with respect to
participants in the Savings Plan. HC and Acquiror shall each use
reasonable efforts to effect the account transfers contemplated in this
Section 10.03 as soon as practicable after the Effective Time.
(d) Notwithstanding the foregoing, if Acquiror cannot reasonably
implement the Retained Companies' Savings Plan prior to the Effective Time,
New Spinco shall allow Acquiror to adopt the Savings Plan as a
participating employer for up to a 90 day period. During that period
thereafter, Acquiror will make contributions thereto for or on behalf of
Retained Companies' Employees in accordance with the terms thereof and pay
its share of expenses related thereto based on the ratio that the number of
Retained Companies' Employees participating therein bear to the total
number of participants in the Savings Plan during such period in accordance
with the terms thereof.
Section 10.04. Nonqualified Plans. Effective as of the
Effective Time, HC shall cause New Spinco to take all actions required or
deemed appropriate to cause New Spinco to become the sponsor of and the
employer under, and to assume the obligations with respect to the New
Spinco Employees under, the Nonqualified Plans. All liabilities of HII
with respect to the New Spinco Employees under the Nonqualified Plans shall
be Contributed Liabilities and not Retained Liabilities and all rights of
HII with respect to New Spinco Employees under the Nonqualified Plans and
all insurance policies, contracts and agreements and all contracts,
arrangements and agreements with other providers and service organizations
pursuant to the Nonqualified Plans shall be Contributed Assets and not
Retained Assets. The assumption of the sponsorship and liabilities and
rights under the Nonqualified Plan by New Spinco shall not constitute a
termination of employment for the New Spinco Employees pursuant to the
provisions of the plan. All obligations and liabilities under the
Nonqualified Plans other than those liabilities and obligations described
in this Section 10.04 shall be Retained Liabilities. All participants in
the Nonqualified Plans shall be vested in their accrued benefits
thereunder, effective as of the Effective Time.
Section 10.05. Group Health Plans; Workers' Compensation.
Effective as of the Effective Time, HC shall cause New Spinco to take all
actions required or deemed appropriate to cause New Spinco to become the
sponsor of and the employer under, and to assume the obligations of HII
with respect to the New Spinco Employees under the Group Health Plans. All
such Group Health Plans and all rights of HII thereunder shall be
Contributed Assets and not Retained Assets. With respect to the Retained
Companies' Employees, HC shall cause New Spinco to assume responsibility
for and continue to pay all expenses and benefits with respect to claims
incurred prior to the Effective Time under the Group Health Plans and
workers compensation claims with respect to events occurring prior to the
Effective Time. Notwithstanding the foregoing, with respect to any
Retained Companies' Employee or his or her covered dependents who enters a
hospital or is on long-term disability under any Group Health Plan on or
prior to the Effective Time and continues in a hospital or on long-term
disability after the Effective Time, HC shall cause New Spinco to assume
responsibility for claims and expenses incurred both before and after the
Effective Time in connection with such person, to the extent that such
claims and expenses are covered by the Group Health Plan, until such time
(if any) that such employee assumes full-time employment with Acquiror and,
in the case of any covered dependent, such person's hospitalization has
terminated; provided that, with respect to maternity leave and any
extraordinary expenses relating to a newborn child, Acquiror shall
reimburse HC for such claims incurred after the Effective Time. For
purposes of this paragraph, a medical, dental, workers' compensation or
similar claim is deemed incurred when the services that are the subject of
the claim are performed.
Section 10.06. Executive Medical and Dental Plan.
Effective as of the Effective Time, HC shall cause New Spinco to take all
actions required or deemed appropriate to cause New Spinco to become the
sponsor of and the employer under, and to assume the obligations of HII
with respect to the Executive Medical and Dental Plan (the "Executive
Medical Plan"). Such Executive Medical Plan and all rights of HII
thereunder shall be Contributed Assets and not Retained Assets.
Section 10.07. Severance Pay Plan. Effective as of the
Effective Time, HC shall cause New Spinco to take all actions required, or
deemed appropriate to cause New Spinco to become the sponsor of and the
employer under, and to assume the obligations of HII with respect to the
New Spinco Employees under the Severance Pay Plan.
Section 10.08. COBRA. New Spinco will be responsible for
COBRA Coverage for all Qualifying Events with respect to all employees (and
their covered beneficiaries) of HII and its Subsidiaries that occur prior
to the Effective Time and HII will be responsible for COBRA Coverage for
all Qualifying Events that occur with respect to Retained Companies'
Employees (and their covered beneficiaries) following the Effective Time.
Section 10.09. Collective Bargaining Agreements. (a)
Acquiror shall, and HC shall cause New Spinco to, take such action as may
be required to cause Acquiror to assume any and all union contracts then
existing for any and all Retained Companies' Employees who are union
employees of HII. HII's obligations under any collective bargaining
agreements covering any New Spinco Employee shall be Contributed
Liabilities, HII's rights under any such agreement shall be Contributed
Assets and New Spinco shall be the successor employer under such collective
bargaining agreements. HII's obligations under any collective bargaining
agreements covering any Retained Companies' Employee shall be Retained
Liabilities, and HII's rights under any such agreement shall be Retained
Assets.
(b) Acquiror agrees to take whatever actions are necessary to
ensure that the transactions contemplated pursuant to this agreement will not
be treated as a withdrawal resulting in any withdrawal liability of HII from
any Multiemployer Plan.
Section 10.10. Relocation Expenses. Acquiror shall provide
relocation benefits to each of the Retained Companies' Employees listed on
Schedule 10.10, which such list shall be finalized no later than the Effective
Time, who are to be relocated, which such benefits shall be at least equal to
those benefits provided to Acquiror's employees immediately prior to the date
hereof in accordance with Acquiror's policies.
Section 10.11. Vacation and Sick Leave. (a) Acquiror will
adopt vacation and sick leave policies substantially comparable to those
maintained by HII immediately prior to the Effective Time, and, to the
extent fully accrued in the Working Capital Statement, will credit all
service earned by the Retained Companies' Employees prior to the Effective
Time and will accept all liability for vacation and sick leave days accrued
by the Retained Companies' Employees as of the Effective Time; to the
extent not so accrued, HC will be liable in respect of all of the foregoing
and will indemnify Acquiror and its Affiliates in respect thereof.
(b) HC will cause New Spinco to adopt vacation and sick leave policies
comparable to those maintained by HII immediately prior to the Effective Time,
will credit all service earned by New Spinco Employees prior to the Effective
Time and will accept all liability for vacation and sick leave days accrued by
the New Spinco Employees as of the Effective Time.
Section 10.12. Loyalty Bonuses. New Spinco shall pay to
each of the Core Employees designated by HC and agreed to by Acquiror, a
loyalty bonus equal to 25% of the base annual salary for such employee for
the period between the date hereof and either (a) the date of such employees'
date of severance or (b) six months after the Effective Time, whichever such
period is shorter. Acquiror shall reimburse New Spinco for any loyalty
bonus paid pursuant to this Section 10.12 within 20 days from the date New
Spinco makes such payment. Acquiror and New Spinco agree to treat any
payment made to New Spinco pursuant to the preceding sentence as a
reimbursement for loyalty payments made by New Spinco on behalf of
Acquiror.
Section 10.13. WARN. (a) Acquiror shall not, at any time prior
to 90 days after the Effective Time, effectuate a "plant closing" or "mass
layoff" as those terms are defined in the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN") affecting in whole or in part any
facility, site of employment, operating unit or employee of HII without
complying fully with the requirements of WARN.
(b) HC shall not, at any time prior to 90 days after the Effective
Time, effectuate a "plant closing" or "mass layoff" as those terms are
defined in WARN affecting in whole or in part any facility, site of
employment, operating unit or employee of HII without complying fully with
the requirements of WARN.
Section 10.14. Cooperation. Without limiting the
generality of Articles 7 and 8 hereof, HII, Acquiror and New Spinco agree
to furnish each other promptly with such information concerning employees
and employee benefit plans, arrangements or policies as is reasonably
necessary and appropriate to effect the transactions contemplated by this
Article 10.
ARTICLE 11
Conditions to the Merger
Section 11.01. Conditions to the Obligations of Each Party.
The obligations of each of HII and Acquiror to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) the adoption of this Agreement and issuance of Acquiror Stock in
the Merger shall have been approved by the requisite vote of the
stockholders of Acquiror in accordance with the DGCL;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger or
the Transactions;
(c) the transactions contemplated by Article 4, including, without
limitation, the Contribution and the Exchange, shall have been consummated in
accordance with the terms of this Agreement and the Contribution Agreement;
(d) the parties or their respective Affiliates shall have entered
into the Stockholders Agreement, the Hotel Properties Agreement and the
Registration Rights Agreement and shall also enter into the Asset Purchase
Agreements, the form of such agreements to be agreed upon by the parties
prior to February 7, 1997 and the closings under the Asset Purchase
Agreements shall have taken place simultaneously with the Closing;
(e) the parties shall have entered into the Franchise Agreements
substantially in the form attached hereto as Exhibit E; and
(f) the waiting period under the HSR Act relating to the Transactions
shall have expired or been terminated.
Section 11.02. Conditions to the Obligations of HII. The
obligation of HII to consummate the Merger is subject to the satisfaction
of each of the following further conditions:
(a) Acquiror shall have performed in all material respects all
obligations required to be performed by it under the Transaction Documents
at or prior to the Effective Time, and HII shall have received a
certificate signed on behalf of Acquiror by an executive officer of
Acquiror to such effect;
(b) The representations and warranties of Acquiror contained in this
Agreement and in any certificate or other writing (including Acquiror
Representation Letter) delivered by Acquiror pursuant hereto shall be true in
all material respects at and as of the Effective Time as if made at and as of
such time (it being understood that where any such representation or warranty
already includes a Material Adverse Effect or materiality exception, no
further materiality exception is to be permitted by this Section) and HII
shall have received a certificate signed by an executive officer of Acquiror
to the foregoing effect;
(c) HII shall have determined in good faith, after considering the
advice of Davis Polk & Wardwell, that there has not occurred after the date
of this Agreement any Adverse Tax Development (as defined below) after the
date hereof that has a reasonable possibility of or will result in the
imposition of a material amount of federal income Tax to HII, New Spinco or
any of their respective Affiliates, Subsidiaries or stockholders by reason
of the Contribution, the Exchange or the Merger. "Adverse Tax Development"
means the enactment or proposal of any legislation or any regulation or
notice that would cause the Contribution, Exchange or Merger to become
taxable for federal income tax purposes;
(d) HII shall have received (i) an advance letter ruling from the
IRS as contemplated by Section 7.01(B)(d)(i) to the effect that the
Contribution and Exchange qualify as a "reorganization" within the meaning
of Section 368(a)(1)(D) of the Code and as a tax free distribution under
Section 355 of the Code and (ii) an opinion of Davis Polk & Wardwell to the
effect that the Merger constitutes a tax-free reorganization under Section
368(a)(1)(A) of the Code in which no gain is recognized by HC or HII;
(e) No event resulting in an Acquiror Material Adverse Effect shall
have occurred; and
(f) Acquiror shall have entered into employment agreements with
Peter Kline and John Beckert previously described.
Section 11.03. Conditions to the Obligations of Acquiror.
The obligation of Acquiror to consummate the Merger is subject to the
satisfaction of each of the following further conditions:
(a) Each of HII and New Spinco shall have performed in all material
respects all obligations required to be performed by it under the
Transaction Documents at or prior to the Effective Time, and Acquiror shall
have received a certificate signed on behalf of HII by an executive officer
of HII to such effect;
(b) The representations and warranties of HII contained in this
Agreement and in any certificate or other writing delivered by HII pursuant
hereto shall be true in all material respects at and as of the Effective
Time as if made at and as of such time (it being understood that where any
such representation or warranty already includes a Material Adverse Effect
or materiality exception, no further materiality exception is to be
permitted by this Section) and Acquiror shall have received a certificate
signed by an executive officer of HII to the foregoing effect;
(c) The Acquiror Required Consents listed on Schedule 11.03(c), the
failure of which to obtain could reasonably be expected to have an Acquiror
Material Adverse Effect, shall have been obtained;
(d) No event resulting in a Retained Companies Material Adverse
Effect shall have occurred;
(e) Acquiror shall have obtained the financing contemplated to be
provided to Acquiror pursuant to the Commitment Letter previously delivered
to HC;
(f) There shall not be pending or threatened any litigation,
proceeding or claim brought by any Governmental Authority seeking to enjoin
the Merger or any transaction contemplated by this Agreement seeking any
hold-separate, divestiture or other order relating thereto or to any other
business or asset of Acquiror or any Subsidiary thereof or seeking any
other relief that Acquiror reasonably determines would be materially
adverse; and
(g) Bass International Holdings N.V. shall have entered into a
guarantee of the indemnity obligations of HC and New Spinco under this
Agreement and the Contribution Agreement reasonably satisfactory to
Acquiror.
ARTICLE 12
Survival; Indemnification
Section 12.01. Survival. The covenants, agreements,
representations and warranties of the parties hereto contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive until June 1, 1998; provided that (i)
except as set forth below, the covenants and agreements contained in this
Agreement shall survive for the period set forth therein, or, if no specific
period is set forth therein, indefinitely, (ii) the representations and
warranties contained in Sections 5.10(c), 5.11, 5.12(a), (b) and (c), 5.14(a)
and (b), 6.11, 6.12(c), (d) and (e) and 6.13(a) and (b) shall not survive
after the Effective Time, (iii) the representations and warranties contained in
Section 5.14(c) and 6.13(c) shall survive until 40 months from the Effective
Time, (v) the representations and warranties, covenants and agreements, as the
case may be, set forth in Sections 5.12(e), 6.12(a) and 8.03(a) shall survive
all applicable statutes of limitations (including applicable extensions) and
(v) the indemnifications set forth in Section 12.02(b) shall survive until 40
months from the Effective Time, and thereafter each HII and the Acquiror and
any of their respective Affiliates hereby waives any contribution or similar
rights it may have against HC, whether in law or in equity, with respect to
Environmental Liabilities. Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of which indemnity
may be sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence, if notice of the claim
for indemnity shall have been given to the party against whom such indemnity
may be sought prior to such time.
Section 12.02. Indemnification. (a) HC hereby indemnifies
Acquiror, and will cause New Spinco to indemnify Acquiror jointly and
severally, and, effective at the Effective Time, without duplication, HII
or any of their respective Affiliates against and agrees to hold them
harmless from any and all Damages incurred or suffered by Acquiror, HII or
any of their respective Affiliates arising out of any misrepresentation or
breach of covenant made or to be performed by HII (prior to the Effective
Time) or HC pursuant to this Agreement; provided that (i) HC shall not be
liable under this Section 12.02(a) for any Damages relating to Taxes which
are governed by Article 5 of the Contribution Agreement, (ii)
notwithstanding anything else in this Agreement or the Contribution
Agreement to the contrary, HC shall not be liable for any Damages relating
to any violation of any Building Code or other Structural Deficiency, any
matter identified in any Initial Report relating to Structural Deficiencies
or Building Codes delivered pursuant to Section 9.09(a) or, except as
provided in Section 12.02(b), any other matter relating to the Retained
Real Properties' compliance with applicable Laws or physical condition and
(iii) no claim may be made against HC for indemnification pursuant to this
Section 12.02(a) with respect to any Individual Item of liability or damage
for breach of any representation or warranty, unless such item exceeds
$5,000 and unless the aggregate of all such liabilities and damages of
Acquiror with respect to this Section 12.02(a), plus all liabilities and
damages incurred under comparable provisions of the Asset Purchase
Agreements, shall exceed $1,000,000, after which HC shall be liable for the
full amount of all Damages (without regard to the foregoing threshold).
"Individual Item" means an item or series of items relating to a single
event or arising out of the same misrepresentation. Notwithstanding
anything to the contrary in this Section 12.02(a) or elsewhere in this
Agreement, after the Effective Time, the representations and warranties
contained in Section 5.10(d) with respect to each Retained Real Property
referred to in Section 5.10(d) shall be deemed to exclude (and HC shall not
be liable for any Damages relating to) all Liens and other matters referred
to in Section 5.10(d) with respect to such Retained Real Property disclosed
in any title commitment, report, abstract or opinion or survey or other
written notice relating to such Retained Real Property received prior to
the Effective Time by Acquiror unless Acquiror gives HC notice of such
matter promptly within a reasonable time after receiving such disclosure
and gives HC the opportunity to attempt to cure, remove or insure over the
matter.
(b) HC hereby indemnifies Acquiror and, effective at the Effective
Time, without duplication, HII and any of their respective Subsidiaries
against and agrees to hold them harmless from 70% of the aggregate of all
Damages incurred or suffered by Acquiror, HII or any of their Subsidiaries
arising out of events occurring on or prior to the Effective Time at the
Hotels which arise directly and solely as a result of any violation or
requirement of any Environmental Law or Environmental Liability or
obligation thereunder which was identified in either an Initial Report or
an HC Report pursuant to the terms of Section 9.09; provided that (x) no
items covered by this Section 12.02(b) may be asserted under Section
12.02(a) and (y) HC's maximum liability under this Section 12.02(b) and
the maximum liability of certain Affiliates of HC under the comparable
indemnification provisions of the Asset Purchase Agreements shall not
exceed $4 million.
(c) Acquiror hereby indemnifies HC, New Spinco and their respective
Affiliates (the "Holiday Indemnitees") against and agrees to hold them
harmless from any and all Damages incurred or suffered by the Holiday
Indemnities arising out of any misrepresentation or breach of covenant made
or to be performed by Acquiror pursuant to this Agreement; provided, that
no claim may be made against Acquiror for indemnification pursuant to this
Section 12.02(c) with respect to any Individual Item of liability or
damage, unless such item exceeds $5,000 and unless the aggregate of all
such liabilities and damages of the Holiday Indemnitees with respect to
this Section 12.02(c), plus all liabilities and damages incurred under
comparable provisions of the Asset Purchase Agreements, shall exceed
$1,000,000 after which Acquiror shall be liable for the full amount of the
Damages (without regard to the foregoing threshold).
Section 12.03. Indemnification Procedures. (a) In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant
to Sections 12.02(a), (b) and (c) hereof, such Person (the "indemnified
party") shall promptly notify the Person against whom such indemnity may be
sought (the "indemnifying party") in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding; provided that the failure of any indemnified party so to notify
the indemnifying party shall not relieve the indemnifying party of its
obligations hereunder except to the extent that the indemnifying party is
actually prejudiced by such failure to notify. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel)
for all indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(b) In addition to and without limiting the terms of Section
12.03(a) above, with respect to any claim for indemnification made pursuant
to Section 12.02(b) hereof, the parties agree that any investigative,
monitoring, removal, remedial or other action required to address a failure
to comply with Environmental Laws shall be performed in a reasonable and
cost-effective manner and, with respect to a violation of an Environmental
Law, shall be limited to those actions required by regulatory authorities
to comply with such Environmental Law given the use of the site as of the
Effective Time. Acquiror agrees, prior to initiating any activity relating
to any environmental matter allegedly covered by Section 12.02(b), to
provide HC with a reasonably detailed description of the proposed activity
and a reasonable period of time, given the specific circumstances, to
permit HC to comment on such proposed activity and agrees to consider any
such comments in good faith. Acquiror agrees to use reasonable efforts to
perform any such activities in a manner that will permit the maximum
available recovery of funds under any applicable insurance policy or any
applicable state reimbursement or similar fund, and the amount of Damages
for which indemnification would otherwise be provided under this Agreement
shall be decreased to take account of any such recovery.
ARTICLE 13
Termination
Section 13.01. Termination. (a) This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Effective Time:
(i) by mutual written consent of HC, HII and Acquiror;
(ii) by HC or HII if, at the stockholders' meetings referred to in
Section 9.06 (including any postponement or adjournment thereof), the
Transactions contemplated hereby that require such approval shall fail to
be approved and adopted by the affirmative vote specified therein;
(iii) by HC, HII or Acquiror, so long as the terminating party
is not then in breach of any of its obligations hereunder, after June 30,
1997 if the Merger shall not have been consummated on or before such date;
(iv) by HC or HII, provided neither HC or HII is then in breach
of any of its obligations hereunder, if either (i) Acquiror fails to
perform any covenant in this Agreement when performance thereof is due
and does not cure the failure within twenty business days after HC or
HII delivers written notice thereof, or (ii) any condition in Section
11.02 has not been satisfied and is not capable of being satisfied
prior to June 30, 1997; and
(v) by Acquiror, provided it is not then in breach of any of its
obligations hereunder, if either (i) HII or HC fails to perform any
covenant in this Agreement when performance thereof is due and does not
cure the failure within twenty business days after Acquiror delivers
written notice thereof or (ii) any condition in Section 11.03 has not been
satisfied and is not capable of being satisfied prior to June 30, 1997.
(b) If (i) the transactions contemplated by Article 4 have not been
consummated by virtue of the failure or non-waiver of the conditions set forth
in Section 7.01(b) of the Contribution Agreement or (ii) either of the
conditions set forth in Section 11.02(c) and (d) have not been satisfied
(other than by reason of a breach of a covenant by the relevant party) or
waived by April 30, 1997 (the "Contingency Date"), or such earlier date if the
parties mutually determine in
good faith that certain conditions cannot be met, then the
Contingency Agreement shall, without further action, become automatically
effective.
Section 13.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 13.01 hereof, this
Agreement, except for the provisions of Section 14.04, and the confidentiality
provisions of Section 9.01, shall forthwith become null and void and have no
effect, without any liability on the part of any party or its directors,
officers or stockholders. Nothing in this Section 13.02 shall, however,
relieve any party to this Agreement of liability for breach of this Agreement.
ARTICLE 14
Miscellaneous
Section 14.01. Entire Agreement. This Agreement and the
Transaction Documents constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, other than the
Confidentiality Agreement with respect to the subject matter hereof and
except as otherwise expressly provided herein and therein.
Section 14.02. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to HC, HII (prior to the Merger) or New Spinco, to:
Holiday Corporation
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
Telecopy: (770) 604-5403
Attention: Senior Vice President, General Counsel
with a copy to:
Bass plc
20 North Audley Street
London W1Y 1WE
England
Attention: Spencer Wigley
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William Rosoff
Telecopy: (212) 450-4800
if to Acquiror, or HII (following the Merger), to:
Bristol Hotel Company
14285 Midway Road
Suite 340
Dallas, Texas 75244
Attention: Joel M. Eastman
Telecopy: (972) 687-0326
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek
Telecopy: (212) 755-7306
or such other address or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section.
Section 14.03. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and
only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by HC and HII and Acquiror or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of Acquiror, no such
amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of HII, (ii) any term of
the certificate of incorporation of the Surviving Corporation or (iii) any
of the terms or conditions of this Agreement if such alteration or change
would adversely affect the holders of any shares of capital stock of
Acquiror.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 14.04. Expenses. Except as otherwise provided
herein, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
Section 14.05. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, provided that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto.
Section 14.06. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of
Delaware regardless of the laws that might otherwise govern under
principles of conflict of laws applicable thereto.
Section 14.07. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof
signed by all of the other parties hereto.
Section 14.08. Defined Terms. Capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the
Contribution Agreement.
Section 14.09. Schedules. Notwithstanding anything herein
to the contrary, on or prior to the Effective Time, HII and Acquiror may
supplement or amend the Schedules applicable to such party with respect to
any matter arising after the date hereof which, if existing or occurring on
the date hereof would have been required to be set forth or described in
such Schedule; but no supplement or amendment will affect the supplementing
or amending party's liabilities or obligations for any prior breach of this
Agreement whether or not the Effective Time occurs.
Section 14.10. Knowledge. (a) For purposes of this Agreement,
"to the knowledge" of HII or HC shall mean actual knowledge, after
reasonable inquiry of those persons listed on Schedule 14.10(a).
(b) For purposes of this Agreement, "to the knowledge" of Acquiror
shall mean actual knowledge, after reasonable inquiry, of those persons
listed on Schedule 14.10(b).
Section 14.11. Consent to Jurisdiction. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby may be brought in the Court of Chancery in the State of Delaware, and
each of the parties hereby consents to the non-exclusive jurisdiction of such
court (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in any such court or that any
such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,
each party agrees that service of process on such party as provided in Section
14.02 shall be deemed effective service of process on such party.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
HOLIDAY CORPORATION
By: /s/ Michael L. Goodson
---------------------------
Name: Michael L. Goodson
Title: Vice President
HOLIDAY INNS, INC.
By: /s/ James L. Kacena
---------------------------
Name: James L. Kacena
Title: Vice President
BRISTOL HOTEL COMPANY
By: /s/ Joel M. Eastman
---------------------------
Name: Joel M. Eastman
Title: Vice President
STOCKHOLDERS' AGREEMENT
dated as of
April 28, 1997
by and among
UNITED/HARVEY HOLDINGS, L.P.,
HOLIDAY CORPORATION,
BASS AMERICA INC.,
BASS PLC
and
BRISTOL HOTEL COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions
Section 1.01. Definitions.............................................2
ARTICLE 2
Corporate Governance
Section 2.01. Composition of the Board................................6
Section 2.02. Vacancies...............................................7
Section 2.03. Executive Committee; Management Committee...............7
Section 2.04. Capital Transactions....................................8
Section 2.05. Voting..................................................8
ARTICLE 3
Restrictions on Transfer
Section 3.01. General Restriction.....................................9
Section 3.02. Transfers in Compliance with Law........................9
Section 3.03. Legend..................................................9
Section 3.04. Unauthorized Transfers.................................10
ARTICLE 4
Right of First Refusal; Right to Participate in Sales
Section 4.01. Right of First Refusal.................................10
Section 4.02. Right to Participate in Sales..........................12
Section 4.03. Execution of the Stockholders' Agreement...............14
Section 4.04. Certain Actions by Acquiror............................14
ARTICLE 5
Preemptive rights
Section 5.01. Preemptive Rights......................................14
Section 5.02. Subsequent Offering....................................15
ARTICLE 6
Standstill obligations
Section 6.01. Acquisition of Voting Securities.......................15
Section 6.02. Certain Actions by Stockholders........................16
Section 6.03. Termination............................................16
ARTICLE 7
Miscellaneous
Section 7.01. Entire Agreement.......................................17
Section 7.02. Notices................................................17
Section 7.03. Amendment; Waiver; Termination.........................19
Section 7.04. Expenses...............................................19
Section 7.05. Assignability..........................................19
Section 7.06. Governing law..........................................20
Section 7.07. Counterparts; Effectiveness............................20
Section 7.08. Binding Effect; Benefit................................20
Section 7.09. Headings...............................................20
Section 7.10. Specific Enforcement...................................20
Section 7.11. Consent to Jurisdiction................................20
Section 7.12. After-Acquired Securities..............................21
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated April 28, 1997 (the "Agreement")
among United/Harvey Holdings, L.P., a Delaware limited partnership
("Holdings"), Holiday Corporation, a Delaware corporation ("HC"), Bass America
Inc., a Delaware corporation ("BAI"), Bass plc, an English public limited
company, and Bristol Hotel Company, a Delaware corporation (the "Acquiror").
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement and Plan of Merger dated
as of December 15, 1996 (the "Merger Agreement") among the Acquiror, HC and
Holiday Inns, Inc. ("HII"), a Tennessee corporation and wholly owned
subsidiary of HC, HC has acquired 2,391,286 shares of common stock, par
value $.01 per share, of the Acquiror and the Acquiror has acquired the
Retained Business (as defined in the Merger Agreement) through the merger
of HII with and into the Acquiror (the "Merger");
WHEREAS, in a related transaction immediately after the
Merger, the Acquiror satisfied a portion of the amount of HII Intercompany
Debt (as defined in the Merger Agreement) assumed pursuant to the Merger
with 6,981,832 Shares (as defined herein) to BAI and repaid the remaining
portion of such debt in cash;
WHEREAS, pursuant to the Registration Rights Agreement dated
the date hereof (the "Registration Rights Agreement") the Acquiror has
granted the parties hereto certain registration rights with respect to the
Shares of the Acquiror;
WHEREAS, certain employee stockholders of the Acquiror (the
"Management Stockholders") have entered into a separate Management
Stockholders' Agreement dated the date hereof (the "Management
Stockholders' Agreement");
WHEREAS, Bass plc has agreed to be a party to the Agreement
solely with respect to Article 6 hereof; and
WHEREAS, the parties hereto desire to provide, on the terms
and subject to the conditions set forth herein, for certain rights and
obligations of the parties hereto;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions . (a) The following terms, as used
herein, have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or
any indication of interest in, a merger or other business combination
involving the Acquiror or the acquisition of any equity securities
representing more than 50% of Total Voting Power, or all or substantially
all of the assets, of the Acquiror.
"Affiliate" means, with respect to any Person, any other
Person who is directly or indirectly Controlling, Controlled by or under
the common Control with such Person; provided that no Stockholder of the
Acquiror shall be deemed an Affiliate of any other Stockholder of the
Acquiror solely by reason of any investment in the Acquiror or by this
Agreement.
"Associate" means (i) any Person who is a director, officer
or partner or who is, directly or indirectly, the beneficial owner of 10%
or more of any class of equity securities of any corporation or entity,
(ii) any Person who has a substantial beneficial interest in or who serves
as a trustee for any trust or other estate, and (iii) any relative or
spouse of a Person, or any relative of such spouse, who has the same home
as such Person.
"Bass Entities" means HC and BAI.
"Beneficial ownership", "beneficially own" and "beneficial
owner" shall be determined in accordance with Rules 13d-3 and 13d-5 under
the Exchange Act as in effect on the date hereof.
"Board" means the board of directors of the Acquiror.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law
to close.
"Contribution Agreement" means the Contribution and
Assumption Agreement dated as of April 21, 1997 among the Acquiror, HC, HII
and Holiday Hospitality Corp., a wholly owned subsidiary of HII, pursuant
to which HII, in contemplation of the transactions contemplated by the
Merger Agreement, contributed certain of its assets and liabilities to
Holiday Hospitality Corp.
"Control" (including the terms "Controlling", "Controlled
by" and "under common Control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities,
as trustee or executor, by contract or credit arrangement or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Securities" means (i) options granted to
directors, officers and employees of the Acquiror to purchase capital stock
of the Acquiror, and the securities issued pursuant to such options or
plans under which options may be granted, which have been authorized by the
Board, (ii) capital stock issued or sold upon exercise of warrants, options
or rights, or upon conversion of convertible securities, which warrants,
options, rights or convertible securities were the subject of the
preemptive rights under Article 5 or (iii) any securities which are issued
to all stockholders by means of a distribution, stock dividend or stock
split or reclassification.
"Hotel Properties Agreement" means the Hotel Properties
Agreement dated the date hereof between HC and Acquiror whereby the
Acquiror has granted a certain right of first offer to franchise certain
hotel properties to HC and HC has granted a certain right of first offer on
certain Opportunities (as defined in such agreement) to the Acquiror.
"Initial Ownership" means, with respect to each Stockholder,
the total number of Shares beneficially owned (without duplication) by such
Stockholder as of the date the Acquiror consummates the transactions
contemplated by the Merger Agreement (equitably adjusted to reflect any
stock split, dividend, reclassification or any similar event); provided
that if the Contingency Agreement (as defined in the Merger Agreement) is
executed, "Initial Ownership" means, with respect to the Bass Entities, the
total number of Shares beneficially owned (equitably adjusted to reflect
any stock split, dividend, reclassification or any similar event) by the
Bass Entities six months after the date of the Initial Closing (as defined
in the Contingency Agreement) as a result of the transactions thereunder,
or, if relevant prior to such date, the number of Shares beneficially owned
(equitably adjusted to reflect any stock split, dividend, reclassification
or any similar event) by the Bass Entities at such time.
"Mid-Scale Lodging Facilities" means a full service lodging
facility providing a degree of sophistication and full service amenities
and facilities which (i) is of a type and standard generally consistent
with hotels operated as Holiday Inn hotels in the United States and Canada,
(ii) does not primarily offer suites, (iii) is not designed to accommodate
"extended stays" (generally more than five days) and (iv) does not
generally compete as an "upscale" or "economy" hotel. By way of example
and for the guidance of the parties, the parties acknowledge that as of
this date they would, without dispute, classify the hotel operations listed
on Schedules 2.01(a)(1) and 2.01(a)(2) of the Hotel Properties Agreement as
"upscale" hotels and "economy" hotels, respectively.
"Outside Director" means any director of the Acquiror who is
not an employee, executive officer or Affiliate of the Acquiror, Bass
Entities or Holdings and who is not an Associate of a business primarily
engaged in operating, managing or developing Mid-Scale Lodging Facilities
and who qualifies as an "independent director" within the meaning of the
New York Stock Exchange Listed Company Manual.
"Ownership Percentage" means with respect to each
Stockholder at any time, the percentage derived by dividing (i) the
aggregate number of Shares beneficially owned by such Stockholder as of
such time, by (ii) the total number of Shares outstanding as of such time
(determined on a fully diluted basis but excluding employee and director
options).
"Permitted Transferee" means with respect to each
Stockholder, any Affiliate of such Stockholder; provided that each such
transferee shall execute a copy of this Agreement and be bound by the
provisions herein to be a Permitted Transferee.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Primary Owner" means a Person or group of Affiliated
Persons who is the beneficial owner of a sufficient number of Shares so as
to be one of the two largest beneficial owners of Shares.
"Public Offering" means an underwritten public offering of
Securities of the Acquiror pursuant to an effective registration statement
under the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of common stock, par value $.01 per
share, of the Acquiror outstanding at any given time.
"Stockholder" means each of (i) the Bass Entities and their
Permitted Transferees, as a group, and (ii) Holdings and its Permitted
Transferees, as a group.
"Subsidiary" means, with respect to any Person, any entity
of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"Third Party" means a prospective purchaser of Shares in an
arm's-length transaction from a Stockholder where such purchaser is not a
Permitted Transferee of such Stockholder.
"Total Voting Power" means the aggregate number of votes
which may be cast by holders of outstanding Voting Securities.
"Transaction Documents" means this Agreement, the Merger
Agreement, the Contribution Agreement, the Hotel Properties Agreement, the
asset purchase agreements, the franchise agreements, the services
agreements, the Registration Rights Agreement and any other documents
relating to each of the foregoing agreements.
"Voting Securities" means all securities of the Acquiror
entitled, in the ordinary course, to vote in the election of directors of
the Acquiror.
"$" means United States dollars.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Acceptance Notice 4.01(b)
Acquiror Recitals
Agreement Recitals
BAI Recitals
Buyer 4.01(c)
Capital Transaction 2.04
Co-Sale Notice 4.02(a)
Co-Selling Stockholder 4.02(a)
Derivatives 3.01
Executive Committee 2.03(a)
Fair Market Value 4.01(b)
Term Section
---- -------
HC Recitals
HII Recitals
Holdings Recitals
Management Committee 2.03(b)
Management Stockholders Recitals
Management Stockholders' Agreement Recitals
Merger Recitals
Merger Agreement Recitals
Nominee 2.02
Non-Offering Stockholder 4.01(b)
Offer Notice 4.01(b)
Offer Price 4.01(b)
Offered Securities 4.01(a)
Offering Stockholder 4.01(a)
Portion 4.02(a)
Pro Rata Number 4.02(a)
Proportionate Amount 5.02
Registration Rights Agreement Recitals
ROFR Acceptance Period 4.01(b)
ROFR Closing 4.01(c)
ROFR Closing Period 4.01(c)
Securities 3.01
Subsequent Offering 5.02
Third-Party Sale 4.01(a)
Transfer 3.01
Unauthorized Transfer 3.04
ARTICLE 2
Corporate Governance
Section 2.01. Composition of the Board. (a) The Board
shall consist of nine directors, consisting of the chief executive officer
and chief operating officer of the Acquiror (so long as such Persons are
entitled to be on the Board pursuant to the Management Stockholders'
Agreement), three directors designated by the Bass Entities (of which one
director must be an Outside Director), three directors designated by
Holdings (of which one director must be an Outside Director), and one
Outside Director designated by the chief executive officer and chief
operating officer of the Acquiror, collectively (so long as such Persons
are entitled to be on the Board pursuant to the Management Stockholders'
Agreement); provided, however, if a Stockholder is not a Primary Owner, it
will be entitled to designate (i) only two directors, neither of whom need
be an Outside Director, if it beneficially owns less than 3,936,710 Shares
and (ii) only one director, who need not be an Outside Director, if it
beneficially owns less than 2,624,473 Shares (in each case equitably
adjusted to reflect any stock split, stock dividend, reclassification or
any similar event).
(b) If a Stockholder fails to designate the maximum number of
Persons for election to the Board that it is entitled to designate under
Section 2.01(a), each directorship in respect of which such Stockholder
fails to make a designation will remain vacant unless that vacancy results
in there being fewer than the minimum number of directors required by law,
in which case that vacancy or vacancies will be filled by a Person or
Persons selected by a majority of the directors of the Acquiror then in
office.
(c) If HC delivers a termination notice pursuant to Section 2.02(b)
of the Hotel Properties Agreement, within the six month period from the
date HC delivers such termination notice, the Bass Entities will cause the
directors on the Board which they designated under Section 2.01(a) who do
not qualify as Outside Directors to resign and designate in their place
Persons who would qualify as Outside Directors.
Section 2.02. Vacancies. If, as a result of death,
disability, retirement, resignation, removal (with or without cause) or
otherwise, there shall exist or occur any vacancy of the Board:
(i) the Person or Persons entitled under Section 2.01(a) to designate
or nominate such director whose death, disability, retirement, resignation
or removal resulted in such vacancy may designate another individual (the
"Nominee") to fill such capacity and serve as a director of the Acquiror;
and
(ii) each Stockholder then entitled to vote for the election of the
Nominee as a director of the Acquiror agrees that it will vote its Voting
Securities, or execute a written consent, as the case may be, in order to
ensure that the Nominee is elected to the Board.
Section 2.03. Executive Committee; Management Committee.
(a) The Acquiror and the Stockholders will take all actions necessary to cause
the Executive Committee of the Board (the "Executive Committee") to consist
of at least (i) either the chief executive officer or the chief operating
officer of the Acquiror (so long as such Persons are entitled to be on the
Board pursuant to the Management Stockholders' Agreement), (ii) a director
designated by the Bass Entities under Section 2.01(a) and (iii) a director
designated by Holdings under Section 2.01(a).
(b) The Acquiror and the Stockholders will take all actions
necessary to cause the Management Committee of the Board (the "Management
Committee") to consist of at least three Persons among the chief executive
officer, chief financial officer, chief operating officer and general
counsel of Acquiror.
Section 2.04. Capital Transactions. The Acquiror and the
Stockholders will take all action necessary to provide that any acquisition,
improvement, disposition or financing transaction (a "Capital Transaction")
will be approved in the following manner:
(i) Capital Transactions, the amount of which is or is
reasonably anticipated to be $25 million or less, shall be authorized
by the Management Committee;
(ii) Capital Transactions, the amount of which is or is
reasonably anticipated to be in excess of $25 million and up to $50
million, shall be approved unanimously by the Executive Committee; and
(iii) Capital Transactions, the amount of which is or is
reasonably anticipated to be in excess of $50 million, shall be
approved by the Board.
Section 2.05. Voting. Each Stockholder entitled to vote
for the election of directors to the Board agrees that it will vote its
Voting Securities or execute written consents, as the case may be, and each
Stockholder and Acquiror will take all other necessary action (including
causing the Acquiror to call a special meeting of stockholders) in order to
ensure that the composition of the Board is as set forth in this Section
2.01. If, at any time, either Stockholder is then entitled to vote for the
removal of directors of the Acquiror, it will not vote any of its Shares in
favor of the removal of any director who shall have been designated or
nominated pursuant to Section 2.01(a), unless such removal shall be for
cause or pursuant to Section 2.01(c) or the Persons entitled to designate
or nominate such director shall have consented to such removal in writing.
ARTICLE 3
Restrictions on Transfer
Section 3.01. General Restriction. No Stockholder may,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("Transfer") any Shares or securities
convertible into, or exchangeable for Shares or rights to purchase Shares
("Derivatives" and collectively with the Shares referred to herein as
"Securities") except (i) to a Permitted Transferee, (ii) in a Public
Offering in accordance with the Registration Rights Agreement, (iii)
pursuant to Article 4 herein, (iv) pursuant to a tender offer or other
transaction that has been approved by the Board and is made to all holders
of Securities that are the subject of the tender offer or other
transaction, (v) any pledge of Securities by a Stockholder made in
connection with a bona fide loan to such Stockholder (provided that the
lender's security interest in the Securities so pledged will be subject to
the right of first refusal granted to the other Stockholder under Section
4.01), (vi) any involuntary Transfer resulting from a lender foreclosing on
any pledge of any Securities which pledge existed on the date hereof or was
made in accordance with this Section 3.01 or (vii) any Transfer made with
the prior written consent of the other Stockholder.
Section 3.02. Transfers in Compliance with Law. No
Stockholder may Transfer any Securities at any time to any Person except in
compliance with applicable federal, state and foreign securities laws.
Section 3.03. Legend. In addition to any other legend
required by applicable law, all certificates representing Securities held
by any Stockholder, or their Permitted Transferees, will bear legend number
(1) to assure the enforceability of this Agreement until the time the
Securities are no longer subject to the provisions of this Agreement and
legend number (2) if the Securities have not been registered under the
Securities Act.
(1) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS' AGREEMENT
AND MAY NOT BE TRANSFERRED, SOLD, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT AS THEREIN PROVIDED AND
THEN ONLY IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS.
A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF
THE COMPANY."
(2) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF THAT ACT
OR LAWS AND THE COMPANY MAY REQUIRE AN OPINION OF
COUNSEL WITH RESPECT TO THAT EXEMPTION."
If any Securities cease to be subject to any restrictions on
Transfer set forth in this Agreement, the Acquiror shall, upon the written
request of the holder thereof, issue to such holder a new certificate
evidencing such Securities without legend number (1).
Section 3.04. Unauthorized Transfers. Any purported
Transfer of any Securities in violation of the provisions of this Article 3
(an "Unauthorized Transfer") will be null and void. Acquiror will not
register, recognize or give effect to any Unauthorized Transfer and the
purported transferee of any Securities pursuant to an Unauthorized Transfer
will not thereby acquire any rights in those Securities. Acquiror will,
immediately upon becoming aware of an actual or attempted Unauthorized
Transfer, instruct the transfer agent or registrar for the Securities to
issue an appropriate stop-transfer order with regard to the Unauthorized
Transfer or attempted Unauthorized Transfer.
ARTICLE 4
Right of First Refusal; Right to Participate in Sales
Section 4.01. Right of First Refusal. Each Stockholder
(the "Offering Stockholder") may from time to time sell any or all of the
Securities owned by the Offering Stockholder (the "Offered Securities") to
a Third-Party in a bona fide sale transaction (a "Third-Party Sale"),
provided that the Offering Stockholder shall have complied with the
provisions of Section 4.01(b).
(b) Prior to effecting any Third-Party Sale, the Offering
Stockholder will deliver to the other Stockholder (the "Non-Offering
Stockholder") a written notice (an "Offer Notice") specifying (i) the
aggregate amount of cash consideration, the amount of any promissory note
or other debt instrument and the Fair Market Value of any other non-cash
consideration (the "Offer Price"), for which the Offering Stockholder
proposes to sell the Offered Securities in the proposed Third-Party Sale,
(ii) the identity of the purchaser in the proposed Third-Party Sale, (iii)
the date the proposed Third-Party Sale is scheduled to close and (iv) all
other material terms of the proposed Third-Party Sale, including without
limitation any other contract or transaction entered into or proposed to be
entered into in connection with the Third-Party Sale. If the Non-Offering
Stockholder delivers to the Offering Stockholder a written notice (an
"Acceptance Notice") within 20 Business Days following the delivery of the
Offer Notice (the "ROFR Acceptance Period") stating that the Non-Offering
Stockholder is willing to purchase all of the Offered Securities for the
Offer Price and on the other terms set forth in the Offer Notice, the
Offering Stockholder will sell all (but not less than all) of the Offered
Securities to the Non-Offering Stockholder, and the Non-Offering
Stockholder will purchase the Offered Securities from the Offering
Stockholder, on the terms and subject to the conditions set forth in
Section 4.01(c). If the consideration under the Third-Party Sale includes
a promissory note or other debt instrument payable to the Offering
Stockholder, the Non-Offering Stockholder may deliver a similar promissory
note or debt instrument in payment of the Offer Price. As used herein,
"Fair Market Value" means the price agreed upon by a willing buyer and a
willing seller both in possession of reasonable knowledge of all relevant
facts, with neither party being under any compulsion to act or not act;
provided that if the Non-Offering Stockholder, on the one hand, and the
Offering Stockholder, on the other hand, disagree on the calculation of the
Fair Market Value, they shall select an unaffiliated financial advisory
firm to determine the Fair Market Value and such firm's determination shall
be final and binding. All costs relating to the financial advisor shall be
borne equally by the Offering Stockholder on the one hand, and the Non-
Offering Stockholder on the other hand.
(c) The consummation of any purchase and sale pursuant to Section
4.01(b) (the "ROFR Closing") will occur 30 Business Days following the
delivery of the Acceptance Notice or on such other date as may be agreed
upon by the Offering Stockholder and the Non-Offering Stockholder (the
"ROFR Closing Period") at the time and place as may be agreed upon by the
Offering Stockholder and the Non-Offering Stockholder delivering the
Acceptance Notice (the "Buyer"). At the ROFR Closing, (i) the Offering
Stockholder will deliver to the Buyer one or more certificates evidencing
all of the Offered Securities, duly endorsed for Transfer to the Buyer,
together with such other duly executed instruments or documents as may be
required to permit the Buyer to acquire the Offered Securities free and
clear of any and all encumbrances, except for encumbrances under this
Agreement, if applicable, (ii) the Buyer will deliver to the Offering
Stockholder by certified or official bank check or wire transfer to an
account designated by the Offering Stockholder an amount in immediately
available funds equal to the Offer Price and (iii) the Offering Stockholder
will be deemed to represent and warrant to the Buyer that, upon the ROFR
Closing, the Offering Stockholder will convey and the Buyer will acquire
the entire record and beneficial ownership of, and good and valid title to,
the Offered Securities, free and clear of any and all encumbrances, except
for encumbrances under this Agreement, if applicable.
(d) If no Acceptance Notice relating to a proposed Third-Party Sale is
delivered to the Offering Stockholder prior to the expiration of the ROFR
Acceptance Period, or an Acceptance Notice is so delivered to the Offering
Stockholder but the ROFR Closing fails to occur prior to the expiration of the
ROFR Closing Period (unless the Buyer was ready, willing and able prior to the
expiration of the ROFR Closing Period to consummate the transactions to be
consummated by the Buyer at the ROFR Closing or the Buyer was not so ready,
willing and able to consummate the transactions to be consummated by the Buyer
at the ROFR Closing as a result of the Offering Stockholder's failure
reasonably to cooperate in good faith with the efforts of Buyer to consummate
such transactions), the Offering Stockholder may consummate the proposed
Third-Party Sale in accordance with Section 4.01(e).
(e) The Offering Stockholder may consummate the Third-Party Sale to
the Third-Party purchaser identified in the Offer Notice (the "Third-Party
Purchaser") only (i) during the 60 calendar day period immediately
following the expiration of the ROFR Acceptance Period (in the event that
no Acceptance Notice was timely delivered to the Offering Stockholder) or
the 60 calendar day period immediately following the expiration of the ROFR
Closing Period, (ii) at a price at least equal to the Offer Price, and
(iii) upon terms not materially less favorable to the Offering Stockholder
than those set forth in the Offer Notice.
(f) Within 3 Business Days following the foreclosure of a pledge of
Securities permitted under Section 3.01, the Pledgee shall send an Offer
Notice pursuant to Section 4.01(b) and the procedures set forth in Sections
4.01(b) through (e) shall apply to such Offer Notice, except that the Offer
Price shall be the market price on the Business Day immediately preceding
the date of the Offer Notice.
Section 4.02. Right to Participate in Sales. (a) If requested
by the other Stockholder (the "Co-Selling Stockholder") in a written notice
(a "Co-Sale Notice") delivered to the Offering Stockholder during the ROFR
Acceptance Period, the Co-Selling Stockholder will be permitted to sell in
that Third-Party Sale, on the same terms as the Offering Stockholder, up to
the number of Securities held by the Co-Selling Stockholder as is specified
in the Co-Sale Notice; provided that the number of Securities to be sold by
the Co-Selling Stockholder participating in such Third-Party Sale shall in
no event exceed the Portion corresponding to such Co-Selling Stockholder.
As used herein, "Portion" means, with respect to the Co-Selling
Stockholder, the number of Securities beneficially owned by such Co-Selling
Stockholder multiplied by a fraction the numerator of which is the number
of Securities to be sold by the Offering Stockholder and its Permitted
Transferees in such Third-Party Sale and the denominator of which is the
aggregate number of Securities beneficially owned by the Offering
Stockholder and its Permitted Transferees, without duplication, immediately
prior to such Third-Party Sale. If a Co-Selling Stockholder requests to
include more Securities than provided under the preceding sentences, the
Offering Stockholder will attempt to cause the Third-Party Purchaser to
acquire those additional Securities, but will have no liability for the
Third-Party Purchaser's refusal to purchase those additional Securities.
To the extent that the Third-Party Purchaser is unwilling to purchase all
of the Securities proposed to be sold by the Offering Stockholder and the
Co-Selling Stockholder, the number of Securities to be sold by each of the
Offering Stockholder and the Co-Selling Stockholder shall be reduced to
their respective Pro Rata Number of Securities. "Pro Rata Number" means,
with respect to the participation of the Offering Stockholder or the Co-
Selling Stockholder in a Third-Party Sale, the product of (i) the total
number of Securities proposed to be sold by such Stockholder and (ii) a
fraction, the numerator of which is the total number of Securities proposed
to be purchased by the Third-Party Purchaser, and the denominator of which
is the total number of Securities proposed to be sold by both the Offering
Stockholder and the Co-Selling Stockholder.
Notwithstanding anything to the contrary herein contained,
(i) the Co-Selling Stockholder may not deliver to the Offering Stockholder
both an Acceptance Notice and a Co-Sale Notice with respect to the same
proposed Third-Party Sale and (ii) the Offering Stockholder will have the
right to elect not to consummate any Third-Party Sale (without liability to
the Co-Selling Stockholder) if it is unable to sell all of the Offered
Securities as initially set forth in the Offer Notice and (iii) may
increase the Securities included in the Offered Securities to accommodate
any Securities proposed to be sold by a Co-Selling Stockholder.
(b) If the Co-Selling Stockholder properly elects to participate in
a Third-Party Sale, the Offering Stockholder will represent the Co-Selling
Stockholder in the sale but will not assume any fiduciary duty to the Co-
Selling Stockholder under this Agreement. The Co-Selling Stockholder will
execute and deliver the documentation providing for the Third-Party Sale as
negotiated by the Offering Stockholder on terms that are reasonably
acceptable to the Co-Selling Stockholder; provided that, at any time prior
to such execution and delivery, the Co-Selling Stockholder may decline to
participate in the Third-Party Sale if the documentation is not reasonably
acceptable to it. If the Co-Selling Stockholder fails to execute and
deliver the documentation or timely to perform its obligations thereunder,
the Offering Stockholder may complete the Third-Party Sale without the
participation of the Co-Selling Stockholder. The Offering Stockholder will
have no responsibility to the Co-Selling Stockholder if it fails to
consummate a Third-Party Sale, and the Offering Stockholder will in all
events be free to abandon any Third-Party Sale at any time prior to its
consummation without any liability to the Co-Selling Stockholder.
Section 4.03. Execution of the Stockholders' Agreement.
(a) Any Third-Party to whom Transfers are made pursuant to this Article 4 who
(i) acquires Securities representing at least 50% of the transferring
Stockholder's Initial Ownership and (ii) is assigned, at the sole discretion of
the transferring Stockholder, all of such transferring Stockholder's rights
and obligations hereunder, shall execute a copy of this Agreement and be
bound by all the provisions herein as the successor-in-interest, in which
event, such transferring Stockholder shall be relieved of all its rights
and obligations hereunder; provided that such transferring Stockholder
shall continue to be bound by the provisions of Article 6 herein.
(b) Any Third-Party to whom Transfers are made pursuant to this
Article 4 who acquires in such Transfer beneficial ownership of Voting
Securities representing at least 5% of the Total Voting Power shall agree
in writing to be bound by the provisions of Article 6 herein.
(c) Any Third-Party to whom Securities are pledged pursuant to
Section 3.01 shall agree in writing to be bound by the provisions of
Section 4.01(f).
Section 4.04. Certain Actions by Acquiror. Acquiror will not take
any action, including without limitation the adoption of a stockholders'
rights plan, which would make it impossible or would otherwise adversely
affect a Stockholder's ability to acquire additional Securities pursuant to
Section 4.01 herein.
ARTICLE 5
Preemptive rights
Section 5.01. Preemptive Rights. Except for the issuance of
Excluded Securities and subject to Section 5.02, the Acquiror shall provide
the Stockholders with written notice of any proposed issuance for cash of any
equity securities or any securities convertible into or exchangeable for, or
any rights or warrants to acquire, any equity securities of the Acquiror no
later than 30 Business Days prior to the proposed issuance thereof. Such
notice shall specify the securities to be issued, the purchase price, the
proposed issuance date and all other material terms of such issuance. Upon
delivery to the Acquiror by any of the Stockholders no later than 20 Business
Days after such notice by the Acquiror of a notice stating that such
Stockholder intends to acquire a portion of the securities to be issued, such
Stockholder shall be entitled, on the terms offered by the Acquiror to other
prospective purchasers of the securities to be issued, to purchase up to an
amount of the securities such that, upon consummation of the proposed
issuance, the Stockholder would hold that Ownership Percentage of the Acquiror
as such Stockholder holds immediately prior to such issuance. Any such notice
from any Stockholder shall indicate the amount of securities it intends to
purchase and shall constitute a binding contract to acquire such securities on
the terms set forth in the notice delivered to such Stockholder by the
Acquiror with respect to such issuance. Notwithstanding anything herein to
the contrary, the Acquiror shall be entitled not to proceed with the proposed
issuance or to alter the terms thereof; provided that, in the event that any
material terms of the proposed issuance are altered, (i) any notice delivered
by a Stockholder to the Acquiror pursuant to this Section 5.01 shall be
revoked automatically and (ii) such Stockholder shall be entitled to
participate in such proposed issuance on the revised terms in accordance with
this Section 5.01.
Section 5.02. Subsequent Offering. Notwithstanding the
provisions of Section 5.01, no Stockholder will have any rights under Section
5.01 with respect to Acquiror's first three Public Offerings of equity
securities after the Merger (the "Subsequent Offering") unless the Stockholder
beneficially owns at least 30 percent of the Shares and the proposed sale
would cause the Stockholder to beneficially own less than 30 percent of the
Shares (after giving effect to the proposed sale of securities). If the
Subsequent Offering would so cause a Stockholder to beneficially own less than
30 percent of the Shares, the Acquiror will offer in accordance with Section
5.01 to each Stockholder the option to purchase in the proposed sale the
Stockholder's Proportionate Amount of the securities. For purposes of this
Section 5.02, the term "Proportionate Amount" for any Stockholder means the
amount of securities, that when added to the number of securities then
beneficially owned by that Stockholder, equals 30 percent of the Shares.
ARTICLE 6
Standstill obligations
Section 6.01. Acquisition of Voting Securities. Each
Stockholder will not, and will not permit its Affiliates to, purchase or
otherwise acquire, or agree or offer to purchase or otherwise acquire,
beneficial ownership of any Voting Securities, if after giving effect
thereto the Stockholder would beneficially own Voting Securities
representing more than 36.5% of the Total Voting Power, without the prior
written consent of (i) the other Stockholder, if the Stockholder would
beneficially own Voting Securities representing less than 45% of the Total
Voting Power, and (ii) the other Stockholder and a majority of the Board,
exclusive of those members of the Board designated by the Stockholder
seeking such consent, if the Stockholder would beneficially own Voting
Securities representing 45% or more of the Total Voting Power; provided
that a Stockholder shall not be deemed to have violated this Section 6.01
if a Stockholder beneficially owns Voting Securities representing more than
36.5% of the Total Voting Power as a result of (i) a recapitalization of
the Acquiror, a repurchase or redemption of securities by the Acquiror or
any other action taken by the Acquiror, (ii) purchases pursuant to Section
4.01 hereof or (iii) inadvertent purchases, if such Stockholder as promptly
as practicable divests itself of beneficial ownership of a sufficient
number of Voting Securities so as to beneficially own Voting Securities
representing no more than 36.5% of the Total Voting Power.
Section 6.02. Certain Actions by Stockholders. Each
Stockholder will not, and will not permit its Affiliates to:
(a) make, or take any action to solicit, initiate or encourage, an
Acquisition Proposal;
(b) "solicit", or become a "participant" in any "solicitation" of, any
"Proxy" (as such terms are defined in Regulation 14A under the Exchange Act)
from any holder of Voting Securities in connection with any vote on any
matter, or agree or announce its intention to vote with any Person undertaking
a "solicitation;"
(c) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting
Securities; or
(d) grant any Proxies with respect to any Voting Securities to any
Person (other than as recommended by the Board of Directors of the
Acquiror) or deposit any Voting Securities in a voting trust or enter into
any other arrangement or agreement with respect to the voting thereof.
Section 6.03. Termination. This Article 6 shall terminate
upon the earlier of (i) the third anniversary of the date hereof and (ii)
the date provided for in Section 7.03(b).
ARTICLE 7
Miscellaneous
Section 7.01. Entire Agreement. This Agreement and the
Transaction Documents constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, with respect to the
subject matter hereof and except as otherwise expressly provided herein and
therein. This Agreement will have no effect on any rights or obligations
the Stockholders or the Acquiror may have under the Registration Rights
Agreement.
Section 7.02. Notices. (a) All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to the Acquiror, to:
Bristol Hotel Company
14285 Midway Road
Suite 340
Dallas, Texas 75244
Attention: Joel M. Eastman
Telecopy: (972) 687-0326
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek
Telecopy: (212) 755-7306
if to Holdings, to:
United/Harvey Holdings, L.P.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
Attention: Daniel A. Decker
Telecopy: (214) 220-4949
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek
Telecopy: (212) 755-7306
if to the Bass Entities or Bass plc, to:
Holiday Corporation
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
Attention: Senior Vice President, General Counsel
Telecopy: (770) 604-5403
Bass plc
20 North Audley Street
London, W1Y 1WE
England
Attention: Spencer Wigley
Telecopy: 011-44-171-409-8513
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William Rosoff
Telecopy: (212) 450-4800
(b) Each party hereto may hereafter specify such other address or
telecopy number for the purpose by notice to the other parties hereto.
Each such notice, request or other communication shall be effective (a) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in Section 7.02(a) and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in Section 7.02(a).
(c) Any Person who becomes a Stockholder shall provide its address
and telecopy number to the Acquiror, which shall promptly provide such
information to each other Stockholder.
Section 7.03. Amendment; Waiver; Termination. (a) No
provision of this Agreement may be waived except by an instrument in
writing executed by the party against whom the waiver is to be effective.
No provision of Articles 5 and 6 may be amended or otherwise modified
except by an instrument in writing executed by the Acquiror with the
approval of the Board and each Stockholder and no provision of Articles 2,
3 and 4 may be amended or otherwise modified except by an instrument in
writing executed by each Stockholder.
(b) This Agreement shall terminate on the earliest of (i) the
voluntary or involuntary dissolution or liquidation of the Acquiror, (ii)
the mutual agreement of the parties hereto, (iii) the date on which either
Stockholder ceases to beneficially own any Shares and (iv) a merger,
consolidation or other business combination in which the Acquiror is not
the surviving entity (excluding any merger, consolidation or other business
combination in which the Stockholders own a majority of the capital stock
of the surviving corporation).
Section 7.04. Expenses. Except as otherwise provided
herein, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense; provided,
however, that, in any action or proceeding brought to enforce any provision
of this Agreement or where any provision of any this Agreement is validly
asserted as a defense, the successful party will be entitled to recover its
cost and expense (including reasonable attorneys' fees and charges) in
addition to any other available remedy.
Section 7.05. Assignability. Except as otherwise provided
herein, this Agreement shall not be assignable by any party hereto. Any
Person acquiring Shares who is required by the terms of this Agreement to
become a party hereto shall execute and deliver to the Acquiror a copy of
this Agreement and shall thenceforth be a "Stockholder". Any Stockholder
who ceases to own beneficially any Shares shall cease to be bound by the
terms hereof.
Section 7.06. Governing law. This Agreement shall be
construed in accordance with and governed by the laws of the state of
Delaware regardless of the laws that might otherwise govern under the
principles of conflict of laws applicable thereto.
Section 7.07. Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto.
Section 7.08. Binding Effect; Benefit. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective heirs, successors, legal representatives and permitted
assigns. Nothing in this Agreement, expressed or implied, shall confer on
any Person other than the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 7.09. Headings. The headings contained in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.10. Specific Enforcement. Each party hereto
acknowledges that the remedies at law of the other parties for a breach or
threatened breach of this Agreement would be inadequate and, in recognition
of this fact, any party to this Agreement, without posting any bond, and in
addition to all other remedies which may be available, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
Section 7.11. Consent to Jurisdiction. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in the Court of Chancery in the State of
Delaware, and each of the parties hereby consents to the non-exclusive
jurisdiction of such court (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of
any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 7.02 shall be
deemed effective service of process on such party.
Section 7.12. After-Acquired Securities. Except as
otherwise expressly provided herein, all of the provisions of this
Agreement will apply to and include all Securities acquired by each
Stockholder on and after the date of this Agreement, including without
limitation such Securities received by each Stockholder as a result of (i)
a stock dividend on or other payment made to holders of Securities, (ii)
any exchange for, or reclassification of, any Securities, (iii) a
reorganization, recapitalization, consolidation or merger, (iv) the
exercise of any Securities or (v) the exercise of any rights under Sections
4.01 and 5.01.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
BRISTOL HOTEL COMPANY
By: /s/ Joel M. Eastman
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UNITED/HARVEY
HOLDINGS, L.P.
By: Holdings Genpar, L.P. its
General Partner
By: HH Genpar Partners, its General
Partner
By: Holdings Associates, Inc., its
Managing General Partner
By: /s/ Daniel A. Decker
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HOLIDAY CORPORATION
By: /s/ Michael L. Goodson
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BASS AMERICA INC.
By: /s/ Michael L. Goodson
----------------------------------
With respect to Article 6 of this
Agreement, accepted and agreed
as of the day and year first above written.
BASS PLC
By: /s/ Richard North
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