<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1997
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 1, 1997
DOUBLETREE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-24392 86 0762415
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification Number)
organization)
410 NORTH 44TH STREET 85008
SUITE 700 (Zip Code)
PHOENIX, ARIZONA
(Address of principal executive offices)
(602) 220-6666
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 5. Other Events
On September 1, 1997, Doubletree Corporation ("Doubletree")
Promus Hotel Corporation ("Promus"), and Parent Holding Corp., a newly-formed
corporation jointly owned by Doubletree and Promus ("Parent"), entered into
an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which
Parent will form two subsidiaries that will merge with and into Promus and
Doubletree such that Promus and Doubletree become wholly-owned subsidiaries of
Parent (the "Mergers"). Pursuant to the Merger Agreement, upon the effectiveness
of the Mergers, (i) each outstanding share of Common Stock, par value $.10 per
share, of Promus will be converted into the right to receive 0.925 shares of
Common Stock, par value $.01 per share, of Parent ("Parent Common Stock"), and
(ii) each outstanding share of Common Stock, par value $.01 per share, of
Doubletree will be converted into the right to receive one share of Parent
Common Stock. Consummation of the Mergers is subject to the satisfaction or
waiver by the parties of certain conditions, including the receipt of regulatory
approvals and approvals by the stockholders of Promus and Doubletree.
In connection with the Merger Agreement, Promus and Doubletree
also have entered into (i) a Stock Option Agreement pursuant to which Promus
granted to Doubletree an option to purchase up to 19.9% of the outstanding
common stock of Promus under certain circumstances and (ii) a Stock Option
Agreement pursuant to which Doubletree has granted to Promus an option to
purchase up to 19.9% of the outstanding common stock of Doubletree under certain
circumstances (together, the "Stock Option Agreements"). In addition, certain
stockholders of Doubletree holding over 39% of the outstanding common stock of
Doubletree have entered into a stockholder support agreement with Promus (the
"Stockholder Support Agreement"), pursuant to which such stockholders agreed to
vote their shares in favor of the adoption of the Merger Agreement and approval
of the Doubletree Merger, subject to certain conditions.
On September 2, 1997, Promus and Doubletree issued a joint press
release announcing the execution of the Merger Agreement. The Merger Agreement,
the Stock Option Agreements, the Stockholder Support Agreement and the press
release are filed as exhibits hereto and are incorporated by reference herein.
Doubletree has also adopted a Stockholder Rights Plan pursuant
to which it will distribute one Preferred Stock Purchase Right with respect to
each outstanding share of its Common Stock outstanding as of the close of
business on September 11, 1997, and each additional such share issued
thereafter until the earlier of the Distribution Date under the rights
Agreement or the date on which the Rights expire or are redeemed. The Rights
will expire immediately prior to the Effective Time or the transactions
contemplated by the above-mentioned agreement with Promus, or, if the
transactions are not consummated then on September 1, 2007, unless extended by
Doubletree. The Rights will not be exercisable except on the occurrence of
certain events described in the Rights Agreement. When exercisable, under
certain circumstances, each Right, for an exercise price of $180 per share,
will entitle the holder to purchase shares of Doubletree's Common Stock (or
other shares, securities or property, as the case may be, of equivalent value)
having a value equal to two times such exercise price. The Rights will be
redeemable at $0.01 per Right. Copies of the Rights Agreement and the press
release announcing adoption of the Stockholder Rights Plan are filed herewith
as exhibits and are incorporated by reference herein.
ITEM 7. Financial Statements and Exhibits
<TABLE>
<S> <C>
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of September 1, 1997, by and
among Doubletree Corporation, Promus Hotel Corporation and Parent
Holding Corp.
4.1 Rights Agreement, dated as of September 1, 1997, between Doubletree
Corporation and Harris Trust Company of California, as Rights Agent.
The Rights Agreement includes the Form of Certificate of Designations
of Series A Junior Preferred Stock as Exhibit A, the Summary of Rights
as Exhibit B and the Form of Rights Certificate as Exhibit C.
10.1 Stock Option Agreement (Doubletree), dated as of September 1, 1997, by
and between Doubletree Corporation and Promus Hotel Corporation.
10.2 Stock Option Agreement (Promus), dated as of September 1, 1997, by and
between Promus Hotel Corporation and Doubletree Corporation.
10.3 Stockholder Support Agreement, dated as of September 1, 1997, by and
among certain stockholders of Doubletree, to and for the benefit of
Promus.
</TABLE>
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<TABLE>
<S> <C>
99.1 Joint Press Release, dated September 2, 1997, issued by Promus Hotel
Corporation and Doubletree Corporation.
99.2 Press Release, dated September 2, 1997, issued by Doubletree
Corporation relating to the Stockholder Rights Plan.
</TABLE>
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PROMUS HOTEL CORPORATION
/s/ DAVID STIVERS
-------------------------------------------
David Stivers
Senior Vice President and
General Counsel
Dated: September 5, 1997
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of September 1, 1997, by
and among Doubletree Corporation, Promus Hotel Corporation and
Parent Holding Corp.
4.1 Rights Agreement, dated as of September 1, 1997, between
Doubletree Corporation and Harris Trust Company of California,
as Rights Agent. The Rights Agreement includes the Form of
Certificate of Designations of Series A Junior Preferred Stock
as Exhibit A, the Summary of Rights as Exhibit B and the Form of
Rights Certificate as Exhibit C.
10.1 Stock Option Agreement (Doubletree), dated as of September 1,
1997, by and between Doubletree Corporation and Promus Hotel
Corporation.
10.2 Stock Option Agreement (Promus), dated as of September 1, 1997,
by and between Promus Hotel Corporation and Doubletree
Corporation.
10.3 Stockholder Support Agreement, dated as of September 1, 1997, by
and among certain stockholders of Doubletree, to and for the
benefit of Promus.
99.1 Joint Press Release, dated September 2, 1997, issued by Promus Hotel
Corporation and Doubletree Corporation.
99.2 Press Release, dated September 2, 1997, issued by Doubletree
Corporation relating to the Stockholder Rights Plan.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 1, 1997
AMONG
DOUBLETREE CORPORATION,
PROMUS HOTEL CORPORATION
AND
PARENT HOLDING CORP.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. THE MERGERS................................................................2
Section 1.1. Certificate of Incorporation and Bylaws of Parent..........................2
Section 1.2. The Doubletree Merger......................................................2
Section 1.3. The Promus Merger..........................................................2
Section 1.4. Effective Time of the Mergers..............................................2
Section 1.5. Closing....................................................................3
Section 1.6. Effect of the Mergers......................................................3
Section 1.7. Certificate of Incorporation and Bylaws of the Surviving Corporations......3
Section 1.8. Directors and Officers of the Surviving Corporations.......................3
ARTICLE II. CONVERSION OF SECURITIES...................................................4
Section 2.1. Conversion of Doubletree Capital Stock.....................................4
Section 2.2. Conversion of Promus Capital Stock.........................................4
Section 2.3. Cancellation of Parent Stock...............................................5
Section 2.4. Exchange of Certificates...................................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF DOUBLETREE...............................8
Section 3.1. Organization of Doubletree.................................................8
Section 3.2. Doubletree Capital Structure...............................................9
Section 3.3. Authority; No Conflict; Required Filings and Consents.....................10
Section 3.4. SEC Filings; Financial Statements.........................................11
Section 3.5. No Undisclosed Liabilities................................................12
Section 3.6. Absence of Certain Changes or Events......................................12
Section 3.7. Taxes.....................................................................12
Section 3.8. Properties................................................................13
Section 3.9. Intellectual Property.....................................................14
Section 3.10. Agreements, Contracts and Commitments.....................................14
Section 3.11. Litigation................................................................14
Section 3.12. Environmental Matters.....................................................14
Section 3.13. Employee Benefit Plans....................................................15
Section 3.14. Compliance With Laws......................................................16
Section 3.15. Accounting and Tax Matters................................................16
Section 3.16. Registration Statement; Joint Proxy Statement/Prospectus..................17
Section 3.17. Labor Matters.............................................................17
Section 3.18. Insurance.................................................................18
Section 3.19. Doubletree Long-Range Plans...............................................18
Section 3.20. Opinion of Financial Advisor..............................................18
Section 3.21. No Existing Discussions...................................................18
Section 3.22. Section 203 of the DGCL Not Applicable....................................18
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
Section 3.23. Doubletree Rights Plan....................................................18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PROMUS..................................19
Section 4.1. Organization of Promus....................................................19
Section 4.2. Promus Capital Structure..................................................19
Section 4.3. Authority; No Conflict; Required Filings and Consents.....................20
Section 4.4. SEC Filings; Financial Statements.........................................21
Section 4.5. No Undisclosed Liabilities................................................22
Section 4.6. Absence of Certain Changes or Events......................................22
Section 4.7. Taxes.....................................................................22
Section 4.8. Properties................................................................23
Section 4.9. Intellectual Property.....................................................23
Section 4.10. Agreements, Contracts and Commitments.....................................24
Section 4.11. Litigation................................................................24
Section 4.12. Environmental Matters.....................................................24
Section 4.13. Employee Benefit Plans....................................................25
Section 4.14. Compliance With Laws......................................................26
Section 4.15. Accounting and Tax Matters................................................26
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus..................26
Section 4.17. Labor Matters.............................................................27
Section 4.18. Insurance.................................................................27
Section 4.19. Promus Long-Range Plans...................................................27
Section 4.20. Opinion of Financial Advisor..............................................27
Section 4.21. No Existing Discussions...................................................27
Section 4.22. Section 203 of the DGCL Not Applicable....................................27
Section 4.23. Promus Rights Plan........................................................27
ARTICLE V. COVENANTS.................................................................28
Section 5.1. Conduct of Business.......................................................28
Section 5.2. Cooperation; Notice; Cure.................................................30
Section 5.3. No Solicitation...........................................................30
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement..................31
Section 5.5. NASDAQ Quotation and NYSE Listing.........................................32
Section 5.6. Access to Information.....................................................32
Section 5.7. Stockholders' Meetings....................................................32
Section 5.8. Legal Conditions to Merger................................................32
Section 5.9. Public Disclosure.........................................................33
Section 5.10. Nonrecognition Exchange...................................................33
Section 5.11. Pooling Accounting........................................................34
Section 5.12. Affiliate Agreements......................................................34
Section 5.13. NYSE Listing..............................................................34
Section 5.14. Stock Plans...............................................................34
Section 5.15. Brokers or Finders........................................................35
Section 5.16. Indemnification...........................................................36
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
Section 5.17. Letter of Promus's Accountants............................................36
Section 5.18. Letter of Doubletree's Accountants........................................37
Section 5.19. Stock Option Agreements...................................................37
Section 5.20. Post-Merger Corporate Governance; Employment Arrangements.................37
Section 5.21. Name of Parent............................................................39
Section 5.22. Parent Stockholder Rights Plan; Amendment of Promus Rights Plan...........39
Section 5.23. GEPT Warrant; Doubletree Registration Rights Agreement....................39
Section 5.24. Conveyance Taxes..........................................................39
Section 5.25. Transfer Taxes............................................................40
Section 5.26. Stockholder Litigation....................................................40
Section 5.27. Employee Benefits; Severance..............................................40
ARTICLE VI. CONDITIONS TO MERGER......................................................41
Section 6.1. Conditions to Each Party's Obligation to Effect the Mergers...............41
Section 6.2. Additional Conditions to Obligations of Doubletree........................42
Section 6.3. Additional Conditions to Obligations of Promus............................43
ARTICLE VII. TERMINATION AND AMENDMENT................................................43
Section 7.1. Termination...............................................................43
Section 7.2. Effect of Termination.....................................................45
Section 7.3. Fees and Expenses.........................................................45
Section 7.4. Amendment.................................................................47
Section 7.5. Extension; Waiver.........................................................47
ARTICLE VIII. MISCELLANEOUS.............................................................48
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.................48
Section 8.2. Notices...................................................................48
Section 8.3. Interpretation............................................................49
Section 8.4. Counterparts..............................................................49
Section 8.5. Entire Agreement; No Third Party Beneficiaries............................49
Section 8.6. Governing Law.............................................................49
Section 8.7. Assignment................................................................49
</TABLE>
EXHIBITS
Exhibit A Stock Option Agreement (Doubletree)
Exhibit B Stock Option Agreement (Promus)
Exhibit C Stockholder Support Agreement
Exhibit D Certificate of Incorporation of Parent
Exhibit E Bylaws of Parent
Exhibit F Form of Doubletree Affiliate Agreement
Exhibit G Form of Promus Affiliate Agreement
iii
<PAGE> 5
TABLES OF DEFINED TERMS
<TABLE>
<CAPTION>
CROSS REFERENCE
TERMS IN AGREEMENT
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<S> <C>
Acquisition Proposal Section 5.3(a)
Affiliate Section 5.12
Affiliate Agreement Section 5.12
Agreement Preamble
Alternative Transaction Section 7.3(e)
Bankruptcy and Equity Exception Section 3.3(a)
Certificate of Merger Section 1.4
Certificates Section 2.4(b)
Closing Section 1.5
Closing Date Section 1.5
Code Preamble
Confidentiality Agreements Section 5.3(a)
DGCL Section 1.2
Doubletree Preamble
Doubletree Balance Sheet Section 3.4(b)
Doubletree Common Stock Section 2.1
Doubletree Director Section 5.20(a)
Doubletree Disclosure Schedule Article III
Doubletree Employee Plans Section 3.13(a)
Doubletree Employees Section 5.27(b)
Doubletree Exchange Ratio Section 2.1(c)
Doubletree Material Adverse Effect Section 3.1
Doubletree Material Contracts Section 3.10(a)
Doubletree Merger Section 1.2
Doubletree Preferred Stock Section 3.2(a)
Doubletree Rights Plan Section 3.2(b)
Doubletree SEC Reports Section 3.4(a)
Doubletree Stock Option Section 5.14(a)
Doubletree Stock Option Agreement Preamble
Doubletree Stock Plans Section 3.2(a)
Doubletree Stockholders' Meeting Section 3.16
Doubletree Sub Section 1.2
Doubletree Surviving Corporation Section 1.6
Effective Time Section 1.4
Environmental Law Section 3.12(b)
ERISA Section 3.13(a)
ERISA Affiliate Section 3.13(a)
Exchange Act Section 3.3(c)
Exchange Agent Section 2.4(a)
Exchange Fund Section 2.4(a)
GEPT Warrant Section 3.2(b)
Governmental Entity Section 3.3(c)
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
CROSS REFERENCE
TERMS IN AGREEMENT
- ----- ------------
<S> <C>
Hazardous Substance Section 3.12(c)
HSR Act Section 3.3(c)
Indemnified Parties Section 5.16(a)
IRS Section 3.7(b)
Joint Proxy Statement/Prospectus Section 3.16
Material Lease(s) Section 3.8(a)
Mergers Section 1.3
NYSE Section 2.4(e)
Order Section 5.8(b)
Outside Date Section 7.1(b)
Parent Preamble
Parent Common Stock Section 2.1(c)
Parent Rights Plan Section 5.22
Promus Preamble
Promus Balance Sheet Section 4.4(b)
Promus Common Stock Section 2.2
Promus Director Section 5.20(a)
Promus Disclosure Schedule Article IV
Promus Employee Plans Section 4.13(a)
Promus Employees Section 5.27(b)
Promus Exchange Ratio Section 2.2(c)
Promus Material Adverse Effect Section 4.1
Promus Material Contracts Section 4.10(a)
Promus Merger Section 1.3
Promus Preferred Stock Section 4.2(a)
Promus Rights Plan Section 4.2(b)
Promus SEC Reports Section 4.4(a)
Promus Special Stock Section 4.2(a)
Promus Stock Option Section 5.14(a)
Promus Stock Option Agreement Preamble
Promus Stock Plans Section 4.2(a)
Promus Stockholders' Meeting Section 3.16
Promus Sub Section 1.3
Promus Surviving Corporation Section 1.6
Registration Statement Section 3.16
Rule 145 Section 5.12
SEC Section 3.3(c)
Securities Act Section 2.4(j)
Stock Option Agreements Preamble
Stockholder Support Agreement Preamble
Subsidiary Section 3.1
Superior Proposal Section 5.3(a)
Surviving Corporation Section 1.6
Tax Section 3.7(a)
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
CROSS REFERENCE
TERMS IN AGREEMENT
- ----- ------------
<S> <C>
Taxes Section 3.7(a)
Third Party Section 5.3(a)
Transfer Taxes Section 5.25
</TABLE>
vi
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of September 1,
1997, by and among DOUBLETREE CORPORATION, a Delaware corporation
("Doubletree"), PROMUS HOTEL CORPORATION, a Delaware corporation ("Promus") and
PARENT HOLDING CORP., a newly-formed Delaware corporation with nominal
capitalization, one-half of the issued and outstanding capital stock of which is
nominally owned by each of Doubletree and Promus ("Parent").
WHEREAS, the Boards of Directors of Doubletree and Promus deem it
advisable and in the best interests of each corporation and its respective
stockholders that Doubletree and Promus combine in a "merger of equals" in order
to advance the interests of Doubletree and Promus and their respective
stockholders;
WHEREAS, the combination of Doubletree and Promus shall be effected by
the terms of this Agreement through (i) a merger of a wholly-owned subsidiary of
Parent with and into Doubletree and (ii) a merger of another wholly-owned
subsidiary of Parent with and into Promus, such that Doubletree and Promus
become wholly-owned subsidiaries of Parent and the stockholders of Doubletree
and Promus become stockholders of Parent;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to each of Doubletree's and Promus's
willingness to enter into this Agreement, Doubletree and Promus have entered
into (i) a Stock Option Agreement dated as of the date of this Agreement and
attached hereto as Exhibit A (the "Doubletree Stock Option Agreement"), pursuant
to which Promus granted Doubletree an option to purchase shares of common stock
of Promus under certain circumstances, and (ii) a Stock Option Agreement dated
as of the date of this Agreement and attached hereto as Exhibit B (the "Promus
Stock Option Agreement" and, together with the Doubletree Stock Option
Agreement, the "Stock Option Agreements"), pursuant to which Doubletree granted
Promus an option to purchase shares of common stock of Doubletree under certain
circumstances;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Promus's willingness to enter into this
Agreement, certain stockholders of Doubletree have entered into a Stockholder
Support Agreement with Promus dated as of the date of this Agreement and
attached hereto as Exhibit C (the "Stockholder Support Agreement"), pursuant to
which such stockholders have agreed, among other things, to vote all voting
securities of Doubletree beneficially owned by them in favor of approval and
adoption of the Agreement and the Doubletree Merger (as defined in Section 1.2);
WHEREAS, for Federal income tax purposes, it is intended that (i) the
Doubletree Merger shall qualify as a reorganization described in Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code") and/or, taken
together with the Promus Merger (as defined in Section 1.3), as a transfer of
property to Parent by holders of Doubletree Common Stock (as defined in Section
2.1) described in Section 351 of the Code and (ii) the Promus Merger shall
qualify as a reorganization described in Section 368(a) of the Code and/or,
taken together with
1
<PAGE> 9
the Doubletree Merger, as a transfer of property to Parent by holders of Promus
Common Stock described in Section 351 of the Code;
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated by this Agreement shall be accounted for as a pooling of interests;
and
WHEREAS, the Boards of Directors of Doubletree and Promus have approved
this Agreement, the Stock Option Agreements and the Stockholder Support
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGERS
Section 1.1. Certificate of Incorporation and Bylaws of Parent
Doubletree and Promus shall cause the Certificate of Incorporation and Bylaws of
Parent to be amended prior to the Effective Time (as defined in Section 1.4) to
be substantially in the form of Exhibit D and Exhibit E hereto, respectively.
From the date hereof until the Effective Time, Doubletree and Promus shall
consult with each other prior to causing or permitting Parent to take any action
and neither shall cause or permit Parent to take any action inconsistent with
the provisions of this Agreement without the written consent of the other.
Section 1.2. The Doubletree Merger Doubletree and Promus shall cause
Parent to form a wholly-owned subsidiary named Doubletree Acquisition Corp.
("Doubletree Sub") under the laws of the State of Delaware. Doubletree and
Promus will cause Parent to cause Doubletree Sub to execute and deliver this
Agreement. Upon the terms and subject to the provisions of this Agreement, and
in accordance with the Delaware General Corporation Code (the "DGCL"),
Doubletree Sub will merge with and into Doubletree (the "Doubletree Merger") at
the Effective Time (as defined in Section 1.4). Doubletree Sub will be formed
solely to facilitate the Doubletree Merger and will conduct no business or
activity other than in connection with the Doubletree Merger.
Section 1.3. The Promus Merger Doubletree and Promus shall cause Parent
to form a wholly-owned subsidiary named Promus Acquisition Corp. ("Promus Sub")
under the laws of the State of Delaware. Doubletree and Promus will cause Parent
to cause Promus Sub to execute and deliver this Agreement. Upon the terms and
subject to the provisions of this Agreement, and in accordance with the DGCL,
Promus Sub will merge with and into Promus (the "Promus Merger" and together
with the Doubletree Merger, the "Mergers") at the Effective Time (as defined in
Section 1.4). Promus Sub will be formed solely to facilitate the Promus Merger
and will conduct no business or activity other than in connection with the
Promus Merger.
Section 1.4. Effective Time of the Mergers Subject to the provisions of
this Agreement, a certificate of merger with respect to each Merger in such form
as is required by the relevant provisions of the DGCL (individually, a
"Certificate of Merger" with respect to one of
2
<PAGE> 10
the Mergers, and collectively with respect to both Mergers, the "Certificates of
Merger") shall be duly prepared, executed and acknowledged and thereafter
delivered to the Secretary of State of the State of Delaware for filing, as
provided in the DGCL, as early as practicable on the Closing Date (as defined in
Section 1.5). Each Merger shall become effective at such time as is specified in
the Certificate of Merger (the time at which both Mergers have become fully
effective being hereinafter referred to as the "Effective Time").
Section 1.5. Closing The closing of the Mergers (the "Closing") will
take place at such time and place to be agreed upon by the parties hereto, on a
date to be specified by Promus and Doubletree, which shall be no later than the
second business day after satisfaction or, if permissible, waiver of the
conditions set forth in Article VI (the "Closing Date"), unless another date is
agreed to in writing by Promus and Doubletree.
Section 1.6. Effect of the Mergers As a result of the Doubletree Merger,
the separate corporate existence of Doubletree Sub shall cease and Doubletree
shall continue as the surviving corporation (the "Doubletree Surviving
Corporation"). As a result of the Promus Merger, the separate corporate
existence of Promus Sub shall cease and Promus shall continue as the surviving
corporation (the "Promus Surviving Corporation" and together with the Doubletree
Surviving Corporation, the "Surviving Corporations"). Upon becoming effective,
the Mergers shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, (i) all
properties, rights, privileges, powers and franchises of Doubletree and
Doubletree Sub shall vest in the Doubletree Surviving Corporation, and all
debts, liabilities and duties of Doubletree and Doubletree Sub shall become the
debts, liabilities and duties of the Doubletree Surviving Corporation and (ii)
all properties, rights, privileges, powers and franchises of Promus and Promus
Sub shall vest in the Promus Surviving Corporation, and all debts, liabilities
and duties of Promus and Promus Sub shall become the debts, liabilities and
duties of the Promus Surviving Corporation.
Section 1.7. Certificate of Incorporation and Bylaws of the Surviving
Corporations At the Effective Time, (i) the Certificate of Incorporation and
Bylaws of the Doubletree Surviving Corporation shall be amended to be identical
to the Certificate of Incorporation and Bylaws, respectively, of Doubletree Sub
as in effect immediately prior to the Effective Time (except that the name of
the Doubletree Surviving Corporation shall be Doubletree Inc.), in each case
until duly amended in accordance with applicable law, and (ii) the Certificate
of Incorporation and Bylaws of the Promus Surviving Corporation shall be amended
to be identical to the Certificate of Incorporation and Bylaws, respectively, of
Promus Sub as in effect immediately prior to the Effective Time (except that the
name of the Promus Surviving Corporation shall be Promus Acquisition Corp.), in
each case until duly amended in accordance with applicable law.
Section 1.8. Directors and Officers of the Surviving Corporations
(a) Doubletree Surviving Corporation. The directors of Doubletree Sub
immediately prior to the Effective Time shall be the initial directors of the
Doubletree Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Doubletree Surviving Corporation.
The officers of Doubletree immediately prior to the Effective Time shall be the
initial officers of the Doubletree Surviving Corporation, each to hold
3
<PAGE> 11
office in accordance with the Certificate of Incorporation and Bylaws of the
Doubletree Surviving Corporation.
(b) Promus Surviving Corporation. The directors of Promus Sub
immediately prior to the Effective Time shall be the initial directors of the
Promus Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Promus Surviving Corporation. The
officers of Promus immediately prior to the Effective Time shall be the initial
officers of the Promus Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and Bylaws of the Promus Surviving
Corporation.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of Doubletree Capital Stock At the Effective
Time, by virtue of the Doubletree Merger and without any action on the part of
any of the parties hereto or the holders of any shares of Common Stock, par
value $.01 per share, of Doubletree ("Doubletree Common Stock") or common stock
of Doubletree Sub:
(a) Capital Stock of Doubletree Sub. Each issued and outstanding share
of the common stock, par value $.01 per share, of Doubletree Sub shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Doubletree Surviving Corporation.
(b) Cancellation of Treasury Stock and Promus-Owned Stock. All shares
of Doubletree Common Stock that are owned by Doubletree as treasury stock and
any shares of Doubletree Common Stock owned by Promus or any wholly-owned
Subsidiary (as defined in Section 3.1) of Promus shall be canceled and retired
and shall cease to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Exchange Ratio for Doubletree Common Stock. Subject to Section
2.4(e), each issued and outstanding share of Doubletree Common Stock (other than
shares to be canceled in accordance with Section 2.1(b)) shall be converted into
the right to receive one share (the "Doubletree Exchange Ratio") of Common
Stock, par value $.01 per share, of Parent ("Parent Common Stock"). All such
shares of Doubletree Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any ownership or other rights with respect thereto, except the right to
receive the shares of Parent Common Stock and an amount equal to certain
dividends and other distributions described in Section 2.4(c), without interest,
upon the surrender of such certificate in accordance with Section 2.4.
Section 2.2. Conversion of Promus Capital Stock At the Effective Time,
by virtue of the Promus Merger and without any action on the part of any of the
parties hereto or the holders of any shares of Common Stock, par value $.10 per
share, of Promus ("Promus Common Stock") or common stock of Promus Sub:
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(a) Capital Stock of Promus Sub. Each issued and outstanding share of
the common stock, par value $.01 per share, of Promus Sub shall be converted
into and become one fully paid and nonassessable share of Common Stock, par
value $.01 per share, of the Promus Surviving Corporation.
(b) Cancellation of Treasury Stock and Doubletree-Owned Stock. All
shares of Promus Common Stock that are owned by Promus as treasury stock and any
shares of Promus Common Stock owned by Doubletree or any wholly-owned Subsidiary
(as defined in Section 3.1) of Doubletree shall be canceled and retired and
shall cease to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Exchange Ratio for Promus Common Stock. Subject to Section 2.4(e),
each issued and outstanding share of Promus Common Stock (other than shares to
be canceled in accordance with Section 2.2(b)) shall be converted into the right
to receive 0.925 shares (the "Promus Exchange Ratio") of Parent Common Stock.
All such shares of Promus Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any ownership or other rights with respect thereto, except the right to
receive the shares of Parent Common Stock, any cash in lieu of fractional shares
of Parent Common Stock to be issued or paid in consideration therefor and an
amount equal to certain dividends and other distributions described in Section
2.4(c), in each case upon the surrender of such certificate in accordance with
Section 2.4 and without interest.
Section 2.3. Cancellation of Parent Stock. At the Effective Time, by
virtue of the Mergers and without any action on the part of any holder of any
capital stock of Doubletree, Promus or Parent, each share of Parent Common Stock
issued and outstanding immediately prior to the Effective Time shall be
surrendered and canceled, and the amount paid by Doubletree and Promus for the
shares of Parent Common Stock held by them shall be returned by Parent to them.
Section 2.4. Exchange of Certificates The procedures for exchanging
certificates which prior to the Effective Time represented shares of Doubletree
Common Stock and Promus Common Stock for certificates representing Parent Common
Stock pursuant to the Mergers are as follows:
(a) Exchange Agent. As of the Effective Time, Parent shall deposit
with a bank or trust company designated by Promus and Doubletree (the "Exchange
Agent"), for the benefit of the holders of shares of Doubletree Common Stock and
shares of Promus Common Stock outstanding immediately prior to the Effective
Time, for exchange in accordance with this Section 2.4, through the Exchange
Agent, certificates representing the shares of Parent Common Stock and, with
respect to shares of Promus Common Stock, cash in lieu of fractional shares
(such shares of Parent Common Stock and cash in lieu of fractional shares,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"), issuable pursuant to Sections
2.1 and 2.2 in exchange for shares of Doubletree Common Stock and Promus Common
Stock, respectively, outstanding immediately prior to the Effective Time.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which
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immediately prior to the Effective Time represented outstanding shares of
Doubletree Common Stock or Promus Common Stock (collectively, the
"Certificates") whose shares were converted pursuant to Section 2.1 or Section
2.2 into the right to receive shares of Parent Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Doubletree and Promus may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange for
certificates representing shares of Parent Common Stock (plus cash in lieu of
fractional shares, if any, of Parent Common Stock as provided below). Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock, the amount of any cash payable in lieu of
fractional shares of Parent Common Stock (with respect to shares of Promus
Common Stock) and an amount equal to certain dividends and other distributions
which such holder has the right to receive pursuant to the provisions of this
Article II, and the Certificate so surrendered shall immediately be canceled. In
the event of a transfer of ownership of Doubletree Common Stock or Promus Common
Stock prior to the Effective Time which is not registered in the transfer
records of Doubletree or Promus, respectively, a certificate representing the
number of shares of Parent Common Stock issuable and any amounts payable in
accordance with this Agreement may be issued and paid to a transferee if the
Certificate representing such Doubletree Common Stock or Promus Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid.
(c) Distributions With Respect to Unexchanged Shares. No amount in
respect of dividends or other distributions declared or made after the Effective
Time with respect to Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock the holder thereof is entitled to receive
in respect thereof and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to subsection (e) below until the holder of
record of such Certificate shall surrender such Certificate to Parent in
accordance herewith. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to subsection (e) below and an amount
equal to the amount of dividends or other distributions with a record date after
the Effective Time previously paid with respect to whole shares of Parent Common
Stock, and (ii) at the appropriate payment date, an amount equal to the amount
of dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to whole shares of Parent Common Stock, in each case without interest.
(d) No Further Ownership Rights in Doubletree Common Stock and Promus
Common Stock. All shares of Parent Common Stock issued upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any cash
paid pursuant to subsection (c) or (e) of this Section 2.4) shall be deemed to
have been issued in full satisfaction of all rights
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pertaining to the shares of Doubletree Common Stock or Promus Common Stock
theretofore represented by such Certificates, subject, however, to the
applicable Surviving Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which may
have been declared or made by Doubletree on such shares of Doubletree Common
Stock or by Promus on such shares of Promus Common Stock, as the case may be, in
accordance with the terms of this Agreement (to the extent permitted under
Section 5.1) prior to the date hereof and which remain unpaid at the Effective
Time, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Doubletree
Surviving Corporation or the Promus Surviving Corporation, as the case may be,
of the shares of Doubletree Common Stock or Promus Common Stock, respectively,
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to one of the Surviving Corporations
or Parent for any reason, such Certificates shall be canceled and exchanged as
provided in this Section 2.4.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates representing shares of Promus Common Stock, and such
fractional share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. Notwithstanding any other provision of
this Agreement, each holder of shares of Promus Common Stock outstanding
immediately prior to the Effective Time exchanged pursuant to the Promus Merger
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Parent Common Stock
multiplied by the per share sales price of Parent Common Stock (as reported on
the New York Stock Exchange Composite Tape) on the closing of the first day of
regular-way trading of Parent Common Stock on the New York Stock Exchange (the
"NYSE") after the Effective Time.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the former stockholders of Doubletree or Promus
for 180 days after the Effective Time shall be delivered to Parent upon demand,
and any former stockholder of Doubletree or Promus who has not previously
complied with this Section 2.4 shall thereafter look only to Parent for payment
of such former stockholder's claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any amounts in respect of dividends
or distributions with respect to Parent Common Stock.
(g) No Liability. None of Doubletree, Promus, Parent or the Exchange
Agent shall be liable to any holder of shares of Doubletree Common Stock or
Promus Common Stock, as the case may be, for any shares of Parent Common Stock
(or cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Parent and each of the Surviving Corporations
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates which prior to
the Effective Time represented shares of Doubletree Common Stock or Promus
Common Stock such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by Parent or one
of the
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Surviving Corporations, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Doubletree Common Stock or Promus Common Stock, as the case may
be, in respect of which such deduction and withholding was made.
(i) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or one of the Surviving Corporations, the posting by such person of a
bond in such reasonable amount as Parent or such Surviving Corporation may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Parent Common Stock and any cash
in lieu of fractional shares, and unpaid dividends and distributions on shares
of Parent Common Stock deliverable in respect thereof pursuant to this
Agreement.
(j) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in Section
5.12) of Doubletree or Promus shall not be exchanged until (i) Parent has
received an Affiliate Agreement (as defined in Section 5.12) from such Affiliate
or (ii) until the later of such date as such shares of Parent Common Stock are
freely tradable without jeopardizing the pooling of interests accounting
treatment of the Mergers and without violating the Securities Act of 1933, as
amended (the "Securities Act").
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF DOUBLETREE
Doubletree represents and warrants to Promus that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedule delivered by Doubletree to Promus on or before
the date of this Agreement (the "Doubletree Disclosure Schedule"). The
Doubletree Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify other paragraphs in this Article III
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other paragraphs.
Section 3.1. Organization of Doubletree Each of Doubletree and its
Subsidiaries (as defined below) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation or
other entity in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the business, properties, financial condition
or results of operations of Doubletree and its Subsidiaries, taken as a whole
(an "Doubletree Material Adverse Effect"). A true and correct copy of the
Certificate of Incorporation and Bylaws of Doubletree has been delivered to
Promus. Except as set forth in Doubletree SEC Reports (as defined in Section
3.4) filed prior to the date hereof, neither Doubletree nor any of its
Subsidiaries directly or indirectly owns (other than ownership
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interests in Doubletree or in one or more of its Subsidiaries) any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity, excluding (i) securities in any publicly traded company
held for investment by Doubletree and comprising less than five percent (5%) of
the outstanding stock of such company and (ii) any investment or series of
related investments with a book value of less than $15 million. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the economic
interests in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
Section 3.2. Doubletree Capital Structure. a) The authorized capital
stock of Doubletree consists of 100,000,000 shares of Common Stock, $.01 par
value, and 5,000,000 shares of Preferred Stock, $.01 par value ("Doubletree
Preferred Stock"). As of the date hereof, (i) 39,688,458 shares of Doubletree
Common Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable and (ii) no shares of Doubletree Common Stock were held
in the treasury of Doubletree or by Subsidiaries of Doubletree. The Doubletree
Disclosure Schedule shows the number of shares of Doubletree Common Stock
reserved for future issuance pursuant to stock options granted and outstanding
as of the date hereof and the plans under which such options were granted
(collectively, the "Doubletree Stock Plans"). As of the date of this Agreement,
none of the shares of Doubletree Preferred Stock is issued and outstanding.
There are no obligations, contingent or otherwise, of Doubletree or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Doubletree
Common Stock or the capital stock of any Subsidiary or to provide funds to or
make any material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees of
bank obligations or indebtedness for borrowed money of Subsidiaries entered into
in the ordinary course of business and other than any obligation the failure of
which to perform or satisfy would not have a Doubletree Material Adverse Effect.
All of the outstanding shares of capital stock or other ownership interests of
each of Doubletree's Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable and all such shares (other than directors' qualifying
shares in the case of foreign Subsidiaries) are owned by Doubletree or another
Subsidiary of Doubletree free and clear of all security interests, liens,
claims, pledges, agreements, limitations in Doubletree's voting rights, charges
or other encumbrances of any nature.
(b) Except as set forth in this Section 3.2 or as reserved for future
grants of options under the Doubletree Stock Plans or the Promus Stock Option
Agreement and except for the preferred stock purchase rights issued and issuable
under the Rights Agreement dated as of September 1, 1997 between Doubletree and
Harris Trust Company of California (the "Doubletree Rights Plan"), options to
purchase an aggregate of 20,000 shares of Doubletree Common Stock, issued on
June 30, 1994, to GE Investment Hotel Partners I, Limited Partnership and the
Warrants to purchase an aggregate of 262,753 shares of Doubletree Common Stock,
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issued on November 8, 1996, to PT Investments Inc. (the "GEPT Warrant"), (i)
there are no shares of capital stock of any class of Doubletree, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding; (ii) there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
Doubletree or any of its Subsidiaries is a party or by which it is bound
obligating Doubletree or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other ownership interests of Doubletree or any of its Subsidiaries or obligating
Doubletree or any of its Subsidiaries to grant, extend, accelerate the vesting
of or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) to the best knowledge of Doubletree, there
are no voting trusts, proxies or other voting agreements or understandings with
respect to the shares of capital stock of Doubletree. All shares of Doubletree
Common Stock subject to issuance as specified in this Section 3.2 are duly
authorized and, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be validly issued, fully
paid and nonassessable.
Section 3.3. Authority; No Conflict; Required Filings and Consents. a)
Doubletree has all requisite corporate power and authority to enter into this
Agreement and the Stock Option Agreements and to consummate the transactions
contemplated by this Agreement and the Stock Option Agreements. The execution
and delivery of this Agreement and the Stock Option Agreements and the
consummation of the transactions contemplated by this Agreement and the Stock
Option Agreements by Doubletree have been duly authorized by all necessary
corporate action on the part of Doubletree, subject only to the approval and
adoption of this Agreement and the Doubletree Merger by Doubletree's
stockholders under the DGCL. This Agreement and the Stock Option Agreements have
been duly executed and delivered by Doubletree and constitute the valid and
binding obligations of Doubletree, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The execution and delivery of this Agreement and the Stock Option
Agreements by Doubletree does not, and the consummation of the transactions
contemplated by this Agreement and the Stock Option Agreements will not, (i)
conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of Doubletree or any of its Subsidiaries,
(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Doubletree or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound (other than pursuant to the Credit Agreement dated as of
November 8, 1996 by and among Doubletree, Morgan Stanley Senior Funding, Inc.,
The Bank of Nova Scotia and the lenders identified therein) or (iii) conflict
with or violate any permit, concession, franchise, license, judgment, order,
decree, statute, law,
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ordinance, rule or regulation applicable to Doubletree or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
(ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which (x) are not, individually or in the
aggregate, reasonably likely to have a Doubletree Material Adverse Effect or (y)
would not substantially impair or delay the consummation of the Doubletree
Merger.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Doubletree or any of its Subsidiaries in
connection with the execution and delivery of this Agreement and the Stock
Option Agreements or the consummation of the transactions contemplated hereby or
thereby, except for (i) the filing of the pre-merger notification report under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR
Act"), (ii) the filing of a Certificate of Merger with respect to the Doubletree
Merger with the Delaware Secretary of State, (iii) the filing of the Joint Proxy
Statement/Prospectus (as defined in Section 3.16 below) with the Securities and
Exchange Commission (the "SEC") in accordance with the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the Securities Act, (iv) such
consents, approvals, orders, authorizations, permits, filings or registrations
related to, or arising out of, compliance with statutes, rules or regulations
regulating the consumption, sale or serving of alcoholic beverages, (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country and (vi) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not (x) be
reasonably likely to have a Doubletree Material Adverse Effect or (y)
substantially impair or delay the consummation of the Doubletree Merger.
Section 3.4. SEC Filings; Financial Statements.
(a) Doubletree has filed and made available to Promus all forms,
reports and documents required to be filed by Doubletree with the SEC since
January 1, 1996 (collectively, the "Doubletree SEC Reports"). The Doubletree SEC
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Doubletree SEC Reports or necessary
in order to make the statements in such Doubletree SEC Reports, in the light of
the circumstances under which they were made, not misleading. None of
Doubletree's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) of Doubletree contained in the Doubletree SEC Reports
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q under the Exchange Act) and fairly presented the consolidated
financial position of Doubletree and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the
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periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount. The audited balance sheet of
Doubletree as of December 31, 1996 is referred to herein as the "Doubletree
Balance Sheet."
Section 3.5. No Undisclosed Liabilities Except as disclosed in the
Doubletree SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since December 31, 1996 in the ordinary course of
business consistent with past practices, Doubletree and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate are reasonably likely to have a Doubletree
Material Adverse Effect.
Section 3.6. Absence of Certain Changes or Events Except as disclosed in
the Doubletree SEC Reports filed prior to the date hereof, since the date of the
Doubletree Balance Sheet, Doubletree and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any event, development,
state of affairs or condition, or series or combination of events, developments,
states of affairs or conditions, which, individually or in the aggregate, has
had or is reasonably likely to have a Doubletree Material Adverse Effect (other
than events, developments, states of affairs or conditions that are the effect
or result of actions taken by Promus or economic factors affecting the economy
as a whole or the industry in which Doubletree competes); (ii) any damage,
destruction or loss (whether or not covered by insurance) with respect to
Doubletree or any of its Subsidiaries which is reasonably likely to have a
Doubletree Material Adverse Effect; (iii) any material change by Doubletree in
its accounting methods, principles or practices to which Promus has not
previously consented in writing; (iv) any revaluation by Doubletree of any of
its assets which is reasonably likely to have a Doubletree Material Adverse
Effect; or (v) any other action or event that would have required the consent of
Promus pursuant to Section 5.1 of this Agreement had such action or event
occurred after the date of this Agreement other than such actions or events
that, individually or in the aggregate, have not had or are not reasonably
likely to have a Doubletree Material Adverse Effect.
Section 3.7. Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this Agreement,
"Taxes" also includes any obligations under any agreements or arrangements with
any other person with respect to Taxes of such other person (including pursuant
to Treas. Reg. Section 1.1502-6 or comparable provisions of state, local or
foreign tax law) and including any liability for Taxes of any predecessor
entity.
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(b) Doubletree and each of its Subsidiaries have (i) filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or in
the aggregate, to have a Doubletree Material Adverse Effect. Neither the
Internal Revenue Service (the "IRS") nor any other taxing authority has asserted
any claim for Taxes, or to the actual knowledge of the executive officers of
Doubletree, is threatening to assert any claims for Taxes, which claims,
individually or in the aggregate, are reasonably likely to have a Doubletree
Material Adverse Effect. Doubletree and each of its Subsidiaries have withheld
or collected and paid over to the appropriate governmental authorities (or are
properly holding for such payment) all Taxes required by law to be withheld or
collected, except for amounts that are not reasonably likely, individually or in
the aggregate, to have a Doubletree Material Adverse Effect. Neither Doubletree
nor any of its Subsidiaries has made an election under Section 341(f) of the
Code, except for any such election that shall not have a Doubletree Material
Adverse Effect. There are no liens for Taxes upon the assets of Doubletree or
any of its Subsidiaries (other than liens for Taxes that are not yet due or
delinquent or that are being contested in good faith by appropriate
proceedings), except for liens that are not reasonably likely, individually or
in the aggregate, to have a Doubletree Material Adverse Effect.
(c) Neither Doubletree nor any of its Subsidiaries is or has been a
member of an affiliated group of corporations filing a consolidated federal
income tax return (or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state, local or foreign
tax law) for any taxable period beginning on or after the taxable period ending
December 31, 1993, other than a group the common parent of which is or was
Doubletree or any Subsidiary of Doubletree.
(d) Neither Doubletree nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity, except for obligations that are
not reasonably likely, individually or in the aggregate, to have a Doubletree
Material Adverse Effect.
Section 3.8. Properties.
(a) Neither Doubletree nor any of its Subsidiaries is in default under
any leases for real property providing for the occupancy, in each case, of (i) a
hotel or (ii) other facilities in excess of 50,000 square feet (collectively
"Material Lease(s)"), except where the existence of such defaults, individually
or in the aggregate, is not reasonably likely to have a Doubletree Material
Adverse Effect.
(b) With respect to each item of real property that Doubletree or any
of its Subsidiaries owns, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Doubletree Material Adverse
Effect: (i) Doubletree or its Subsidiary has good and clear record and
marketable title to such property, insurable by a recognized
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national title insurance company at standard rates, free and clear of any
security interest, easement, covenant or other restriction, except for recorded
easements, covenants and other restrictions which do not materially impair the
current uses or occupancy of such property; and (ii) the improvements
constructed on such property are in good condition, and all mechanical and
utility systems servicing such improvements are in good condition, free in each
case of material defects.
Section 3.9. Intellectual Property Doubletree owns, or is licensed or
otherwise possesses legally enforceable rights to use, all trademarks, trade
names, service marks, copyrights, and any applications for such trademarks,
trade names, service marks and copyrights, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of Doubletree as currently conducted,
subject to such exceptions that, individually and in the aggregate, would not be
reasonably likely to have a Doubletree Material Adverse Effect. Doubletree has
no knowledge of any assertion or claim challenging the validity of any of such
intellectual property.
Section 3.10. Agreements, Contracts and Commitments.
(a) Doubletree has not breached, or received in writing any claim or
notice that it has breached, any of the terms or conditions of any material
agreement, contract or commitment filed as an exhibit to the Doubletree SEC
Reports ("Doubletree Material Contracts") in such a manner as, individually or
in the aggregate, are reasonably likely to have a Doubletree Material Adverse
Effect. Each Doubletree Material Contract that has not expired by its terms is
in full force and effect.
(b) Without limiting Section 3.10(a), each of the management contracts
and franchise agreements to which Doubletree is a party and each of Doubletree's
Material Leases (i) is valid and binding in accordance with its terms and is in
full force and effect, (ii) neither Doubletree nor any of its Subsidiaries is in
default in any material respect thereof, nor does any condition exist that with
notice or lapses of time or both would constitute a material default thereunder,
and (iii) no party has given any written or (to the knowledge of Doubletree)
oral notice of termination or cancellation thereof or that such party intends to
assert a breach thereof, or seek to terminate or cancel, any such agreement,
contract or lease, in each case as a result of the transactions contemplated
hereby, subject to such exceptions that, individually and in the aggregate,
would not be reasonably likely to have a Doubletree Material Adverse Effect.
Section 3.11. Litigation Except as described in the Doubletree SEC
Reports filed prior to the date hereof, there is no action, suit or proceeding,
claim, arbitration or investigation against Doubletree pending or as to which
Doubletree has received any written notice of assertion, which, individually or
in the aggregate, is reasonably likely to have a Doubletree Material Adverse
Effect or a material adverse effect on the ability of Doubletree to consummate
the transactions contemplated by this Agreement.
Section 3.12. Environmental Matters.
(a) To the knowledge of Doubletree and except as disclosed in the
Doubletree SEC Reports filed prior to the date hereof and except for such
matters that, individually or in the
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aggregate, are not reasonably likely to have a Doubletree Material Adverse
Effect: (i) Doubletree and its Subsidiaries have complied with all applicable
Environmental Laws (as defined in Section 3.12(b)); (ii) the properties
currently owned or operated by Doubletree and its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substances (as defined in Section 3.12(c)); (iii) the
properties formerly owned or operated by Doubletree or any of its Subsidiaries
were not contaminated with Hazardous Substances during the period of ownership
or operation by Doubletree or any of its Subsidiaries; (iv) neither Doubletree
nor its Subsidiaries are subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither Doubletree
nor any of its Subsidiaries has been associated with any release or threat of
release of any Hazardous Substance; (vi) neither Doubletree nor any of its
Subsidiaries has received any notice, demand, letter, claim or request for
information alleging that Doubletree or any of its Subsidiaries may be in
violation of or liable under any Environmental Law; (vii) neither Doubletree nor
any of its Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving Doubletree or any of its Subsidiaries that
could reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use or transfer of any property of
Doubletree or any of its Subsidiaries pursuant to any Environmental Law.
(b) As used herein, the term "Environmental Law" means any federal,
state, local or foreign law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health and safety, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
(c) As used herein, the term "Hazardous Substance" means any substance
that is: (A) listed, classified or regulated pursuant to any Environmental Law;
(B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is the subject of
regulatory action by any Governmental Entity pursuant to any Environmental Law.
Section 3.13. Employee Benefit Plans.
(a) For purposes of this Agreement, the "Doubletree Employee Plans"
shall mean all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans, and
all unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Doubletree or any trade or
business (whether or not incorporated) which is under common control with
Doubletree within the meaning of Section 414 of the Code (an "ERISA Affiliate"),
or any Subsidiary of Doubletree (together, the "Doubletree Employee Plans").
Doubletree has listed in Section 3.13 of the Doubletree Disclosure Schedule all
Doubletree Employee Plans other plans that are "employee welfare benefit plans"
within the meaning of Section 3(1) of ERISA.
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(b) With respect to each Doubletree Employee Plan, Doubletree has made
available to Promus, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Doubletree Employee Plan and
all amendments thereto, (iii) each trust agreement and group annuity contract,
if any, and all amendments thereto relating to such Doubletree Employee Plan and
(iv) the most recent actuarial report or valuation relating to a Doubletree
Employee Plan subject to Title IV of ERISA.
(c) With respect to the Doubletree Employee Plans, individually and in
the aggregate, no event has occurred, and to the knowledge of Doubletree, there
exists no condition or set of circumstances in connection with which Doubletree
could be subject to any liability that is reasonably likely to have a Doubletree
Material Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Doubletree Employee Plans, individually and in
the aggregate, there are no funded benefit obligations for which contributions
have not been made or properly accrued and there are no unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting principles, on the
financial statements of Doubletree, except for obligations which, individually
or in the aggregate, are not reasonably likely to have a Doubletree Material
Adverse Effect.
(e) Except as disclosed in the Doubletree SEC Reports filed prior to
the date of this Agreement, and except as provided for in this Agreement,
neither Doubletree nor any of its Subsidiaries is a party to any oral or written
(i) agreement with any officer or other key employee of Doubletree or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Doubletree of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Doubletree providing any term of employment or compensation guarantee extending
for a period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, the
vesting of the benefits of which will be accelerated or the funding of benefits
of which will be required, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
Section 3.14. Compliance With Laws Doubletree has complied with, is not
in violation of, and has not received any notices of violation with respect to,
any federal, state or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, except
for failures to comply or violations which, individually or in the aggregate,
have not had and are not reasonably likely to have a Doubletree Material Adverse
Effect.
Section 3.15. Accounting and Tax Matters.
(a) To the best knowledge of Doubletree, after consulting with its
independent auditors with respect to clause (i) below and its tax advisors with
respect to clause (ii) below, neither Doubletree nor any of its Affiliates (as
defined in Section 5.12) has taken or agreed to take any action which would (i)
prevent Parent from accounting for the business combination to be
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effected by the Mergers as a pooling of interests or (ii) prevent the Doubletree
Merger from qualifying as a reorganization described in Section 368(a) of the
Code and/or, taken together with the Promus Merger, as a transfer of property to
Parent by holders of Doubletree Common Stock described in Section 351 of the
Code. Except as contemplated by the Doubletree Option Agreement, neither
Doubletree nor any of its Subsidiaries owns any shares of Promus Common Stock or
other securities convertible into shares of Promus Common Stock (exclusive of
any shares owned by Doubletree's employee benefit plans).
(b) To the best knowledge of Doubletree, the stockholders of
Doubletree as a group have no present plan, intention or arrangement to sell or
otherwise dispose of such number of the shares of Parent Common Stock received
in the Doubletree Merger as would reduce their ownership in Parent Common Stock
to a number of shares having a value, as of the date of the Doubletree Merger,
of less than eighty percent (80%) of the value of all the formerly outstanding
stock of Doubletree as of the same date.
Section 3.16. Registration Statement; Joint Proxy Statement/Prospectus.
The information to be supplied by Doubletree for inclusion in the registration
statement on Form S-4 pursuant to which shares of Parent Common Stock issued in
the Mergers will be registered under the Securities Act (the "Registration
Statement"), shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information supplied by Doubletree for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of Promus and Doubletree in
connection with the meeting of Doubletree's stockholders (the "Doubletree
Stockholders' Meeting") and the meeting of Promus's stockholders (the "Promus
Stockholders' Meeting") to consider this Agreement and the Mergers (the "Joint
Proxy Statement/Prospectus") shall not, on the date the Joint Proxy
Statement/Prospectus is first mailed to stockholders of Doubletree or Promus, at
the time of the Doubletree Stockholders' Meeting and the Promus Stockholders'
Meeting and at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, omit to state any material fact
necessary in order to make the statements made in the Joint Proxy
Statement/Prospectus not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Doubletree Stockholders' Meeting or the
Promus Stockholders' Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Doubletree or any of its
Affiliates, officers or directors should be discovered by Doubletree which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, Doubletree shall promptly
inform Promus.
Section 3.17. Labor Matters. Except as disclosed in the Doubletree SEC
Reports filed prior to the date hereof, neither Doubletree nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Doubletree or any of its
Subsidiaries the subject of any material proceeding asserting that Doubletree or
any of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any
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labor union or labor organization nor, as of the date of this Agreement, is
there pending or, to the knowledge of the executive officers of Doubletree,
threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving Doubletree or any of its Subsidiaries.
Section 3.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Doubletree or any of its Subsidiaries
are with reputable insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of Doubletree and its Subsidiaries and
their respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Doubletree Material Adverse Effect.
Section 3.19. Doubletree Long-Range Plans. Doubletree has provided to
Promus copies of Doubletree's most recent long-range plans prepared in draft
form by Doubletree's management and Doubletree has not adopted any other
long-range plans since January 1, 1997.
Section 3.20. Opinion of Financial Advisor. The financial advisor of
Doubletree, Morgan Stanley & Co. Incorporated, has delivered to Doubletree an
opinion dated the date of this Agreement to the effect that the Doubletree
Exchange Ratio is fair to the holders of Doubletree Common Stock from a
financial point of view.
Section 3.21. No Existing Discussions. As of the date hereof, Doubletree
is not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to an Acquisition Proposal (as defined in Section
5.3).
Section 3.22. Section 203 of the DGCL Not Applicable. The restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in DGCL Section 203) will not apply to the authorization, execution,
delivery and performance of this Agreement or the Stock Option Agreements by
Doubletree or the Stockholder Support Agreement by the parties thereto or the
consummation of the Doubletree Merger by Doubletree. No other "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation is applicable to Doubletree or (by reason of Doubletree's
participation therein) the Doubletree Merger or the other transactions
contemplated by this Agreement.
Section 3.23. Doubletree Rights Plan. Under the terms of the Doubletree
Rights Plan, neither the execution of this Agreement, the Promus Stock Option
Agreement, the Stockholder Support Agreement, nor the transactions contemplated
hereby or thereby, will cause a Distribution Date to occur or cause the rights
issued pursuant to the Doubletree Rights Plan to become exercisable, and all
such rights shall become non-exercisable at the Effective Time.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PROMUS
Promus represents and warrants to Doubletree that the statements
contained in this Article IV are true and correct, except as set forth in the
disclosure schedule delivered by Promus to Doubletree on or before the date of
this Agreement (the "Promus Disclosure Schedule"). The Promus Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article IV and the disclosure in any
paragraph shall qualify other paragraphs in this Article IV only to the extent
that it is reasonably apparent from a reading of such document that it also
qualifies or applies to such other paragraphs.
Section 4.1. Organization of Promus Each of Promus and its Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power to own, lease and
operate its property and to carry on its business as now being conducted and as
proposed to be conducted, and is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, properties, financial condition or results of operations of Promus and
its Subsidiaries, taken as a whole (a "Promus Material Adverse Effect"). A true
and correct copy of the Certificate of Incorporation and Bylaws of Promus has
been delivered to Doubletree. Except as set forth in the Promus SEC Reports (as
defined in Section 4.4) filed prior to the date hereof, neither Promus nor any
of its Subsidiaries directly or indirectly owns (other than ownership interests
in Promus or in one or more of its Subsidiaries) any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or entity,
excluding (i) securities in any publicly traded company held for investment by
Promus and comprising less than five percent (5%) of the outstanding stock of
such company and (ii) any investment or series of related investments with a
book value of less than $15 million.
Section 4.2. Promus Capital Structure.
(a) The authorized capital stock of Promus consists of 360,000,000
shares of Common Stock, $.10 par value, 150,000 shares of Preferred Stock,
$100.00 par value ("Promus Preferred Stock") and 5,000,000 shares of Special
Stock, par value $1.12-1/2 ("Promus Special Stock"). As of the date hereof, (i)
49,896,911 shares of Promus Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and (ii) 1,580,101
additional shares of Promus Common Stock were held in the treasury of Promus or
by Subsidiaries of Promus. The Promus Disclosure Schedule shows the number of
shares of Promus Common Stock reserved for future issuance pursuant to stock
options granted and outstanding as of the date hereof and the plans under which
such options were granted (collectively, the "Promus Stock Plans"). As of the
date of this Agreement, none of the shares of Promus Preferred Stock or Promus
Special Stock are issued and outstanding. There are no obligations, contingent
or otherwise, of Promus or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Promus Common Stock or the capital stock of any
Subsidiary or to provide funds to or make any material investment (in the form
of a loan, capital contribution or otherwise) in any such Subsidiary or any
other entity other than guarantees of bank obligations or indebtedness for
borrowed money of Subsidiaries entered into in the ordinary course of business
and other than any
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obligation the failure of which to perform or satisfy would not have a Promus
Material Adverse Effect. All of the outstanding shares of capital stock or other
ownership interests of each of Promus's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and all such shares (other than
directors' qualifying shares in the case of foreign Subsidiaries) are owned by
Promus or another Subsidiary of Promus free and clear of all security interests,
liens, claims, pledges, agreements, limitations in Promus's voting rights,
charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.2 or as reserved for future
grants of options under the Promus Stock Plans or the Doubletree Stock Option
Agreement, and except for the preferred stock purchase rights issued and
issuable under the Rights Agreement dated as of June 30, 1995 between Promus and
Continental Stock Transfer & Trust Company (the "Promus Rights Plan"), (i) there
are no shares of capital stock of any class of Promus, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding; (ii) there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
Promus or any of its Subsidiaries is a party or by which it is bound obligating
Promus or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other ownership
interests of Promus or any of its Subsidiaries or obligating Promus or any of
its Subsidiaries to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement; and
(iii) to the best knowledge of Promus, there are no voting trusts, proxies or
other voting agreements or understandings with respect to the shares of capital
stock of Promus. All shares of Promus Common Stock subject to issuance as
specified in this Section 4.2 are duly authorized and, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable.
Section 4.3. Authority; No Conflict; Required Filings and Consents.
(a) Promus has all requisite corporate power and authority to enter
into this Agreement, the Stock Option Agreements and the Stockholder Support
Agreement and to consummate the transactions contemplated by this Agreement, the
Stock Option Agreements and the Stockholder Support Agreement. The execution and
delivery of this Agreement, the Stock Option Agreements and the Stockholder
Support Agreement and the consummation of the transactions contemplated by this
Agreement, the Stock Option Agreements and the Stockholder Support Agreement by
Promus have been duly authorized by all necessary corporate action on the part
of Promus, subject only to the approval and adoption of this Agreement and the
Promus Merger by Promus's stockholders under the DGCL. This Agreement, the Stock
Option Agreements and the Stockholder Support Agreement have been duly executed
and delivered by Promus and constitute the valid and binding obligations of
Promus, enforceable in accordance with their terms, subject to the Bankruptcy
and Equity Exception.
(b) The execution and delivery of this Agreement, the Stock Option
Agreements and the Stockholder Support Agreement by Promus does not, and the
consummation of the transactions contemplated by this Agreement, the Stock
Option Agreements and the Stockholder Support Agreement will not, (i) conflict
with, or result in any violation or breach of, any provision of the Certificate
of Incorporation or Bylaws of Promus or any of its Subsidiaries, (ii) result in
any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or
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give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Promus or any of its Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound (other than pursuant
to the Tranche A Credit Agreement or the Tranche B Credit Agreement, each dated
as of June 7, 1995, as amended, by and among Promus and certain of its
subsidiaries and NationsBank, N.A. (Carolinas)) or (iii) conflict with or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Promus or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
(ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which (x) are not, individually or in the
aggregate, reasonably likely to have a Promus Material Adverse Effect or (y)
would not substantially impair or delay the consummation of the Promus Merger.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Promus or any of its Subsidiaries in connection with the execution
and delivery of this Agreement, the Stock Option Agreements and the Stockholder
Support Agreement or the consummation of the transactions contemplated hereby or
thereby, except for (i) the filing of the pre-merger notification report under
the HSR Act, (ii) the filing of a Certificate of Merger with respect to the
Promus Merger with the Delaware Secretary of State, (iii) the filing of the
Joint Proxy Statement/Prospectus with the SEC in accordance with the Exchange
Act and the Securities Act, (iv) such consents, approvals, orders,
authorizations, permits, filings, or registrations related to, or arising out
of, compliance with statutes, rules or regulations regulating the consumption,
sale or serving of alcoholic beverages, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the laws of any foreign country and (vi)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not (x) be reasonably likely to have a Promus
Material Adverse Effect or (y) substantially impair or delay the consummation of
the Promus Merger.
Section 4.4. SEC Filings; Financial Statements.
(a) Promus has filed and made available to Doubletree all forms,
reports and documents required to be filed by Promus with the SEC since January
1, 1996 (collectively, the "Promus SEC Reports"). The Promus SEC Reports (i) at
the time filed, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Promus SEC Reports or necessary in order to make
the statements in such Promus SEC Reports, in the light of the circumstances
under which they were make, not misleading. Other than Promus Hotels, Inc., none
of Promus's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) of Promus contained in the Promus SEC Reports complied
as to form in all material
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respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Promus and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
audited balance sheet of Promus as of December 31, 1996 is referred to herein as
the "Promus Balance Sheet."
Section 4.5. No Undisclosed Liabilities Except as disclosed in the
Promus SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since December 31, 1996 in the ordinary course of
business consistent with past practices, Promus and its Subsidiaries do not have
any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate, are reasonably likely to have a Promus
Material Adverse Effect.
Section 4.6. Absence of Certain Changes or Events Except as disclosed in
the Promus SEC Reports filed prior to the date hereof, since the date of the
Promus Balance Sheet, Promus and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any event, development,
state of affairs or condition, or series or combination of events, developments,
states of affairs or conditions, which, individually or in the aggregate, has
had or which is reasonably likely to have a Promus Material Adverse Effect
(other than events, developments, states of affairs or conditions that are the
effect or result of actions taken by Doubletree or economic factors affecting
the economy as a whole or the industry in which Promus competes); (ii) any
damage, destruction or loss (whether or not covered by insurance) with respect
to Promus or any of its Subsidiaries which is reasonably likely to have a Promus
Material Adverse Effect; (iii) any material change by Promus in its accounting
methods, principles or practices to which Doubletree has not previously
consented in writing; (iv) any revaluation by Promus of any of its assets which
is reasonably likely to have a Promus Material Adverse Effect; or (v) any other
action or event that would have required the consent of Doubletree pursuant to
Section 5.1 of this Agreement had such action or event occurred after the date
of this Agreement, other than such actions or events that, individually or in
the aggregate, have not had or are not reasonably likely to have a Promus
Material Adverse Effect.
Section 4.7. Taxes.
(a) Promus and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or in
the aggregate, to have a Promus Material Adverse Effect. Neither the IRS nor
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any other taxing authority has asserted any claim for Taxes, or to the actual
knowledge of the executive officers of Promus, is threatening to assert any
claims for Taxes, which claims, individually or in the aggregate, are reasonably
likely to have a Promus Material Adverse Effect. Promus and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts that are not
reasonably likely, individually or in the aggregate, to have a Promus Material
Adverse Effect. Neither Promus nor any of its Subsidiaries has made an election
under Section 341(f) of the Code, except for any such election that shall not
have a Promus Material Adverse Effect. There are no liens for Taxes upon the
assets of Promus or any of its Subsidiaries (other than liens for Taxes that are
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings), except for liens that are not reasonably likely,
individually or in the aggregate, to have a Promus Material Adverse Effect.
(b) Neither Promus nor any of its Subsidiaries is or has been a member
of an affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) for any taxable period beginning on or after February 7, 1990, other than a
group the common parent of which is or was The Promus Companies Incorporated,
Promus or any Subsidiary of Promus.
(c) Neither Promus nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity, except for obligations that are
not reasonably likely, individually or in the aggregate, to have an Promus
Material Adverse Effect.
Section 4.8. Properties.
(a) Neither Promus nor any of its Subsidiaries is in default under any
Material Leases, except where the existence of such defaults, individually or in
the aggregate, is not reasonably likely to have a Promus Material Adverse
Effect.
(b) With respect to each item of real property that Promus or any of
its Subsidiaries owns, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Promus Material Adverse Effect:
(i) Promus or its Subsidiary has good and clear record and marketable title to
such property, insurable by a recognized national title insurance company at
standard rates, free and clear of any security interest, easement, covenant or
other restriction, except for recorded easements, covenants and other
restrictions which do not materially impair the current uses or occupancy of
such property; and (ii) the improvements constructed on such property are in
good condition, and all mechanical and utility systems servicing such
improvements are in good condition, free in each case of material defects.
Section 4.9. Intellectual Property Promus owns, or is licensed or
otherwise possesses legally enforceable rights to use, all trademarks, trade
names, service marks, copyrights, and any applications for such trademarks,
trade names, service marks and copyrights, know-how, computer software programs
or applications, and tangible or intangible proprietary information or
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material that are necessary to conduct the business of Promus as currently
conducted, subject to such exceptions that, individually and in the aggregate,
would not be reasonably likely to have a Promus Material Adverse Effect. Promus
has no knowledge of any assertion or claim challenging the validity of any of
such intellectual property.
Section 4.10. Agreements, Contracts and Commitments.
(a) Promus has not breached, or received in writing any claim or
notice that it has breached, any of the terms or conditions of any material
agreement, contract or commitment filed as an exhibit to the Promus SEC Reports
("Promus Material Contracts") in such a manner as, individually or in the
aggregate, are reasonably likely to have a Promus Material Adverse Effect. Each
Promus Material Contract that has not expired by its terms is in full force and
effect.
(b) Without limiting Section 4.10(a), each of the management contracts
and franchise agreements to which Promus is a party and each of Promus's
Material Leases (i) is valid and binding in accordance with its terms and is in
full force and effect, (ii) neither Promus nor any of its Subsidiaries is in
default in any material respect thereof, nor does any condition exist that with
notice or lapses of time or both would constitute a material default thereunder,
and (iii) no party has given any written or (to the knowledge of Promus) oral
notice of termination or cancellation thereof or that such party intends to
assert a breach thereof, or seek to terminate or cancel, any such agreement,
contract or lease, in each case as a result of the transactions contemplated
hereby, subject to such exceptions that, individually and in the aggregate,
would not be reasonably likely to have a Promus Material Adverse Effect.
Section 4.11. Litigation Except as described in the Promus SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against Promus pending or as to which Promus has
received any written notice of assertion, which, individually or in the
aggregate, is reasonably likely to have a Promus Material Adverse Effect or a
material adverse effect on the ability of Promus to consummate the transactions
contemplated by this Agreement.
Section 4.12. Environmental Matters To the knowledge of Promus and
except as disclosed in the Promus SEC Reports filed prior to the date hereof and
except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Promus Material Adverse Effect: (i) Promus and its
Subsidiaries have complied with all applicable Environmental Laws; (ii) the
properties currently owned or operated by Promus and its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances; (iii) the properties formerly owned
or operated by Promus or any of its Subsidiaries were not contaminated with
Hazardous Substances during the period of ownership or operation by Promus or
any of its Subsidiaries; (iv) neither Promus nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither Promus nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance;
(vi) neither Promus nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that Promus or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither Promus nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third
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party relating to liability under any Environmental Law or relating to Hazardous
Substances; and (viii) there are no circumstances or conditions involving Promus
or any of its Subsidiaries that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership, use
or transfer of any property of Promus or any of its Subsidiaries pursuant to any
Environmental Law.
Section 4.13. Employee Benefit Plans.
(a) For purposes of this Agreement, the "Promus Employee Plans" shall
mean all employee benefit plans (as defined in Section 3(3) of ERISA) and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans, and
all unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Promus or any ERISA Affiliate of
Promus, or any Subsidiary of Promus (together, the "Promus Employee Plans").
Promus has listed in Section 4.13 of the Promus Disclosure Schedule all Promus
Employee Plans other than plans that are "employee welfare benefit plans" within
the meaning of Section 3(1) of ERISA.
(b) With respect to each Promus Employee Plan, Promus has made
available to Doubletree, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Promus Employee Plan and all
amendments thereto, (iii) each trust agreement and group annuity contract, if
any, and all amendments thereto relating to such Promus Employee Plan and (iv)
the most recent actuarial report or valuation relating to a Promus Employee Plan
subject to Title IV of ERISA.
(c) With respect to the Promus Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Promus, there exists
no condition or set of circumstances in connection with which Promus could be
subject to any liability that is reasonably likely to have a Promus Material
Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Promus Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of Promus, except for obligations which, individually or in the
aggregate, are not reasonably likely to have a Promus Material Adverse Effect.
(e) Except as disclosed in the Promus SEC Reports filed prior to the
date of this Agreement, and except as provided for in this Agreement, neither
Promus nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of Promus or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Promus of the
nature contemplated by this Agreement, (ii) agreement with any officer of Promus
providing any term of employment or compensation guarantee extending for a
period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, the
vesting of the benefits of which
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will be accelerated or the funding of benefits of which will be required, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
Section 4.14. Compliance With Laws Promus has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Promus Material Adverse Effect.
Section 4.15. Accounting and Tax Matters.
(a) To the best knowledge of Promus, after consulting with its
independent auditors with respect to clause (i) below and its tax advisors with
respect to clause (ii) below, neither Promus nor any of its Affiliates (as
defined in Section 5.12) has taken or agreed to take any action which would (i)
prevent Parent from accounting for the business combination to be effected by
the Mergers as a pooling of interests, or (ii) prevent the Promus Merger from
qualifying as a reorganization described in Section 368(a) of the Code and/or,
taken together with the Doubletree Merger, as a transfer of property to Parent
by holders of Promus Common Stock described in Section 351 of the Code. Except
as contemplated by the Promus Option Agreement, neither Promus nor any of its
Subsidiaries owns any shares of Doubletree Common Stock or other securities
convertible into shares of Doubletree Common Stock (exclusive of any shares
owned by Promus's employee benefit plans).
(b) To the best knowledge of Promus, the stockholders of Promus as a
group have no present plan, intention or arrangement to sell or otherwise
dispose of such number of the shares of Parent Common Stock received in the
Promus Merger as would reduce their ownership in Parent Common Stock to a number
of shares having a value, as of the date of the Promus Merger, of less than
eighty percent (80%) of the value of all the formerly outstanding stock of
Promus as of the same date.
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus
The information to be supplied by Promus for inclusion in the Registration
Statement shall not at the time the Registration Statement is declared effective
by the SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information to be
supplied by Promus for inclusion in the Joint Proxy Statement/Prospectus shall
not, on the date the Joint Proxy Statement/Prospectus is first mailed to
stockholders of Promus or Doubletree, at the time of the Promus Stockholders'
Meeting and the Doubletree Stockholder's Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements made in the Joint Proxy Statement/Prospectus not false or misleading,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Promus
Stockholders' Meeting or the Doubletree Stockholders' Meeting which has become
false or misleading. If at any time prior to the Effective Time any event
relating to Promus or any
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of its Affiliates, officers or directors should be discovered by Promus which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, Promus shall promptly inform
Doubletree.
Section 4.17. Labor Matters Except as disclosed in the Promus SEC
Reports filed prior to the date hereof, neither Promus nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Promus or any of its
Subsidiaries the subject of any material proceeding asserting that Promus or any
of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization nor, as of the
date of this Agreement, is there pending or, to the knowledge of the executive
officers of Promus, threatened, any material labor strike, dispute, walkout,
work stoppage, slow-down or lockout involving Promus or any of its Subsidiaries.
Section 4.18. Insurance All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Promus or any of its Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of Promus and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Promus Material Adverse Effect.
Section 4.19. Promus Long-Range Plans Promus has provided to Doubletree
copies of Promus's long-range plans that are substantially identical to the
long-range plans presented by Promus's management to, and adopted by, the Board
of Directors of Promus on July 23, 1997, and Promus has not adopted any other
long-range plans since such date.
Section 4.20. Opinion of Financial Advisor The financial advisor of
Promus, BT Wolfensohn, has delivered to Promus an opinion dated the date of this
Agreement to the effect that the Promus Exchange Ratio is fair to holders of
Promus Common Stock from a financial point of view.
Section 4.21. No Existing Discussions As of the date hereof, Promus is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal.
Section 4.22. Section 203 of the DGCL Not Applicable. The restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in Section DGCL 203) will not apply to the authorization, execution,
delivery or performance of this Agreement or the Stock Option Agreements by
Promus or the consummation of the Promus Merger by Promus. No other "fair
price," "moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation is applicable to Promus or (by reason of Promus's
participation therein) the Promus Merger or the other transactions contemplated
by this Agreement.
Section 4.23. Promus Rights Plan. Under the terms of the Promus Rights
Plan, neither the execution of this Agreement or the Doubletree Stock Option
Agreement, nor the transactions
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contemplated hereby or thereby will cause a Distribution Date to occur or cause
the rights issued pursuant to the Promus Rights Plan to become exercisable, and
all such rights shall become non-exercisable at the Effective Time.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Doubletree and Promus each agrees as to itself and its
respective Subsidiaries (except to the extent that the other party shall
otherwise consent in writing) to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to pay
its debts and taxes when due subject to good faith disputes over such debts or
taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Except as expressly contemplated by this
Agreement or the Stock Option Agreements or as set forth in Section 5.1 of the
Doubletree Disclosure Schedule, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Doubletree and Promus each shall not (and shall not
permit any of its respective Subsidiaries to), without the written consent of
the other party:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock granted under any employee stock plan of such party
or authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements
(including severance agreements) in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than (i) the grant
of options consistent with past practices to employees or directors, which
options represent in the aggregate the right to acquire no more than 25,000
shares (net of cancellations) of Doubletree Common Stock or Promus Common Stock,
as the case may be, (ii) the issuance of shares of Doubletree Common Stock or
Promus Common Stock, as the case may be, pursuant to
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the exercise of options or warrants outstanding on the date of this Agreement,
and (iii) the issuance of capital stock under the Doubletree Rights Plan or the
Promus Rights Plan if required by the respective terms thereof;
(d) 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 business or any corporation, partnership
or other business organization or division, or otherwise acquire or agree to
acquire any assets (other than hotel properties, inventory and other immaterial
assets, in each case in the ordinary course of business);
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions (including sales, leases, licenses
or dispositions of hotel properties, inventory and other immaterial assets) in
the ordinary course of business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees (other than officers) in accordance with past practices, (ii)
grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers, (iii) enter
into any collective bargaining agreement (other than as required by law or
extensions to existing agreements in the ordinary course of business), (iv)
establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its Certificate of Incorporation or
Bylaws except as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than in the
ordinary course of business;
(i) Take any action that would or is reasonably likely to result in a
material breach of any provision of this Agreement or the Stock Option
Agreements or in any of its representations and warranties set forth in this
Agreement or the Stock Option Agreements being untrue on and as of the Closing
Date;
(j) Make or rescind any material express or deemed election relating
to Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or make any material change to any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 1996, except as may be required by applicable law;
(k) Settle any litigation relating to the transactions contemplated
hereby other than any settlement which would not (i) have a Doubletree Material
Adverse Effect (if settled by
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Doubletree), a Promus Material Adverse Effect (if settled by Promus) or a
material adverse effect on the business, properties, financial condition or
results of operations of Parent (if settled by either Doubletree or Promus) or
(ii) adversely effect the consummation of the transactions contemplated hereby;
or
(l) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (k) above.
Section 5.2. Cooperation; Notice; Cure Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of
Doubletree and Promus shall confer on a regular and frequent basis with one or
more representatives of the other party to report on the general status of
ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Mergers and the transactions contemplated
hereby and thereby. Each of Doubletree and Promus shall promptly notify the
other in writing of, and will use all commercially reasonable efforts to cure
before the Closing Date, any event, transaction or circumstance, as soon as
practical after it becomes known to such party, that causes or will cause any
covenant or agreement of Doubletree or Promus under this Agreement to be
breached or that renders or will render untrue any representation or warranty of
Doubletree or Promus contained in this Agreement. No notice given pursuant to
this paragraph shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein.
Section 5.3. No Solicitation.
(a) Doubletree and Promus each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving such party
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions with any person (or group of persons) other than Doubletree or
Promus or their respective affiliates (a "Third Party") concerning, or provide
any non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to or recommend any Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent Doubletree or
Promus, or their respective Board of Directors, from (A) furnishing non-public
information to, or entering into discussions or negotiations with, any person or
entity in connection with an unsolicited bona fide written Acquisition Proposal
by such person or entity or modifying or withdrawing its recommendation with
respect to the transactions contemplated hereby or recommending an unsolicited
bona fide written Acquisition Proposal to the stockholders of such party, if and
only to the extent that (1) the Board of Directors of such party believes in
good faith (after consultation with its financial advisor) that such Acquisition
Proposal is reasonably capable of being completed on the terms proposed and,
after taking into account the strategic benefits anticipated to be derived from
the Mergers and the prospects of Doubletree and Promus as a combined company,
would, if consummated, result in a transaction more favorable to the
stockholders of such party over the long term than the transaction contemplated
by this Agreement (a "Superior Proposal") and the Board of Directors of such
party determines in good
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faith after consultation with outside legal counsel that such action is required
for such Board of Directors to comply with its fiduciary duties to stockholders
under applicable law and (2) prior to furnishing such non-public information to,
or entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality and standstill agreement with terms no less favorable to such
party than those contained in the Confidentiality Agreements, each dated August
16, 1997 between Promus and Doubletree (the "Confidentiality Agreements"); or
(B) complying with Rule 14e-2 promulgated under the Exchange Act with regard to
an Acquisition Proposal. Each of Doubletree and Promus agrees not to release any
third party from, or waive any provision of, any standstill agreement to which
it is a party or any confidentiality agreement between it and another person who
has made, or who may reasonably be considered likely to make, an Acquisition
Proposal, unless its Board of Directors determines in good faith after
consultation with outside legal counsel that such action is required for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law.
(b) Doubletree and Promus shall each notify the other party
immediately after receipt by Doubletree or Promus (or any of their advisors) of
any Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or records
of such party by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact. Such party shall continue to keep the other party hereto informed, on a
current basis, of the status of any such discussions or negotiations and the
terms being discussed or negotiated.
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practical after the execution of this Agreement,
Doubletree and Promus shall prepare and file with the SEC the Joint Proxy
Statement/Prospectus and the Registration Statement in which the Joint Proxy
Statement/Prospectus will be included as a prospectus, provided that Doubletree
and Promus may delay the filing of the Registration Statement until approval of
the Joint Proxy Statement/Prospectus by the SEC. Doubletree and Promus shall use
all reasonable efforts to cause the Registration Statement to become effective
as soon after such filing as practical. The Joint Proxy Statement/Prospectus
shall include the recommendation of the Board of Directors of Doubletree in
favor of adoption of this Agreement and the Doubletree Merger and the
recommendation of the Board of Directors of Promus in favor of adoption of this
Agreement and the Promus Merger; provided that the Board of Directors of either
party may modify or withdraw such recommendation if such Board of Directors
believes in good faith after consultation with outside legal counsel that the
modification or withdrawal of such recommendation is required for such Board of
Directors to comply with its fiduciary duties under applicable law.
(b) Doubletree and Promus shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
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Section 5.5. NASDAQ Quotation and NYSE Listing Each of Doubletree and
Promus agrees to continue the quotation and listing of Doubletree Common Stock
and Promus Common Stock, respectively, on NASDAQ National Market and the NYSE,
respectively, during the term of this Agreement.
Section 5.6. Access to Information Upon reasonable notice, Doubletree
and Promus shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its personnel, properties, books,
contracts, commitments and records and, during such period, each of Doubletree
and Promus shall, and shall cause each of their respective Subsidiaries to,
furnish promptly to the other (a) copies of monthly financial reports and
development reports, (b) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws and (c) all other information concerning
its business, properties and personnel as such other party may reasonably
request. The parties will hold any such information which is nonpublic in
confidence in accordance with the Confidentiality Agreements. No information or
knowledge obtained in any investigation pursuant to this Section 5.6 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger.
Section 5.7. Stockholders' Meetings Doubletree and Promus each shall
call a meeting of its respective stockholders to be held as promptly as
practicable for the purpose of voting, in the case of Doubletree, upon this
Agreement and the Doubletree Merger and, in the case of Promus, upon this
Agreement and the Promus Merger. Subject to Sections 5.3 and 5.4, Doubletree and
Promus shall, through their respective Boards of Directors, recommend to their
respective stockholders adoption of this Agreement and approval of such matters
and shall coordinate and cooperate with respect to the timing of such meetings
and shall use their best efforts to hold such meetings on the same day and as
soon as practicable after the date hereof. Unless otherwise required to comply
with the applicable fiduciary duties of the respective directors of Doubletree
and Promus, as determined by such directors in good faith after consultation
with outside legal counsel, each party shall use all reasonable efforts to
solicit from stockholders of such party proxies in favor of such matters.
Doubletree and Promus intend to submit additional proposals to their respective
stockholders at the Doubletree Stockholders' Meeting and the Promus
Stockholders' Meeting, respectively, separate from the proposals referred to in
the first sentence of this Section 5.7. The approval by Doubletree's
stockholders or Promus's stockholders, as the case may be, of such additional
proposals shall not be a condition to the closing of the Mergers under this
Agreement.
Section 5.8. Legal Conditions to Merger.
(a) Doubletree and Promus shall each use all reasonable efforts to (i)
take, or cause to be taken, all appropriate action, and do, or cause to be done,
all things necessary and proper under applicable law to consummate and make
effective the transactions contemplated hereby as promptly as practicable, (ii)
obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by Doubletree or Promus or any of their Subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions
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contemplated hereby including, without limitation, the Mergers, and (iii) as
promptly as practicable, make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement and the Mergers
required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other applicable law. Doubletree
and Promus shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection therewith.
Doubletree and Promus shall use their reasonable efforts to furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Joint Proxy Statement/Prospectus and
the Registration Statement) in connection with the transactions contemplated by
this Agreement.
(b) Doubletree and Promus agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective reasonable
efforts to obtain any government clearances required for Closing (including
through compliance with the HSR Act and any applicable foreign government
reporting requirements), to respond to any government requests for information,
and to contest and resist any action, including any legislative, administrative
or judicial action, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the consummation
of the Mergers or any other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other federal, state or foreign
antitrust or fair trade law. Doubletree and Promus shall cooperate and work
together in any proceedings or negotiations with any Governmental Entity
relating to any of the foregoing. Notwithstanding anything to the contrary in
this Section 5.8, neither Doubletree nor Promus, nor any of their respective
Subsidiaries, shall be required to take any action that would reasonably be
expected to substantially impair the overall benefits expected, as of the date
hereof, to be realized from the consummation of the Mergers.
(c) Each of Doubletree and Promus shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, all reasonable efforts to obtain any
third party consents related to or required in connection with the Mergers.
Section 5.9. Public Disclosure Doubletree and Promus shall agree on
the form and content of the initial press release regarding the transactions
contemplated hereby and thereafter shall consult with each other before issuing,
and use all reasonable efforts to agree upon, any press release or other public
statement with respect to any of the transactions contemplated hereby and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law.
Section 5.10. Nonrecognition Exchange From and after the date hereof
and until the Effective Time, neither Doubletree nor Promus, nor any of their
respective Subsidiaries or other
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Affiliates shall knowingly take any action, or knowingly fail to take any
action, that is reasonably likely to jeopardize the treatment of either of the
Mergers as a reorganization described in Section 368(a) of the Code and/or,
taken together with the other of the Mergers, as a transfer of property to
Parent by holders of Doubletree Common Stock or Promus Common Stock, as
applicable, described in Section 351 of the Code.
Section 5.11. Pooling Accounting From and after the date hereof and
until the Effective Time, neither Doubletree nor Promus, nor any of their
respective Subsidiaries or other Affiliates shall knowingly take any action, or
knowingly fail to take any action, that is reasonably likely to jeopardize the
treatment of the Mergers as a pooling of interests for accounting purposes.
Section 5.12. Affiliate Agreements Upon the execution of this
Agreement, Doubletree and Promus will provide each other with a list of those
persons who are, in Doubletree's or Promus's respective reasonable judgment,
"affiliates" of Doubletree or Promus, respectively, within the meaning of Rule
145 (each such person who is an "affiliate" of Doubletree or Promus within the
meaning of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). Doubletree and Promus shall provide each other such
information and documents as the other party shall reasonably request for
purposes of reviewing such list and shall notify the other party in writing
regarding any change in the identity of its Affiliates prior to the Closing
Date. Doubletree and Promus shall each use all reasonable efforts to deliver or
cause to be delivered to each other by October 15, 1997 (and in any case prior
to the Effective Time) from each of its Affiliates, an executed Affiliate
Agreement, in substantially the form of Exhibit F (with respect to affiliates of
Doubletree) or Exhibit G (with respect to affiliates of Promus) attached hereto
(each, an "Affiliate Agreement," and together, the "Affiliate Agreements").
Section 5.13. NYSE Listing Doubletree and Promus shall cause Parent to
promptly prepare and submit to the NYSE a listing application covering the
shares of Parent Common Stock to be issued in the Mergers and upon exercise of
Doubletree Stock Options, the GEPT Warrant and Promus Stock Options, and shall
use all reasonable efforts to cause such shares to be approved for listing on
the NYSE, prior to the Effective Time, subject to official notice of issuance.
Section 5.14. Stock Plans.
(a) At the Effective Time, each outstanding option to purchase shares
of Doubletree Common Stock (an "Doubletree Stock Option") under the Doubletree
Stock Plans and each outstanding option to purchase shares of Promus Common
Stock (a "Promus Stock Option") under the Promus Stock Plans, in each case
whether vested or unvested, shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under such Doubletree Stock
Option or Promus Stock Option, as the case may be, the same number of shares of
Parent Common Stock as the holder of such Doubletree Stock Option or Promus
Stock Option, as the case may be, would have been entitled to receive pursuant
to the Doubletree Merger or the Promus Merger, respectively, had such holder
exercised such option in full immediately prior to the Effective Time (rounded
downward to the nearest whole number), at a price per share (rounded downward to
the nearest whole cent) equal to (y) the aggregate exercise price for the shares
of Doubletree Common Stock or Promus Common Stock, as the case may be,
purchasable pursuant to such Doubletree Stock Option or such Promus Stock Option
immediately
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prior to the Effective Time divided by (z) the number of full shares of Parent
Common Stock deemed purchasable pursuant to such Doubletree Stock Option or
Promus Stock Option, as the case may be, in accordance with the foregoing.
(b) As soon as practicable after the Effective Time, Parent shall
deliver to the participants in the Doubletree Stock Plans and the Promus Stock
Plans appropriate notice setting forth such participants' rights pursuant
thereto and the grants pursuant to Doubletree Stock Plans or Promus Stock Plans,
as the case may be, shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.14 after giving effect to
the Mergers).
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery under
Doubletree Stock Plans and Promus Stock Plans assumed in accordance with this
Section 5.14. As soon as practicable after the Effective Time, Parent shall file
a registration statement on Form S-8 (or any successor or other appropriate
forms), or another appropriate form with respect to the shares of Parent Common
Stock subject to such options and shall use its reasonable efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(d) The Board of Directors of each of Doubletree and Promus shall,
prior to or as of the Effective Time, take all necessary actions, pursuant to
and in accordance with the terms of the Doubletree Stock Plans and the
instruments evidencing the Doubletree Stock Options, or the Promus Stock Plans
and the instruments evidencing the Promus Stock Options, as the case may be, to
provide for the conversion of the Doubletree Stock Options and the Promus Stock
Options into options to acquire Parent Common Stock in accordance with this
Section 5.14 without obtaining consent of the holders of the Doubletree Stock
Options or Promus Stock Options in connection with such conversion; provided,
however, that Promus shall use all reasonable efforts to obtain from each holder
of Promus Stock Options a waiver of any right of such holder to receive any cash
payment which may become due with respect to any Promus Stock Options that are
exercisable immediately prior to the Effective Time as a result of the
consummation of the transactions contemplated hereby.
(e) The Board of Directors of each of Doubletree and Promus shall,
prior to or as of the Effective Time, take appropriate action to approve the
deemed cancellation of the Doubletree Stock Options or Promus Stock Options, as
the case may be, for purposes of Section 16(b) of the Exchange Act. The Board of
Directors of Parent shall, prior to or as of the Effective Time, take
appropriate action to approve the deemed grant of options to purchase Parent
Common Stock under the Doubletree Stock Options and the Promus Stock Options (as
converted pursuant to this Section 5.14) for purposes of Section 16(b) of the
Exchange Act.
Section 5.15. Brokers or Finders Each of Doubletree and Promus
represents, as to itself, its Subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except Morgan Stanley & Co. Incorporated, whose fees and expenses will be paid
by
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Doubletree in accordance with Doubletree's agreement with such firm (a copy of
which has been delivered by Doubletree to Promus prior to the date of this
Agreement), and BT Wolfensohn, whose fees and expenses will be paid by Promus in
accordance with Promus's agreement with such firm (a copy of which has been
delivered by Promus prior to the date of this Agreement). Each of Promus and
Doubletree agrees to indemnify and hold the other harmless from and against any
and all claims, liabilities or obligations with respect to any such fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
Section 5.16. Indemnification.
(a) From and after the Effective Time, Parent agrees that it will, and
will cause the Surviving Corporations to, indemnify and hold harmless each
present and former director and officer of Doubletree and Promus (the
"Indemnified Parties"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that Doubletree or Promus, as the case may be, would
have been permitted under Delaware law and its certificate of incorporation or
bylaws in effect on the date hereof to indemnify such Indemnified Party (and
Parent and the Surviving Corporation shall also advance expenses as incurred to
the fullest extent permitted under applicable law, provided the Indemnified
Party to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Indemnified Party is not
entitled to indemnification).
(b) For a period of six years after the Effective Time, Parent shall
maintain or shall cause the Surviving Corporations to maintain (to the extent
available in the market) in effect a directors' and officers' liability
insurance policy covering those persons who are currently covered by
Doubletree's or Promus's directors' and officers' liability insurance policy
(copies of which have been heretofore delivered by Doubletree and Promus to each
other) with coverage in amount and scope at least as favorable as Doubletree's
or Promus's existing coverage; provided that in no event shall Parent or the
Surviving Corporations be required to expend in the aggregate in excess of 200%
of the annual premium currently paid by Doubletree and Promus for such coverage;
and if such premium would at any time exceed 200% of the such amount, then the
Parent or the Surviving Corporations shall maintain insurance policies which
provide the maximum and best coverage available at an annual premium equal to
200% of such amount.
(c) The provisions of this Section 5.16 are intended to be an addition
to the rights otherwise available to the current officers and directors of
Doubletree and Promus by law, charter, statute, bylaw or agreement, and shall
operate for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
Section 5.17. Letter of Promus's Accountants Promus shall use all
reasonable efforts to cause to be delivered to Doubletree and Promus a letter of
Arthur Andersen LLP, Promus's independent auditors, dated a date within two
business days before the date on which the Registration Statement shall become
effective and addressed to Doubletree, in form reasonably
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satisfactory to Doubletree and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
Section 5.18. Letter of Doubletree's Accountants Doubletree shall use
all reasonable efforts to cause to be delivered to Promus and Doubletree a
letter of KPMG Peat Marwick LLP, Doubletree's independent auditors, dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to Promus, in form reasonably satisfactory
to Promus and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
Section 5.19. Stock Option Agreements Promus and Doubletree each agree
to fully perform their respective obligations under the Stock Option Agreements.
Section 5.20. Post-Merger Corporate Governance; Employment
Arrangements.
(a) At the Effective Time, the total number of persons serving on the
Board of Directors of Parent shall be fourteen (unless otherwise agreed in
writing by Doubletree and Promus prior to the Effective Time), half of whom
shall be Doubletree Directors and half of whom shall be Promus Directors (as
such terms are defined below), all of which Doubletree Directors and Promus
Directors shall be spread as evenly as possible among Parent's three classes of
Directors. The persons to serve initially on the Board of Directors of Parent at
the Effective Time who are Doubletree Directors shall be selected solely by and
at the absolute discretion of the Board of Directors of Doubletree prior to the
Effective Time; and the persons to serve initially on the Board of Directors of
Parent at the Effective Time who are Promus Directors shall be selected solely
by and at the absolute discretion of the Board of Directors of Promus prior to
the Effective Time. In the event that, prior to the Effective Time, any person
so selected to serve on the Board of Directors of Parent after the Effective
Time is unable or unwilling to serve in such position, the Board of Directors
which selected such person shall designate another of its members to serve in
such person's stead in accordance with the provisions of the immediately
preceding sentence. From and after the Effective Time and until December 31,
2002, (a) the Board of Directors of Parent and each Committee of the Board of
Directors of Parent as constituted following each election of Directors shall
consist of an equal number of Doubletree Directors and Promus Directors, and (b)
the size of the Board of Directors of Parent and each Committee of the Board of
Directors of Parent shall not be increased unless such increase is approved by
75% of the members thereof. It is the intention of the parties hereto that Mr.
Dale Frey shall be designated as the initial Chairman of the Human Resources
Committee of Parent immediately following the Effective Time. If, at any time
during the period referenced in the second preceding sentence, the number of
Doubletree Directors and Promus Directors serving, or that would be serving
following the next stockholders' meeting at which Directors are to be elected,
as Directors of Parent or as members of any Committee of the Board of Directors
of Parent, would not be equal, then, subject to the fiduciary duties of the
Directors of Parent, the Board of Directors and the Nominating Committee thereof
shall nominate for election at the next stockholders' meeting at which Directors
are to be elected, such person or persons as may be requested by the remaining
Doubletree Directors (if the number of
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Doubletree Directors is, or would otherwise become, less than the number of
Promus Directors) or by the remaining Promus Directors (if the number of Promus
Directors is, or would otherwise become, less than the number of Doubletree
Directors) to ensure that there shall be an equal number of Doubletree Directors
and Promus Directors. The provisions of the preceding sentence shall not apply
in respect of any stockholders' meeting which takes place after December 31,
2002. The term "Doubletree Director" means (i) any person serving as a Director
of Doubletree or any of its Subsidiaries on the date hereof who becomes a
Director of Parent at the Effective Time and (ii) any person who becomes a
Director of Parent pursuant to the second preceding sentence and who is
designated by the Doubletree Directors; and the term "Promus Director" means (i)
any person serving as a Director of Promus or any of its Subsidiaries on the
date hereof who becomes a Director of Parent at the Effective Time and (ii) any
person who becomes a Director of Parent pursuant to the second preceding
sentence and who is designated by the Promus Directors.
(b) At the Effective Time, pursuant to the terms of the employment
contracts referred to in Section 5.20(c) hereof, (i) Raymond E. Schultz, the
current Chief Executive Officer of Promus, shall hold the position of Chief
Executive Officer and Chairman of the Board of Parent, (ii) Richard M. Kelleher,
the current President and Chief Executive Officer of Doubletree, shall hold the
position of President and Chief Operating Officer of Parent, (iii) William L.
Perocchi, the current Executive Vice President and Chief Financial Officer of
Doubletree, shall hold the position of Executive Vice President and Chief
Financial Officer of Parent and (iv) Thomas L. Keltner, the current Executive
Vice President, Development of Promus, shall hold the position of Executive Vice
President, Development of Parent. Mr. Schultz will continue as Chairman of the
Board and Chief Executive Officer of Parent until his retirement no later than
December 31, 1999, and, pursuant to the terms of the employment contracts
referred to in Section 5.20(c) hereof and subject to the Bylaws of Parent, Mr.
Kelleher will succeed Mr. Schultz as Chairman of the Board and Chief Executive
Officer of Parent. If any of the persons identified above in this Section
5.20(b) is unable or unwilling to hold such offices as set forth above, his
successor shall be selected by the Board of Directors of Parent in accordance
with the Bylaws of Parent. The authority, duties and responsibilities of the
Chairman and Chief Executive Officer, the President and Chief Operating Officer,
the Executive Vice President and Chief Financial Officer and the Executive Vice
President, Development shall be set forth in the employment contracts entered
into pursuant to Section 5.20(c) hereof, which employment contracts shall also
set forth in their entirety the rights and remedies of Messrs. Schultz,
Kelleher, Perocchi and Keltner with respect to employment by Parent , and none
of them shall have any right, remedy or cause of action under this Section 5.20,
nor shall they be third party beneficiaries of this Section 5.20.
(c) Prior to the Closing, Parent shall offer to enter into employment
agreements with Raymond E. Schultz, Richard M. Kelleher, William L. Perocchi and
Thomas L. Keltner on substantially the terms previously agreed to by Doubletree
and Promus.
(d) At the Effective Time, Parent shall have an Executive Committee
which initially will be comprised of the following four members of the Board of
Directors of Parent: Richard J. Ferris, Michael D. Rose, Raymond E. Schultz and
Peter V. Ueberroth. In addition, Richard M. Kelleher shall be an ex-officio
member of the Executive Committee with the right to attend but not vote at all
meetings of the Executive Committee. The Executive Committee shall have
responsibility for developing Parent's long-term strategic plans, making
significant capital
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allocation decisions and such other duties and responsibilities as specified by
the Board of Directors of Parent at or after the Effective Time. The Executive
Committee also shall be required to oversee the implementation of Promus's
existing 100% guest satisfaction guarantee program at all of Promus's and
Doubletree's hotel properties following the Effective Time. Each member of the
Executive Committee that is not an employee of Parent will be entitled to
receive $300,000 per year as compensation for serving on the Executive
Committee.
(e) Each of Doubletree and Promus shall cause Parent to incorporate
the provisions contained in this Section 5.20 into the Bylaws of Parent in
effect at the Effective Time, which provisions shall thereafter be amended only
with the approval of 75% of the members of the Board of Directors of Parent.
Section 5.21. Name of Parent At the Effective Time, Parent shall
change its corporate name to Promus Hotel Corporation.
Section 5.22. Parent Stockholder Rights Plan Prior to the Effective
Time, Doubletree and Promus shall cause Parent to adopt a Stockholder Rights
Plan (the "Parent Rights Plan") that is substantially similar to the Promus
Rights Plan, with such modifications as are acceptable to both Doubletree and
Promus.
Section 5.23. GEPT Warrant; Doubletree Registration Rights Agreement
(a) At the Effective Time, Parent shall assume all obligations under
the GEPT Warrant, and the holder of the GEPT Warrant thereafter shall have the
right to acquire, on the same pricing and payment terms and conditions as are
currently applicable under the GEPT Warrant, the same number of shares of Parent
Common Stock as the holder of the GEPT Warrant would have been entitled to
receive pursuant to the Doubletree Merger had such holder exercised the GEPT
Warrant in full immediately prior to the Effective Time (rounded downward to the
nearest whole number), at the price per share (rounded downward to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of
Doubletree Common Stock purchasable pursuant to the GEPT Warrant immediately
prior to the Effective Time divided by (z) the number of full shares of Parent
Common Stock deemed purchasable pursuant to the GEPT Warrant in accordance with
the foregoing.
(b) At the Effective Time, Doubletree and Promus shall cause Parent to
enter into a Registration Rights Agreement (the "Parent Registration Rights
Agreement") substantially similar to the Incorporation and Registration Rights
Agreement dated as of December 16, 1993, as amended on June 30, 1994, February
27, 1996 and November 8, 1996 by and among Doubletree and certain stockholders
of Doubletree (the "Doubletree Registration Rights Agreement") pursuant to which
Parent will provide registration rights to parties to the Doubletree
Registration Rights Agreement (other than Doubletree) with respect to all shares
of Parent Common Stock issued in the Doubletree Merger on account of the shares
of Doubletree Common Stock covered by the Doubletree Registration Rights
Agreement.
Section 5.24. Conveyance Taxes Doubletree and Promus shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and
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stamp taxes, any transfer, recording, registration and other fees or any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time.
Section 5.25. Transfer Taxes Doubletree shall pay, and Promus shall
pay, on behalf of the stockholders of Doubletree and Promus, respectively, any
New York State Real Estate Transfer Tax, New York City Real Property Transfer
Tax, New York State Stock Transfer Tax and any similar taxes imposed on the
stockholders of Doubletree and Promus, respectively, by any other State of the
United States (and any interest with respect to such taxes) (the "Transfer
Taxes"), which become payable in connection with the transactions contemplated
by this Agreement. Doubletree and Promus shall cooperate in the preparation,
execution and filing of any required returns with respect to such Transfer Taxes
(including returns on behalf of the stockholders of Doubletree and Promus) and
in the determination of the portion of the consideration allocable to the real
property of Doubletree and the Doubletree Subsidiaries and Promus and the Promus
Subsidiaries in New York State and City (or in any other jurisdiction, if
applicable). The Joint Proxy Statement/Prospectus shall provide that the
stockholders of Doubletree and Promus shall be deemed to have (i) authorized
Doubletree and Promus, respectively, to prepare, execute and file any tax
returns relating to Transfer Taxes and pay any Transfer Taxes arising in
connection with the Mergers, in each case, on behalf of such holders and (ii)
agreed to be bound by the values and allocations established by Doubletree and
Promus in the preparation of any return with respect to the Transfer Taxes, if
applicable.
Section 5.26. Stockholder Litigation Each of Doubletree and Promus
shall give the other the reasonable opportunity to participate in the defense of
any stockholder litigation against Doubletree or Promus, as applicable, and its
directors relating to the transactions contemplated hereby.
Section 5.27. Employee Benefits; Severance
(a) Parent shall cause to continue to be maintained the Doubletree and
Promus annual bonus plans for management employees for the 1997 fiscal year and
shall calculate the amounts payable to participants thereunder on a basis
consistent with the terms of each such plan and the past practice of Doubletree
or Promus, as applicable.
(b) For purposes of determining eligibility to participate, vesting,
entitlement to benefits and in all other respects where length of service is
relevant (except for pension benefit accruals) under any employee benefit plan
or arrangement covering employees of Doubletree and its Subsidiaries
("Doubletree Employees") employees of Promus and its Subsidiaries ("Promus
Employees") following the Effective Time, Parent shall cause such plans or
arrangements to recognize service credit for service with Doubletree or Promus
(as applicable) and any of their respective Subsidiaries to the same extent such
service was recognized under the applicable employee benefit plans immediately
prior to the Effective Time.
(c) At the Effective Time, Parent shall assume and honor in accordance
with their terms the severance agreements and severance pay policies identified
in Section 5.27 of the Doubletree Disclosure Schedule and Section 5.27 of the
Promus Disclosure Schedule.
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(d) Promus and Doubletree agree that each may enter into retention and
transition bonus arrangements with its employees prior to the Effective Time,
with the terms and amounts of such payments to be determined jointly by the
Chief Executive Officers of Promus and Doubletree; provided, however, that in no
event shall the aggregate of all such payments exceed approximately $2.5
million.
(e) Promus agrees to use all reasonable efforts, including obtaining
any necessary employee consents, to prevent the automatic funding of any escrow,
trust or similar arrangement pursuant to any employment agreement, arrangement
or benefit plan that arises in connection with the execution of this Agreement
or the consummation of any of the transactions contemplated hereby.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the
Mergers The respective obligations of each party to this Agreement to effect the
Mergers shall be subject to the satisfaction or waiver by each party prior to
the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement, the Doubletree Merger and
the Promus Merger shall have been approved in the manner required under the DGCL
by the respective holders of the issued and outstanding shares of capital stock
of Doubletree and Promus.
(b) HSR Act. The waiting period applicable to the consummation of the
Mergers under the HSR Act shall have expired or been terminated.
(c) Approvals. Other than the filing provided for by Section 1.4, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity the
failure of which to file, obtain or occur is reasonably likely to have a
Doubletree Material Adverse Effect or a Promus Material Adverse Effect shall
have been filed, been obtained or occurred.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(e) No Injunctions. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction or statute, rule, regulation which is in effect and which
has the effect of making the Mergers illegal or otherwise prohibiting
consummation of the Mergers.
(f) Pooling Letters. Doubletree and Promus shall have received letters
from KPMG Peat Marwick LLP and Arthur Andersen LLP, respectively, addressed to
Doubletree and Promus, respectively, regarding their concurrence with the
respective conclusions of management of Doubletree and Promus, as to the
appropriateness of the pooling of interests accounting, under
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Accounting Principles Board Opinion No. 16 for the transactions contemplated
hereby, it being agreed that Doubletree and Promus shall each provide reasonable
cooperation to KPMG Peat Marwick LLP and Arthur Andersen LLP to enable them to
issue such letters.
(g) NYSE Listing. The shares of Parent Common Stock to be issued in
the Merger and upon exercise of Doubletree Options, the GEPT Warrant and Promus
Options shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(h) Corporate Governance. Doubletree and Promus shall have taken all
actions necessary so that (i) not later than the Effective Time, the Certificate
of Incorporation and Bylaws of Parent shall have been amended to be
substantially in the form of Exhibit D and Exhibit E hereto; (ii) at the
Effective Time, the composition of the Board of Directors of Parent and of each
Committee of the Board of Directors of Parent shall comply with Section 5.20
hereof (assuming Doubletree has designated the Doubletree Directors and Promus
has designated the Promus Directors, in each case as contemplated by Section
5.20(a) hereof); and (iii) not later than the Effective Time, Parent shall have
adopted the Parent Rights Plan.
Section 6.2. Additional Conditions to Obligations of Doubletree The
obligation of Doubletree to effect the Doubletree Merger is subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by Doubletree:
(a) Representations and Warranties. The representations and warranties
of Promus set forth in this Agreement shall be true and correct as of the date
of this Agreement and (except to the extent such representations speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date, except for, (i) changes contemplated by this Agreement and (ii)
inaccuracies which, individually or in the aggregate, have not had and are not
reasonably likely to have a Promus Material Adverse Effect or a material adverse
effect upon the consummation of the transactions contemplated hereby; and
Doubletree shall have received a certificate signed on behalf of Promus by the
chief executive officer and the chief financial officer of Promus to such
effect.
(b) Performance of Obligations of Promus. Promus shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Doubletree shall have
received a certificate signed on behalf of Promus by the chief executive officer
and the chief financial officer of Promus to such effect.
(c) Tax Opinion. Doubletree shall have received the opinion of Dewey
Ballantine, counsel to Doubletree, based upon reasonably requested
representation letters and dated the Closing Date, to the effect that the
Doubletree Merger will be treated as a reorganization described in Section
368(a) of the Code and/or, taken together with the Promus Merger, as a transfer
of property to Parent by holders of Doubletree Common Stock described in Section
351 of the Code.
(d) No Trigger of Promus Rights Plan. No event shall have occurred
that has or would result in the triggering of any right or entitlement of
stockholders of Promus under the Promus Rights Plan, or will occur as a result
of the consummation of the Mergers.
42
<PAGE> 50
Section 6.3. Additional Conditions to Obligations of Promus The
obligations of Promus to effect the Promus Merger are subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by Promus:
(a) Representations and Warranties. The representations and warranties
of Doubletree set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) inaccuracies which, individually or in the aggregate, have
not had and are not reasonably likely to have a Doubletree Material Adverse
Effect, or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Promus shall have received a certificate signed on
behalf of Doubletree by the chief executive officer and the chief financial
officer of Doubletree to such effect.
(b) Performance of Obligations of Doubletree. Doubletree shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date; and Promus shall have
received a certificate signed on behalf of Doubletree by the chief executive
officer and the chief financial officer of Doubletree to such effect.
(c) Tax Opinion. Promus shall have received the opinion of Latham &
Watkins, counsel to Promus, based upon reasonably requested representation
letters and dated the Closing Date, to the effect that the Promus Merger will be
treated as a reorganization described in Section 368(a) of the Code and/or,
taken together with the Doubletree Merger, as a transfer of property to Parent
by holders of Promus Common Stock described in Section 351 of the Code.
(d) No Trigger of Doubletree Rights Plan. No event shall have occurred
that has or would result in the triggering of any right or entitlement of
stockholders of Doubletree under the Doubletree Rights Plan, or will occur as a
result of the consummation of the Mergers.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(h), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Mergers by the
stockholders of Doubletree or Promus:
(a) by mutual written consent of Doubletree and Promus; or
(b) by either Doubletree or Promus if the Mergers shall not have been
consummated by January 31, 1998 (provided that (i) either Doubletree or Promus
may extend such date to March 31, 1998 by providing written notice thereof to
the other party on or prior to January 31, 1998 (January 31, 1998, as it may be
so extended, shall be referred to herein as the "Outside Date") and (ii) the
right to terminate this Agreement under this Section 7.1(b) shall not
43
<PAGE> 51
be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Mergers to
occur on or before such date); or
(c) by either Doubletree or Promus if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Mergers; or
(d) (i) by Doubletree or Promus, if, at the Promus Stockholders'
Meeting (including any adjournment or postponement), the requisite vote of the
stockholders of Promus in favor of the approval and adoption of this Agreement
and the Promus Merger shall not have been obtained; or (ii) by Promus or
Doubletree if, at the Doubletree Stockholders' Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of
Doubletree in favor of the approval and adoption of this Agreement and the
Doubletree Merger shall not have been obtained; or
(e) by Doubletree, if (i) the Board of Directors of Promus shall have
withdrawn or modified its recommendation of this Agreement or the Promus Merger
(provided that Doubletree's right to terminate this Agreement under such clause
(i) shall not be available if at such time Promus would be entitled to terminate
this Agreement under Section 7.1(h) without giving effect to the cure period);
(ii) after the receipt by Promus of an Acquisition Proposal, Doubletree requests
in writing that the Board of Directors of Promus reconfirm its recommendation of
this Agreement and the Promus Merger to the stockholders of Promus and the Board
of Directors of Promus fails to do so within 10 business days after its receipt
of Doubletree's request; (iii) the Board of Directors of Promus shall have
recommended to the stockholders of Promus an Alternative Transaction (as defined
in Section 7.3(e)); (iv) a tender offer or exchange offer for 20% or more of the
outstanding shares of Promus Common Stock is commenced (other than by Doubletree
or an Affiliate of Doubletree) and the Board of Directors of Promus recommends
that the stockholders of Promus tender their shares in such tender or exchange
offer; or (v) for any reason Promus fails to call and hold the Promus
Stockholders' Meeting by the Outside Date (provided that Doubletree's right to
terminate this Agreement under such clause (v) shall not be available if at such
time Promus would be entitled to terminate this Agreement under Section 7.1(h)
without giving effect to the cure period); or
(f) by Promus, if (i) the Board of Directors of Doubletree shall have
withdrawn or modified its recommendation of this Agreement or the Doubletree
Merger (provided that Promus's right to terminate this Agreement under such
clause (i) shall not be available if at such time Doubletree would be entitled
to terminate this Agreement under Section 7.1(h) without giving effect to the
cure period); (ii) after the receipt by Doubletree of an Acquisition Proposal,
Promus requests in writing that the Board of Directors of Doubletree reconfirm
its recommendation of this Agreement and the Doubletree Merger to the
stockholders of Promus and the Board of Directors of Doubletree fails to do so
within 10 business days after its receipt of Promus's request; (iii) the Board
of Directors of Doubletree shall have recommended to the stockholders of
Doubletree an Alternative Transaction (as defined in Section 7.3(e)); (iv) a
tender offer or exchange offer for 20% or more of the outstanding shares of
Doubletree Common Stock is commenced (other than by Promus or an Affiliate of
Promus) and the Board of Directors of Doubletree recommends that the
stockholders of Doubletree tender their shares in such tender or
44
<PAGE> 52
exchange offer; or (v) for any reason Doubletree fails to call and hold the
Doubletree Stockholders' Meeting by the Outside Date (provided that Promus's
right to terminate this Agreement under such clause (v) shall not be available
if at such time Doubletree would be entitled to terminate this Agreement under
Section 7.1(h) without giving effect to the cure period); or
(g) by Doubletree or Promus, prior to the approval of this Agreement
by the stockholders of such party, if, as a result of a Superior Proposal
received by such party from a Third Party, the Board of Directors of such party
determines in good faith after consultation with outside legal counsel that
accepting such Superior Proposal is required for such Board of Directors to
comply with its fiduciary duties to stockholders under applicable law; provided,
however, that no termination shall be effective pursuant to this Section 7.1(g)
under circumstances in which a termination fee is payable by the terminating
party pursuant to Section 7.3(b)(iii) or (c)(iii), unless concurrently with such
termination, such termination fee is paid in full by the terminating party in
accordance with Section 7.3(b)(iii) or (c)(iii), as applicable; or
(h) by Doubletree or Promus, if (A) there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) will cause the conditions set
forth in Section 6.2(a) or (b) (in the case of termination by Doubletree) or
6.3(a) or (b) (in the case of termination by Promus) not to be satisfied, and
(ii) shall not have been cured within 20 business days following receipt by the
breaching party of written notice of such breach from the other party; or (B)
any event shall have occurred which makes it impossible for the conditions set
forth in Article VI hereof (other than Section 6.1(a), 6.1(e), 6.2(d) and
6.3(d)) to be satisfied, provided that any termination pursuant to this clause
(B) shall not be effective until 20 business days after notice thereof is
delivered by the party seeking to terminate to the other party, and shall be
automatically rescinded if (1) such condition is solely for the benefit of the
party receiving such notice and (2) such party, prior to such 20th business day,
irrevocably waives satisfaction of such condition based on such event.
Section 7.2. Effect of Termination In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Doubletree,
Promus, Parent or their respective officers, directors, stockholders or
Affiliates, except as set forth in Sections 5.15 and 7.3 and except that such
termination shall not limit liability for a willful breach of this Agreement;
provided that, the provisions of Sections 5.15 and 7.3 of this Agreement, the
Stock Option Agreements and the Confidentiality Agreements shall remain in full
force and effect and survive any termination of this Agreement.
Section 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Mergers are consummated.
(b) Doubletree shall pay Promus a termination fee of $45 million upon
the earliest to occur of the following events:
45
<PAGE> 53
(i) the termination of this Agreement by either Promus or
Doubletree pursuant to Section 7.1(d)(ii), if a proposal for an Alternative
Transaction (as defined below) involving Doubletree shall have been publicly
announced prior to the Doubletree Stockholders' Meeting and either a definitive
agreement for an Alternative Transaction is entered into, or an Alternative
Transaction is consummated, within eighteen months of such termination;
(ii) the termination of this Agreement by Promus pursuant to
Section 7.1(f); or
(iii) the termination of this Agreement by Doubletree
pursuant to
Section 7.1(g).
Doubletree's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Promus against Doubletree and any of
its Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the event of a
willful breach of this Agreement by Doubletree. Notwithstanding the foregoing,
if and to the extent that Promus has purchased shares of Doubletree Common Stock
pursuant to the Promus Stock Option Agreement prior to the payment of the $45
million fee provided for herein (the "Fee Payment Date"), the amount payable to
Promus under this Section 7.3(b), together with (i)(x) the net cash amount
received by Promus prior to the Fee Payment Date pursuant to Doubletree's
repurchase of Shares (as defined in the Promus Stock Option Agreement) pursuant
to Section 7 of the Promus Stock Option Agreement, less (y) Promus's purchase
price for such Shares, and (ii)(x) the amounts received by Promus prior to the
Fee Payment Date pursuant to the sale of Shares (or any other securities into
which such Shares are converted or exchanged), less (y) Promus's purchase price
for such Shares, shall not exceed $65 million.
(c) Promus shall pay Doubletree a termination fee of $45 million upon
the earliest to occur of the following events:
(i) the termination of this Agreement by either Doubletree
or Promus pursuant to Section 7.1(d)(i), if a proposal for an Alternative
Transaction (as defined below) involving Promus shall have been publicly
announced prior to the Promus Stockholders' Meeting and either an Alternative
Transaction is entered into, or an Alternative Transaction is consummated,
within eighteen months of such termination;
(ii) the termination of this Agreement by Doubletree
pursuant to
Section 7.1(e); or
(iii) the termination of this Agreement by Promus pursuant
to
Section 7.1 (g).
Promus's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Doubletree against Promus and any of
its Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the event of a
willful breach of this Agreement by Promus. Notwithstanding the foregoing, if
and to
46
<PAGE> 54
the extent that Doubletree has purchased shares of Promus Common Stock
pursuant to the Doubletree Stock Option Agreement prior to the Fee Payment Date,
the amount payable to Doubletree under this Section 7.3(c), together with (i)(x)
the net cash amount received by Doubletree prior to the Fee Payment Date
pursuant to Promus's repurchase of Shares (as defined in the Doubletree Stock
Option Agreement) pursuant to Section 7 of the Doubletree Stock Option
Agreement, less (y) Doubletree's purchase price for such Shares, and (ii)(x) the
amounts received by Doubletree prior to the Fee Payment Date pursuant to the
sale of Shares (or any other securities into which such Shares are converted or
exchanged), less (y) Doubletree's purchase price for such Shares, shall not
exceed $65 million.
(d) The fees payable pursuant to Section 7.3(b) or 7.3(c) shall be
paid concurrently with the first to occur of the events described in Section
7.3(b)(i), (ii) or (iii) or 7.3(c)(i), (ii) or (iii), respectively.
(e) As used in this Agreement, "Alternative Transaction" means either
(i) a transaction pursuant to which any Third Party acquires more than 20% of
the outstanding shares of Doubletree Common Stock or Promus Common Stock, as the
case may be, pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger or other business combination involving Doubletree or Promus pursuant to
which any Third Party (or the stockholders of a Third Party) acquires more than
20% of the outstanding shares of Doubletree Common Stock or Promus Common Stock,
as the case may be, or the entity surviving such merger or business combination,
(iii) any other transaction pursuant to which any Third Party acquires control
of assets (including for this purpose the outstanding equity securities of
Subsidiaries of Doubletree or Promus, and the entity surviving any merger or
business combination including any of them) of Doubletree or Promus having a
fair market value (as determined by the Board of Directors of Doubletree or
Promus, as the case may be, in good faith) equal to more than 20% of the fair
market value of all the assets of Doubletree or Promus, as the case may be, and
their respective Subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
Section 7.4. Amendment This Agreemen ay be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Mergers by the stockholders of Doubletree or Promus, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto; provided, however, that this Agreement may be amended in writing
without obtaining the signatures of Doubletree, Promus or Parent solely for the
purpose of adding Doubletree Sub and Merger Sub as parties to this Agreement.
Section 7.5. Extension; Waiver At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained here. Any
agreement on the part of a party hereto
47
<PAGE> 55
to any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.6, 2.1, 2.2, 2.4, 5.16,
5.19, 5.20 and 5.27 and Article VIII, and the agreements of the Affiliates
delivered pursuant to Section 5.12. The Confidentiality Agreements shall survive
the execution and delivery of this Agreement.
Section 8.2. Notices . All notices nd ther communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Doubletree, to
Doubletree Corporation
410 North 44th Street, Suite 700
Phoenix, AZ 85008
Attn: Richard M. Kelleher
Telecopy: (602) 220-6753
with a copy to
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019-6092
Attn: William J. Phillips, Esq.
Telecopy: (212) 295-6333
(b) if to Promus, to
Promus Hotel Corporation
755 Crossover Lane
Memphis, TN 38117
Attn: Raymond E. Schultz
Telecopy: (901) 374-5636
48
<PAGE> 56
with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
Attn: John M. Newell, Esq.
Telecopy: (213) 891-8763
Section 8.3. Interpretation When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
September 1, 1997.
Section 8.4. Counterparts This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.16 are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided that the Confidentiality Agreements shall remain in full force and
effect until the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Doubletree
nor Promus makes any other representations or warranties, and each hereby
disclaims any other representations and warranties made by itself or any of its
officers, directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement or
the transactions contemplated hereby, notwithstanding the delivery or disclosure
to the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
Section 8.6. Governing Law This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
Section 8.7. Assignment Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
49
<PAGE> 57
Signature Page for Agreement and Plan of Merger
IN WITNESS WHEREOF, Doubletree, Promus and Parent have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
DOUBLETREE CORPORATION
/s/ Richard M. Kelleher
By: Richard M. Kelleher
Its: President and Chief Executive Officer
PROMUS HOTEL CORPORATION
/s/ Raymond E. Schultz
By: Raymond E. Schultz
Its: President and Chief Executive Officer
PARENT HOLDING CORP.
/s/ Raymond E. Schultz
By: Raymond E. Schultz
Its: Chief Executive Officer and
Chairman of the Board
<PAGE> 1
PRIVILEGED AND CONFIDENTIAL
ATTORNEY WORK PRODUCT
FOR DISCUSSION PURPOSES ONLY
- --------------------------------------------------------------------------------
DOUBLETREE CORPORATION
and
HARRIS TRUST COMPANY OF CALIFORNIA
As Rights Agent
------------
Rights Agreement
Dated as of September 1, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Section 1. Certain Definitions...............................................1
Section 2. Appointment of Rights Agent.......................................8
Section 3. Issuance of Rights Certificates...................................8
Section 4. Form of Rights Certificates......................................11
Section 5. Countersignature and Registration................................12
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates..............................................12
Section 7. Exercise of Rights; Exercise Price; Expiration
Date of Rights...................................................14
Section 8. Cancellation and Destruction of Rights Certificates..............17
Section 9. Reservation and Availability of Shares of Preferred Stock........18
Section 10. Preferred Stock Record Date......................................20
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights.................................................21
Section 12. Certification of Adjusted Exercise Price or Number of Shares.....33
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................33
Section 14. Fractional Rights and Fractional Shares..........................39
Section 15. Rights of Action.................................................40
Section 16. Agreement of Right Holders.......................................40
Section 17. Rights Certificate Holder Not Deemed a Stockholder...............41
Section 18. Concerning the Rights Agent......................................42
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.....................................................43
Section 20. Duties of Rights Agent...........................................44
Section 21. Change of Rights Agent...........................................48
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Section 22. Issuance of New Rights Certificates..............................49
Section 23. Redemption.......................................................50
Section 24. Exchange.........................................................51
Section 25. Notice of Proposed Actions.......................................54
Section 26. Notices..........................................................55
Section 27. Supplements and Amendments.......................................56
Section 28. Successors.......................................................57
Section 29. Benefits of this Rights Agreement................................57
Section 30. Determinations and Actions by the Board; etc.....................57
Section 31. Delaware Contract................................................58
Section 32. Counterparts.....................................................58
Section 33. Descriptive Headings.............................................59
Section 34. Severability.....................................................59
</TABLE>
Exhibit A -- Form of Certificate of Designations of Series A
Junior Preferred Stock
Exhibit B -- Summary of Rights
Exhibit C -- Form of Rights Certificate
ii
<PAGE> 4
RIGHTS AGREEMENT
Agreement, dated as of September 1, 1997 by and between
DOUBLETREE CORPORATION, a Delaware corporation (the "Company"), and HARRIS TRUST
COMPANY OF CALIFORNIA (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on September 1, 1997, the Board of Directors of the
Company authorized the issuance, and declared a dividend, of one right (a
"Right") for each share of Common Stock, $.01 par value per share, of the
Company outstanding as of the close of business on September 11, 1997 (the
"Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Series A Junior Preferred Stock of the Company
("Preferred Stock") having the rights and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A authorized by the Board
of Directors on September 1, 1997 upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earlier to occur of the Redemption Date or the Final Expiration Date (as such
terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter
<PAGE> 5
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the shares of any class of
Voting Stock (as such term is hereinafter defined) of the Company then
outstanding; provided that, an Acquiring Person shall not include (i) an Exempt
Person (as such term is hereinafter defined), (ii) GE Investment Management
Incorporated, GE Investment Hotel Partners I, Limited Partnership, the Trustees
of GE Pension Trust or Red Lion, a California limited partnership, (iii) Promus
Hotel Corporation ("Promus") or Parent Holding Corp. ("Parent"), solely by
reason of the execution of the Agreement and Plan of Merger, dated as of
September 1, 1997, between the Corporation, Promus and Parent (the "Merger
Agreement") or the execution and implementation of the Promus Stock Option
Agreement, dated as of September 1, 1997, between the Corporation and Promus or
(iv) any Person, together with all Affiliates and Associates of such Person, who
or which would be an Acquiring Person solely by reason of (x) being the
Beneficial Owner of shares of Voting Stock of the Company, the Beneficial
Ownership of which was acquired by such Person pursuant to any action or
transaction or series of related actions or transactions approved by the Board
of Directors before such Person otherwise became an Acquiring Person or (y) a
reduction in the number of issued and outstanding shares of Voting Stock of the
Company pursuant to a transaction or a series of related transactions approved
by the Board of Directors of the Company (upon approval, in the case of
subclauses (x) and (y), by a majority of the Continuing Directors (as such term
is hereinafter defined)) (provided that, in the case of the person set forth in
clause (iv) does not become an Acquiring Person by reason of clause (x) or (y)
above, such persons set forth in clause (iv) shall nonetheless become an
Acquiring Person upon acquisition of any additional shares of the Company's
Voting Stock unless such acquisition of additional Voting
2
<PAGE> 6
Stock will not result in such person or group becoming an Acquiring Person by
reason of such clause (x) or (y)). Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith (upon approval by a
majority of the Continuing Directors) that a Person who would otherwise be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a) has become such inadvertently, and such Person divests as promptly
as practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person" as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed an
"Acquiring Person" for any purposes of this Rights Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), as in effect on the date of this Rights Agreement.
(c) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have correlative
meanings);
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, "beneficially owns" (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act); or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights, other
rights (other than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own",
3
<PAGE> 7
securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or (B) the right to
vote, alone or in concert with others, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own", any
securities if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given in response to a proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations under the Exchange Act and (2) is not at the time
reportable by such Person on a Schedule 13D report under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Company.
Notwithstanding anything in this paragraph (c) to
the contrary, if a Person, who together with any other
stockholders of the Company holds, in the aggregate, greater
than 50% of the Voting Stock of the Company, approves any
action of the stockholders by written consent in lieu of a
stockholders meeting, such Person shall be deemed to be the
"Beneficial Owner" of all of the Voting Stock that is voted
pursuant to such written consent. Further, notwithstanding
anything in this paragraph (c) to the contrary, a Person
engaged in the business of underwriting securities shall not
be deemed the "Beneficial
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<PAGE> 8
Owner" of, or to "Beneficially Own," any securities acquired
in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
Notwithstanding anything in this paragraph (c) to
the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of
the Company, shall mean the number of such securities then
issued and outstanding together with the number of such
securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Illinois are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., New York or Chicago time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York or Chicago time, on
the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the Common Stock (presently $.01 par value) of the Company. "Common
Stock" when used with reference to any Person other than the Company which shall
be organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses,
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<PAGE> 9
deductions and credits of such Person and which shall be entitled to exercise
the greatest voting power per unit of such Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "Continuing Director" shall mean any member of the Board
of Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors on the date
of this Agreement or (ii) subsequently became a member of the Board of
Directors, and whose nomination for election or election to the Board of
Directors was recommended or approved by a majority of the Continuing Directors
then on the Board of Directors.
(h) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company or (iii) any employee benefit plan or employee stock
plan of the Company or any Subsidiary of the Company, or any trust or other
entity organized, appointed, established or holding Common Stock for or pursuant
to the terms of any such plan.
(k) "Exercise Price" shall have the meaning set forth in
Section 4 and 7(b) hereof.
(l) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with Section 11(d)
hereof.
(m) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
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<PAGE> 10
(n) "Person" shall mean any individual, firm, corporation or
other entity and shall include any successor (by merger of otherwise) of such
entity.
(o) "Preferred Stock" shall mean shares of Series A Junior
Preferred Stock, $.01 par value, of the Company and, to the extent that there is
not a sufficient number of shares of Series A Junior Preferred Stock authorized
to permit the full exercise of the Rights, any other series of Preferred Stock,
$.01 par value, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Preferred Stock.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(q) "Record Date" shall have the meaning set forth in the
recital.
(r) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(t) "Rights Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(u) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(v) "Stock Acquisition Date" shall mean the first date on
which there shall be a public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier date as a majority of the
Continuing Directors shall become aware of the existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person or by any corporation or other entity that is otherwise controlled
by
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<PAGE> 11
such Person.
(x) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(z) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights, shares of Common Stock and Shares of Preferred Stock.
(aa)"Triggering Event" shall mean any event described in
Section 11(a)(ii) or Section 13(a).
(bb)"Voting Stock" shall mean (i) the Common Stock of the
Company and (ii) any other shares of capital stock of the Company entitled to
vote generally in the election of directors or entitled to vote together with
the Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates
(a) On the Record Date (or as soon as practicable thereafter),
the Company or the Rights Agent, at the expense of the Company, shall send a
copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights"), by first class
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<PAGE> 12
mail, postage prepaid, to each record holder of the Common Stock as of the close
of business on the Record Date, at the address of such holder shown on the
records of the Company.
(b) Until the Close of Business on the day (or such later date
as may be determined by action of the Board of Directors, upon approval by a
majority of the Continuing Directors) which is the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth business day after the date
of the commencement by any person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of any class of the then outstanding shares of
Voting Stock of the Company (irrespective of whether any shares are actually
purchased pursuant to any such offer) (the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together with, in the case of certificates for Common Stock
outstanding as of the Record Date, the Summary of Rights) and not by separate
Rights Certificates and the record holders of such certificates for Common Stock
shall be the record holders of the Rights represented thereby and (y) each Right
shall be transferable only simultaneously and together with the transfer of a
share of Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Redemption Date or Final Expiration
Date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right or Rights associated with the
Common Stock evidenced thereby, whether or not accompanied by a copy of the
Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become
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<PAGE> 13
outstanding after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock issued (including, without limitation,
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date, or the
Final Expiration Date (or, in certain circumstances as provided in Section 22
hereof, after the Distribution Date) shall have impressed, printed, written or
stamped thereon or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the
holder hereof to the same number of Rights (subject to
adjustment) as the number of shares of Common Stock
represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Doubletree
Corporation and Harris Trust Company of California (the
"Rights Agent"), dated as of September 1, 1997, as it may be
amended from time to time (the "Rights Agreement"), the terms
of which are incorporated herein by reference and a copy of
which is on file at the principal executive offices of
Doubletree Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights shall be evidenced
by separate certificates and shall no longer be evidenced by
this certificate. Doubletree Corporation shall mail to the
registered holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances as provided in Section
7(e) of the Rights Agreement, Rights issued to or Beneficially
Owned by Acquiring Persons or their Affiliates or Associates
(as such terms are defined in the Rights Agreement) or any
subsequent holder of such Rights shall be null and void and
may not be transferred to any Person.
(d) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent
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<PAGE> 14
(and the Rights Agent will, if requested, send), by first class mail, postage
prepaid, to each record holder of the Common Stock as of the Close of Business
on the Distribution Date, as shown by the records of the Company, at the address
of such holder shown on such records, a certificate in the form provided by
Section 4 hereof (a "Rights Certificate"), evidencing one Right (subject to
adjustment as provided herein) for each share of Common Stock so held. As of and
after the Distribution Date, the rights shall be evidenced solely by Rights
Certificates and may be transferred by the transfer of the Rights Certificate as
permitted hereby, separately and apart from any transfer of one or more shares
of Common Stock.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase shares, certificate and assignment to be printed on the reverse
thereof), when, as and if issued, shall be substantially in the form set forth
in Exhibit C hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Common Stock or the
Rights may from time to time be listed or as the Company may deem appropriate to
conform to usage or otherwise and as are not inconsistent with the provisions of
this Rights Agreement. Subject to the provisions of Section 22 hereof, Rights
Certificates evidencing Rights whenever issued (i) shall be dated as of the date
of issuance of the Rights they represent and (ii) subject to adjustment from
time to time as provided herein, on their face shall entitle the holders thereof
to purchase such number of shares (including fractional shares which are
integral multiples of one-hundredth of a share) of Preferred Stock as shall be
set forth therein at the price payable upon exercise of a Right provided by
Section 7(b) hereof as the same may from time to time be adjusted as provided
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<PAGE> 15
herein (the "Exercise Price").
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by its Chairman of the Board, President, any Vice President or its
Treasurer, either manually or by facsimile signature. Each Rights Certificate
shall be countersigned by the Rights Agent manually and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any Rights Certificate shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery of
the certificate by the Company, such Rights Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, and in such other locations as may be required by law,
books for registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates;
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<PAGE> 16
Mutilated, Destroyed, Lost or Stolen Rights Certificates
(a) Subject to the provisions of Sections 7(e), 7(f), 14 and
24 hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Rights Certificate may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Rights Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Rights Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Rights
Certificate shall surrender the Rights Certificate at the office of the Rights
Agent designated for the surrender of Rights Certificates with the form of
certificate and assignment on the reverse side thereof duly endorsed (or
enclosed with such Rights Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate to be
split up, combined or exchanged at the office of the Rights Agent designated
therefor. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any Transfer Tax that may be imposed in connection with any transfer,
split up, combination or exchange of any Rights Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f), 14 and
24 hereof, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of
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<PAGE> 17
indemnity or security reasonably satisfactory to them and, if requested by the
Company, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, or upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company shall issue and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights.
(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e), 23 and 24 hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
prior to the earliest of (i) the Effective Time of the transactions contemplated
by the Merger Agreement; provided, however, that if the Merger Agreement is
terminated without consummation of the transactions contemplated thereby, then
at or prior to the Close of Business on September 1, 2007 (the "Final Expiration
Date"), (ii) the Close of Business on the date on which the Rights are redeemed
as provided in Section 23 hereof (the "Redemption Date"), (iii) the date on
which such Rights are exchanged as provided in Section 24 hereof or (iv) the
time at which the Rights expire pursuant to Section 13(e) hereof.
(b) The Exercise Price shall initially be $180 for each one
one-hundredth (1/100)
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of a share of Preferred Stock issued pursuant to the exercise of a Right. The
Exercise Price and the number of shares of Preferred Stock or other securities
to be acquired upon exercise of a Right shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof. The Exercise Price shall be
payable in lawful money of the United States of America, in accordance with
paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a
Rights Certificate representing exercisable Rights with the form of election to
purchase and the certificate contained therein duly executed, accompanied by
payment by certified check, cashier's check, bank draft or money order payable
to the Company of the Exercise Price for the shares to be purchased and an
amount equal to any applicable Transfer Tax required to be paid by the holder of
the Rights Certificate in accordance with Section 9(e) hereof, the Rights Agent
shall thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock of the Company one or more certificates representing the number
of shares of Preferred Stock to be so purchased, and the Company hereby
authorizes such transfer agent to comply with all such requests, (ii) as
provided in Section 14(b), at the election of the Company, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if
the election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred
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<PAGE> 19
Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding in such case to that referred to in the
foregoing clauses (i) through (v) of this Section 7(c). Notwithstanding the
foregoing provisions of this Section 7(c), the Company may suspend the
exercisability of the Rights for a period not in excess of ninety (90) days,
during which the Company seeks to register under the Securities Act of 1933, as
amended (the "Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to
the contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e) (upon approval
by a majority of the Continuing Directors) and subsequent transferees of such
Persons referred to in
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clause (y) and (z) above, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect to
such Rights under any provision of this Rights Agreement. The Company shall use
all reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of Rights Certificates
or any other Person as a result of its failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. No Rights Certificate shall be issued pursuant to Section 3 hereof
that represents Rights beneficially owned by an Acquiring Person whose Rights
would be void pursuant to the provisions of this Section 7(e) or any Associate
or Affiliate hereof; no Rights Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the provisions of this Section 7(e) or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Rights Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the provisions of this
Section 7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights
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Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall cancel and retire, any Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of its authorized and issued shares of Preferred Stock
held in its treasury, such number of shares of Preferred Stock as will from time
to time be sufficient to permit the exercise in full of all outstanding Rights
and, after the occurrence of a Triggering Event, shall, to the extent reasonably
practicable, so reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) which may be required to permit the
exercise in full of all outstanding Rights.
(b) If the Preferred Stock (or, following the occurrence of a
Triggering Event, the Common Stock and/or other securities) is at any time
listed on a national securities exchange or included for quotation on any
transaction reporting system, then so long as the Preferred Stock (and,
following the occurrence of any such Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange
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<PAGE> 22
or included for quotation on any such transaction reporting system, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable (but only to the extent that it is reasonably likely that the
Rights will be exercised), all shares reserved for such issuance to be listed on
such exchange or included for quotation on any such transaction reporting system
upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Preferred Stock
delivered upon the exercise of Rights (or, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) shall, at the
time of delivery of the certificates for such shares or other securities
(subject to payment of the Exercise Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable.
(d) The Company shall use its best efforts to (i) file, as
soon as practicable following the occurrence of an event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (b) the date of the expiration of the
Rights. The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order to prepare and file
a registration statement under the Act and permit it to become effective. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with
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the exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification is such jurisdiction shall have
been obtained and until a registration statement under the Act (if required)
shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due
and payable any and all U.S. federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issued or delivered upon the
exercise of Rights. The Company shall not, however, be required to pay any
Transfer Tax which may be payable in respect of any transfer or delivery of a
Rights Certificate to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) upon exercise of Rights in a name
other than that of, the registered holder of the Rights Certificate, and the
Company shall not be required to issue or deliver a Rights Certificate or
certificate for Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) to a Person other than such
registered holder until any such Transfer Tax shall have been paid (any such
Transfer Tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the securities
represented thereby on, and such certificate shall be dated as
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of, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated as of, the next succeeding Business Day on which
the applicable transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of
Shares or Number of Rights. The Exercise Price, the number and kind of shares
which may be purchased upon exercise of a Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Exercise
Price in effect at the time of the
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<PAGE> 25
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to this Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in
the event that any Person (other than an Exempt Person), alone
or together with its Affiliates and Associates, shall become
an Acquiring Person, unless the event causing such Person to
become an Acquiring Person is an acquisition of shares of
Common Stock pursuant to a cash tender offer made pursuant to
Section 14(d) of the Exchange Act for all outstanding shares
of Common Stock (other than shares of Voting Stock
beneficially owned by the Person making the offer or by its
Affiliates or Associates) at a price and on terms determined
by at least a majority of the Continuing Directors to be (a)
at a price which is fair to stockholders (taking into account
all factors which such members of the Board deem relevant,
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<PAGE> 26
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders, then, except as otherwise provided in this
Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to
receive, upon exercise of such Right at a price equal to the
then current Exercise Price multiplied by the number of one
one-hundredths of a share of Preferred Stock for which a Right
is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Exercise
Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable and
dividing that product by (y) 50% of the Fair Market Value of
the Company's Common Stock (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event;
provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing Common Stock in accordance
with Section 11(a)(ii) hereof, the Company may, if the Board
of Directors of the Company, upon approval by a majority of
the Continuing Directors, determines that such action is
necessary or appropriate and not contrary to the interest of
holders of Rights (and, in the event that the number of shares
of Common Stock
23
<PAGE> 27
which are authorized by the Company's Restated Certificate of
Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights, the
Company shall): (A) determine the excess of (1) the value of
the Common Stock issuable upon the exercise of a Right (the
"Current Value") over (2) the Exercise Price (such excess
being referred to as the "Spread") and (B) with respect to
each Right, make adequate provision to substitute for such
Common Stock, upon exercise of the Rights, (1) cash, (2) a
reduction in the Exercise Price, (3) other equity securities
of the Company (including, without limitation, shares or units
of shares of any series of preferred stock which the Board of
Directors of the Company, upon approval by a majority of the
Continuing Directors, has deemed to have the same value as
Common Stock (such shares or units of shares of preferred
stock are herein called "common stock equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company, upon
approval by a majority of the Continuing Directors; provided,
however, if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty
(30) days following the occurrence of an event described in
Section 11(a)(ii), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Exercise Price, Common Stock
(to the extent available), and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors, upon
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<PAGE> 28
approval by a majority of the Continuing Directors, shall
determine in good faith that it is likely that sufficient
additional Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary, but not
more than ninety (90) days after the occurrence of an event
described in Section 11(a)(ii), in order that the Company may
seek stockholder approval for the authorization of such
additional shares. To the extent that the Company determines
that some action need be taken pursuant to the preceding
sentences of this Section 11(a)(iii), the Company may suspend
the exercisability of the Rights until the expiration of any
such period, as extended, in order to seek any authorization
of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to this Section 11(a)(iii)
and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect and shall
promptly notify the Rights Agent of such suspension. For
purposes of this Section 11(a)(iii), the value of the Common
Stock shall be the Fair Market Value (as determined pursuant
to Section 11(d) hereof) per share of the Common Stock at the
Close of Business on the date of the occurrence of an event
described in Section 11(a)(ii) and the value of any "common
stock equivalent" shall be deemed to have the same value as
the Common Stock on such date.
(b) In the event that the Company shall, after the Record
Date, fix a record date for the issuance of rights, options or warrants to all
holders of Preferred Stock entitling them (for
25
<PAGE> 29
a period expiring within 45 calendar days after such record date) to subscribe
for or purchase Preferred Stock (or shares having the same rights, privileges
and preferences as the Preferred Stock ("equivalent preferred stock")) or
securities convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the Fair Market Value per share of the
Preferred Stock (as defined in Section 11(d)) on such record date, the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or the equivalent preferred stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.
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<PAGE> 30
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) or evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Fair Market Value per share of the Preferred Stock on such record date, less the
Fair Market Value of the portion of the assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to one
share of Preferred Stock and the denominator of which shall be the Fair Market
Value per share of the Preferred Stock; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Exercise Price shall again be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.
(d) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock or any
Rights or other security or any other property on any date shall be determined
as provided in this Section 11(d). In the case of a publicly-traded stock or
other security, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such stock or per unit of such
other security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately
27
<PAGE> 31
prior to such date; provided, however, that in the event that the Fair Market
Value per share of any security is determined during a period which includes any
date that is within 30 Trading Days after (i) the ex-dividend date for a
dividend or distribution on such security payable in shares of such security or
securities convertible into shares of such security, or (ii) the effective date
of any subdivision, split, combination, consolidation, reverse stock split or
reclassification of such security, then, and in each such case, the Fair Market
Value shall be appropriately adjusted by the Board of Directors of the Company
to take into account ex-dividend or post-effective date trading. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way (in either case, as reported in the applicable transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange), or, if the securities are not listed or admitted to trading on
the New York Stock Exchange, as reported in the applicable transaction reporting
system with respect to securities listed on the principal national securities
exchange on which such security is listed or admitted to trading; or, if not
listed or admitted to trading on any national securities exchange, the last
quoted price (or, if not so quoted, the average of the high bid and low asked
prices) in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use; or, if no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the Board
of Directors of the Company (upon approval by a majority of the Continuing
Directors). The term "Trading Day" shall mean a day on which the principal
national securities exchange on which such security is listed or admitted to
trading is open for the transaction of business or, if such security is not
28
<PAGE> 32
listed or admitted to trading on any national securities exchange, a Business
Day. If a security is not publicly held or not so listed or traded, "Fair Market
Value" shall mean the fair value per share of stock or per other unit of such
other security, as determined in good faith by the Board of Directors of the
Company (upon approval by a majority of the Continuing Directors); provided,
however, that, if the Preferred Stock is not publicly traded, the Fair Market
Value of a share of Preferred Stock shall be conclusively deemed to be the Fair
Market Value of a share of Common Stock (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. In the case of property other than
securities, the "Fair Market Value" thereof shall be determined in good faith by
the Board of Directors of the Company (upon approval by a majority of the
Continuing Directors). Any such determination of Fair Market Value shall be
described in a statement filed with the Rights Agent and shall be binding upon
the Rights Agent and the holders of the Rights.
(e) All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-hundredth of a share, as the case may
be. No adjustment in the Exercise Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Notwithstanding the preceding sentence, any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates the adjustment or (ii) the
date of the expiration of the right to exercise the Rights.
(f) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of
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<PAGE> 33
shares to be issued upon exercise of the Rights as in the initial Rights
Certificates issued hereunder but, nevertheless, shall represent the Rights as
so adjusted.
(g) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred Stock,
the Company shall use its best efforts to take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Preferred
Stock at such adjusted purchase price per share.
(h) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (f), (g), (i), (j) and (k), and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Stock shall apply on like terms to any
such other shares.
(i) Unless the Company shall have exercised its election as
provided in Section 11(j), upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
one one-hundredth of a share of Preferred Stock (calculated to the nearest one
one-millionth of a share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to such
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<PAGE> 34
adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(j) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Exercise Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(j), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the
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<PAGE> 35
Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.
(k) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(l) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) into
a greater or lesser number of shares of Common Stock, then in any such case (A)
the number of one one-hundredths of a share of Preferred Stock purchasable after
such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a share of Preferred Stock so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of shares of
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<PAGE> 36
Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event, and (B) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
share of Common Stock outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(l) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certification of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11 or Section 13 of this Rights Agreement shall be effective
as of the date of the event giving rise to such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be obligated or responsible for
calculating any adjustment nor shall it be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power
(a) Except for any transaction approved by the Board of
Directors (upon approval by a majority of the Continuing Directors), in the
event that, at any time on or after the Stock Acquisition Date, (x) the Company
shall, directly or indirectly, consolidate with, or merge with
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<PAGE> 37
and into, any other Person or Persons and the Company shall not be the surviving
or continuing corporation of such consolidation or merger, or (y) any Person or
Persons shall, directly or indirectly, consolidate with, or merge with and into,
the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or of the
Company or cash or any other property, or (z) the Company or one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer to any
other Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Company or one or more of its Subsidiaries shall sell or
otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event (except as may be contemplated by Section 13(e)
hereof), proper provision shall be made so that (i) each holder of record of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof and payment of the Exercise Price in
accordance with the terms of this Rights Agreement, such number of shares of
validly issued, fully paid, non-assessable and freely tradeable Common Stock of
the Principal Party (as defined herein), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall, based on the Fair
Market Value of the Common Stock of the Principal Party on the date of the
consummation of such consolidation, merger, sale or transfer, equal twice the
Exercise Price; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement; (iii)
the term "Company" for all purposes of this Rights Agreement shall
34
<PAGE> 38
thereafter be deemed to refer to such Principal Party; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with the
provisions of Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the occurrence of
any event described in clause (x), (y) or (z) above of this Section 13(a). The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which shares of Common Stock of the Company are changed or
otherwise exchanged or converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (x) the Person that
is the other party to the merger or consolidation and that survives such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest market value or (y) if the Person that is
the other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Company if its survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to
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<PAGE> 39
such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or
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<PAGE> 40
transfer of assets or earning power referred to in Section 13(a) hereof, the
Principal Party will:
(i) prepare and file a registration statement under the act
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state securities
laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in Section
13(a) hereof shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share
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(determined pursuant to Section 11(b) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such then
Fair Market Value (other than to holders of Rights pursuant to this Section 13)
or (ii) providing for any special tax or similar payment in connection with the
issuance to any holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the Company
shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect on the benefits intended to be afforded by the Rights in
connection with, or as a consequence of, the consummation of the proposed
transaction.
(e) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons (or a wholly-owned subsidiary of any such
Person or Persons) who acquired shares of Common Stock pursuant to a cash tender
offer for all outstanding shares of Common Stock which complies with the
provisions of Section 11(a)(ii) hereof relating to fair price determination by a
majority of the Continuing Directors, (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of Common Stock
paid to all holders of Common Stock whose shares were purchased pursuant to such
cash tender offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such cash tender offer. Upon
consummation of any such transaction contemplated by this Section 13(e), all
Rights hereunder shall expire.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-hundredth of a share of Preferred
Stock). If the Company shall determine not to issue such fractional Rights,
then, in lieu of such fractional Rights, there shall be paid to the holders of
record of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-hundredth of a share). In lieu of issuing fractions of
shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have
all of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one-hundredth of a share, if the Company does not issue
such fractional shares or depositary receipts in lieu thereof, there shall be
paid to the holders of record of Rights Certificates at the time such Rights
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share) upon exercise of a Right.
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Section 15. Rights of Action. All rights of action in respect
of this Rights Agreement, except the rights of action given to the Rights Agent
in Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the holders of record
of the Common Stock); and any holder of record of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Rights Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Rights Agreement and will
be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any Person
subject to this Rights Agreement.
Section 16. Agreement of Right Holders. Each holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Common Stock registered in the name of the
holders of Common Stock (together, as applicable, with the Summary of Rights),
which certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Rights Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares of
Common Stock;
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(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Preferred
Stock or any other securities which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or
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upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The indemnification provided for hereunder shall
survive the expiration of the Rights and termination of this Agreement. The
costs and expenses of enforcing this right of indemnification shall also be paid
by the Company.
(b) The Rights Agent may conclusively rely upon and shall be
protected against, and shall incur no liability for or in respect of, any action
taken, suffered or omitted by it in connection with its administration of this
Rights Agreement in reliance upon any Rights Certificate or certificate for
Preferred Stock or for other securities of the Company, instrument of
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assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights
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Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, and no implied duties or obligations shall be
read into this Agreement against the Rights Agent, by all of which the Company
and the holders of Rights Certificates by their acceptance thereof shall be
bound:
(a) Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter, including without
limitation, the identity of any Acquiring Person (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent. Any such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
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(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Rights Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent and
accordingly shall not be under any responsibility in respect of the validity of
this Rights Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Rights Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11 or 13
hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt of a certificate describing any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock to be
issued pursuant to this Rights Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying
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out or performing by the Rights Agent of the provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President or any Vice President or the Secretary
or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
these instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with the proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or specifying the
action to be taken or omitted.
Notwithstanding anything in this Agreement to the contrary, in
no event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
(h) The Rights Agent and any shareholder, director, officer or
employee of the
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Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate following the form of
election to purchase set forth on the reverse side of such Rights Certificate
has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take further action with respect to
the requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or
be deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events
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defined in this Agreement or the designation of any Person as an Acquiring
Person, Affiliate or Associate) under this Agreement unless and until the Rights
Agent shall be specifically notified in writing by the Company of such fact,
event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail and, at the expense of the Company, to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail and at the expense of the Company, to the holders of the rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions of this
Section 21, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing business under the
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laws of the United States or of any state thereof, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination in the conduct of its corporate
trust or stock transfer business by federal or state authorities and which has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an Affiliate controlled by a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed, but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have assumed the duties
of the Rights Agent hereunder.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors or
Executive Committee thereof to reflect any adjustment or change in the
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Exercise Price per share and the number or kind or class of shares of stock or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors (upon approval by a majority of the
Continuing Directors) redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date; provided, however, that, during
the time period relating to when the Rights may be redeemed, the Board of
Directors of the Company (upon approval of a majority of the Continuing
Directors) may extend the time during which the Rights may be redeemed to be at
any time as may be determined by the Board of Directors of the Company and the
Continuing Directors or (ii) the Final Expiration Date, at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction after the date hereof (the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of the event described in
Section 11(a)(ii) until such time as the Company's right of redemption hereunder
has expired.
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate at the effective time of the action
of the Board of Directors and the Continuing Directors ordering the redemption
of the Rights and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 days after the effective time of the
action of the Board of Directors and the Continuing Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the
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then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made. At the option of the
Board of Directors, the Redemption Price may be paid in cash to each Rights
holder or by the issuance of shares (and, at the Company's election pursuant to
Section 14(b) hereof, cash or depositary receipts in lieu of fractions of shares
other than fractions which are integral multiples of one one-hundredth (1/100)
of a share) of Preferred Stock having a Fair Market Value equal to such cash
payment.
Section 24. Exchange.
(a) By the vote of a majority of the Board of Directors (upon
approval by a majority of the Continuing Directors), the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights which have become void pursuant to Section 7(e) hereof) for shares of
Common Stock at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of any class of voting stock of the Company then
outstanding.
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(b) Without any further action and without any notice, the
right to exercise the Rights to be so exchanged will terminate at the effective
time of the action of the Board of Directors and the Continuing Directors
ordering the exchange and the only right thereafter of each holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give notice of the exchange to the holders of such Rights
then outstanding by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such exchange. Each such notice shall state the method by which the
exchange for rights will be effected and, in the event of a partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Preferred Stock for shares of Common
Stock exchangeable for the Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or
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Preferred Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall either take such action as may be necessary to authorize
additional Common Stock or Preferred Stock for issuance upon exchange of the
Rights or, alternatively, by the vote of a majority of the Board of Directors
(upon approval by a majority of the Continuing Directors) with respect to each
Right, (i) pay cash in an amount equal to the Exercise Price, in lieu of issuing
Common Stock or Preferred Stock in exchange therefor, or (ii) issue debt or
equity securities, or a combination thereof, having a value equal to the Current
Value (as hereinafter defined) of the Common Stock or Preferred Stock
exchangeable for each such Right, where the value of such securities shall be
determined in good faith by the Board of Directors (upon approval by a majority
of the Continuing Directors), or (iii) deliver any combination of cash,
property, Common Stock, Preferred Stock and/or other securities having a value
equal to the Current Value in exchange for each Right. The term "Current Value,"
for purposes of this Section 24, shall mean the product of the per share market
price of the Common Stock (determined pursuant to Section 11(d) on the date of
the occurrence of the event described above in subparagraph (a)), multiplied by
the number of shares of Common Stock for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the
Company determines that some action need be taken pursuant to clauses (i), (ii)
or (iii) of this Section 24(d), the Board of Directors (upon approval by a
majority of the Continuing Directors) may temporarily suspend the exercisability
of the Rights for a period of up to sixty (60) days following the date on which
the event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Stock or Preferred Stock and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In
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the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to each registered holder of a Rights Certificate with regard
to which a fractional share of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the fair market value of a whole
share of Common Stock. For the purposes of this paragraph (e), the fair market
value of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), (iv) to effect any consolidation or merger with or
into, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the
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Company, then, in each such case, the Company shall give to each holder of
record of a Rights Certificate, in accordance with Section 26, notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale or transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of record of Common Stock or Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case an event described in Section 11(a)(ii) hereof
shall occur, then the Company shall, as soon as practicable thereafter, give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of
record of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by registered or certified mail and shall be deemed given
upon receipt and addressed (until another address is filed in writing with the
Rights Agent) as follows:
55
<PAGE> 59
Doubletree Corporation
410 North 44th Street, Suite 700
Phoenix, Arizona 85008
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Rights Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by registered or certified mail and shall be
deemed given upon receipt and addressed (until another address is filed in
writing with the Company) as follows:
Harris Trust Company of California
601 S. Figueroa , Suite 4900
Los Angeles, California 90017
Attention: Stock Transfer Administration
Notices or demand authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Rights Certificate or
Right shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. For as long as the
Rights are then redeemable and except as provided in the last sentence of this
Section 27, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time when
the Rights are not then redeemable and except as provided in the last sentence
of this Section 27, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Rights Agreement without the approval of
any holders of Rights Certificates (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem
56
<PAGE> 60
necessary or desirable, provided that no such supplement or amendment pursuant
to this clause (iii) shall materially adversely affect the interest of the
holders of Rights Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Rights Agreement to the contrary, supplements or amendments may be made
only upon approval by a majority of the Continuing Directors. Further,
notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this
Agreement shall be effective without the written consent of the Rights Agent.
Section 28. Successors. All of the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of
record of the Rights Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Determinations and Actions by the Board; etc. The
Board of Directors (upon approval by a majority of the Continuing Directors)
shall have the exclusive power and
57
<PAGE> 61
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith (and with the approval of a majority of the
Continuing Directors then in office) in accordance with the preceding sentence,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and (y) not subject any director to
any liability to the holders of the Rights. Notwithstanding anything contained
in this Agreement to the contrary, whenever any action, calculation,
interpretation or determination made pursuant to this Agreement requires the
approval of a majority of the Continuing Directors, and no Continuing Directors
are then in office, such action, calculation, interpretation or determination
may not be made.
Section 31. Delaware Contract. This Rights Agreement and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state, except as to
Sections 18, 20 and 21 which shall be governed by and construed in accordance
with the laws of the State of Illinois.
Section 32. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original,
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<PAGE> 62
and all such counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
DOUBLETREE CORPORATION
By: /s/ DAVID STIVERS
--------------------------------
HARRIS TRUST COMPANY OF
CALIFORNIA
By: /s/ NEIL ROSSO
--------------------------------
Name:
Title:
60
<PAGE> 64
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PREFERRED STOCK
of
DOUBLETREE CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------------------------------------
DOUBLETREE CORPORATION., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), DOES HEREBY CERTIFY that pursuant to the authority vested in
the Board of Directors by the Restated Certificate of Incorporation of the
Corporation and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors on September 1,
1997 adopted a resolution providing for the authorization of a series of
Preferred Stock, as follows:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Restated
Certificate of Incorporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Section 1.EE Designation and Amount. The shares of such series
shall be designated as "Series A Junior Preferred Stock" (the "Series A Junior
Preferred Stock") and the number of shares constituting the Series A Junior
Preferred Stock shall be Nine Hundred Thousand (900,000). Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series A
<PAGE> 65
Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Junior Preferred Stock.
Section 2.EE Dividends and Distributions. Subject to the rights
of the holders of any shares of any series of Preferred Stock (or any similar
stock) ranking prior and superior to the Series A Junior Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Preferred Stock,
in preference to the holders of Common Stock, par value $.01 per share (the
"Common Stock"), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Junior Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Junior Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(A) The Corporation shall declare a dividend or distribution on
the Series A Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to
2
<PAGE> 66
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Junior Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3.EE Voting Rights. The holders of shares of Series A
Junior Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Junior Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Junior Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Junior Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
3
<PAGE> 67
Section 4.EE Certain Restrictions. Whenever quarterly dividends
or other dividends or distributions payable on the Series A Junior Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Preferred Stock, except dividends paid ratably on the
Series A Junior Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (as
to dividends and upon dissolution, liquidation and winding up) to the
Series A Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(A) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Company unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
4
<PAGE> 68
Section 5.EE Reacquired Shares. Any shares of Series A Junior
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6.EE Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Junior Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Preferred Stock, except distributions made ratably on the Series
A Junior Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Junior Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7.EE Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of
5
<PAGE> 69
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8.EE No Redemption. The shares of Series A Junior
Preferred Stock shall not be redeemable.
Section 9.EE Rank. The Series A Junior Preferred Stock shall
rank, with respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred Stock.
Section 10.EE Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the outstanding shares
of Series A Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Corporation by its Chairman of the Board and Chief Executive
Officer and attested by its Secretary this 1st day of September, 1997.
DOUBLETREE CORPORATION
By: _______________________________
Name:
Title:
Attest:
By:_______________________
Name:
Title:
6
<PAGE> 70
EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS
REFERRED TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY
ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID
AND MAY NOT BE TRANSFERRED TO ANY PERSON.
DOUBLETREE CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On September 1, 1997, the Board of Directors of Doubletree
Corporation. (the "Company") declared a dividend distribution of one preferred
stock purchase right (a "Right") for each outstanding share of Common Stock, par
value $.01 per share (the "Common Stock"), of the Company. The distribution is
payable as of September 11, 1997 to stockholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth (1/100) of a share of preferred stock of the Company, designated
as Series A Junior Preferred Stock (the "Preferred Stock") at a price of $180
per one one-hundredth (1/100) of a share ("Exercise Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of September 1, 1997 (the "Rights Agreement"), between the
Company and Harris Trust Company of California, as Rights Agent (the "Rights
Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights become exercisable upon the close of business on the
day (the "Distribution Date") which is the earlier of (i) the tenth day
following a public announcement that a person or group of affiliated or
associated persons, with certain exceptions set forth below, has acquired
beneficial ownership of 15% or more of any class of the outstanding voting stock
of the Company (an "Acquiring Person") and (ii) the tenth business day after the
date of the commencement or announcement of a person's or group's intention to
commence a tender or exchange offer the consummation of which would result in
the ownership of 15% or more of any class of the Company's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer), or such
later date as may be determined by a majority of the Board of Directors and the
Continuing Directors (as defined in the Rights Agreement); prior thereto, the
Rights will not be exercisable, will not be represented by a separate
certificate, and will not be transferable apart from the Company's Common Stock,
but will instead be evidenced, with respect to any of the Common Stock
certificates outstanding as of September 11, 1997, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto. An Acquiring
Person
<PAGE> 71
does not include (A) the Company, (B) any subsidiary of the Company, (C) any
employee benefit plan or employee stock plan of the Company or of any subsidiary
of the Company, or any trust or other entity organized, appointed, established
or holding Common Stock for or pursuant to the terms of any such plan, (D) GE
Investment Management Incorporated, GE Investment Hotel Partners I, Limited
Partnership, the Trustees of GE Pension Trust or Red Lion, a California limited
partnership, (E) Promus Hotel Corporation ("Promus") or Parent Holding Corp.
("Parent") solely by reason of the execution of the Agreement and Plan of
Merger, dated as of September 1, 1997, between the Corporation, Promus and
Parent (the "Merger Agreement") or the execution and implementation of the
Promus Stock Option Agreement dated as of September 1, 1997 between the Company
and Promus or (F) any person or group whose ownership of 15% or more of the
shares of any class of voting stock of the Company then outstanding results
solely from (i) any action or transaction or transactions approved by a majority
of the Board of Directors and the Continuing Directors before such person or
group became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of voting stock of the Company pursuant to a transaction or
transactions approved by a majority of the Board of Directors and the Continuing
Directors (provided that, in the case of the person set forth in clause (F) does
not become an Acquiring Person by reason of clause (i) or (ii) above, such
persons set forth in clause (F) shall nonetheless become an Acquiring Person
upon acquisition of any additional shares of the Company's voting stock unless
such acquisition of additional voting stock will not result in such person or
group becoming an Acquiring Person by reason of such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration
of the Rights), new Common Stock certificates issued after September 11, 1997
will contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as of
September 11, 1997 with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate certificates alone
will evidence the Rights from and after the Distribution Date.
The Rights are not exercisable until the Distribution Date. The
Rights will expire immediately prior to the Effective Time of the transactions
contemplated by the Merger Agreement; provided, however, that if the Merger
Agreement is terminated without consummation of the transactions contemplated
thereby, then at or prior to the Close of Business on September 2, 2007, unless
earlier redeemed or exchanged by the Company, in each case as described below.
The Preferred Stock is nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. Each
share of Preferred Stock will be entitled to a minimum quarterly dividend
payment of $1.00 per share but will be entitled to an aggregate dividend of 100
times the dividend declared on the Company's Common Stock. In the event of the
liquidation of the Company, the holders of Preferred Stock will be entitled to
receive a payment of the greater of (i) $100 per share or (ii) 100 times the
payment made per share of
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<PAGE> 72
Common Stock. Each share of Preferred Stock will have 100 votes, voting together
with the Common Stock. In the event of any merger, consolidation or other
transaction in which Common Stock is exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount received per share of Common
Stock. The rights of Preferred Stock as to dividends, liquidation and voting are
protected by anti-dilution provisions.
The Exercise Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Unless the transaction is approved by a majority of the Board of
Directors and the Continuing Directors, in the event that, after the time the
Rights become exercisable, the Company were to be acquired in a merger or other
business combination (in which any shares of Common Stock are changed into or
exchanged for other securities or assets) (other than a merger that follows a
cash tender offer for all outstanding shares of the Company, at a price
determined by a majority of the Continuing Directors to be fair and otherwise in
the best interests of the Company and its stockholders) or more than 50% of the
assets or earning power of the Company and its subsidiaries (taken as a whole)
were to be sold or transferred in one or a series of related transactions, the
Rights Agreement provides that proper provision will be made so that each holder
of record of a Right, other than the Acquiring Person (whose Rights will
thereupon become null and void), will from and after such date, have the right
to receive, upon payment of the Exercise Price, that number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price. In addition, in the event
that a person or group of affiliated or associated persons becomes an Acquiring
Person (unless such acquisition is made pursuant to a cash tender offer
determined to be fair to the stockholders of the Company, as described in the
preceding sentence), the Rights Agreement provides that proper provision will be
made so that each holder of record of a Right, other than the Acquiring Person
(whose Rights will thereupon become null and void), will thereafter have the
right to receive, upon payment of the Exercise Price, that number of shares of
the Common Stock (or cash, other securities or property) having a market value
at the time of the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value of the
Company's Common Stock as provided in the Rights Agreement).
3
<PAGE> 73
Fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company may
also issue cash in lieu of fractional shares which are not integral multiples of
one one-hundredth of a share.
At any time on or prior to the close of business on the earlier
of (i) the tenth day after the time that a person (or group of affiliated or
associated persons) has become an Acquiring Person (or such later date as a
majority of the Board of Directors and the Continuing Directors may determine)
or (ii) September 1, 2007, the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the "Redemption Price"), with the
approval of the Continuing Directors. Immediately upon the effective time of the
action of the Board of Directors of the Company authorizing redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may
amend the Rights in any manner, including an amendment to extend the time period
in which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement require the approval of the Continuing
Directors.
At any time after a person (or group of affiliated or associated
persons) becomes an Acquiring Person and prior to the acquisition by any such
person or group of 50% or more of any class of outstanding voting stock of the
Company, the Board of Directors of the Company (with the approval of the
Continuing Directors) may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock (or a fraction of a share of Preferred Stock
or other consideration having equivalent market value) per Right (subject to
adjustment).
Until a Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated September ___, 1997. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement which is incorporated herein by reference.
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<PAGE> 74
EXHIBIT C
[Form of Rights Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AT OR AFTER THE EFFECTIVE DATE OF THE TRANSACTIONS
CONTEMPLATED BY THE AGREEMENT AND PLAN OF MERGER, DATED AS OF SEPTEMBER
1, 1997, AMONG PARENT HOLDING CORP., THE COMPANY AND PROMUS HOTEL
CORPORATION; PROVIDED, HOWEVER, THAT IF SUCH AGREEMENT IS TERMINATED
WITHOUT CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, THEN NOT
EXERCISABLE AFTER THE CLOSE OF BUSINESS ON SEPTEMBER 1, 2007 OR EARLIER
IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT THE OPTION OF THE COMPANY AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES AS
PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED
TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.
Rights Certificate
DOUBLETREE CORPORATION
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of September 1, 1997 (the "Rights Agreement") between Doubletree
Corporation, a Delaware corporation (the "Company"), and Harris Trust Company of
California (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to the Effective Date of the Agreement and Plan of Merger, dated as of
September 1, 1997, between Parent Holding Corp., the Company and Promus Hotel
Corporation (the "Merger Agreement") or if the Merger Agreement is terminated
without consummation of the transactions contemplated thereby then prior to 5:00
P.M. (New York time) on September 1, 2007 at the office of the Rights Agent
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, one one-hundredth (1/100) of a fully paid nonassessable share of Series A
Junior Preferred Stock (the "Preferred Stock") of the Company at a purchase
price of $180, as the same may from time to time be adjusted in accordance with
the Rights Agreement (the "Exercise Price"), upon
<PAGE> 75
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the
number of shares of Preferred Stock which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Rights
Certificate, as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of record of Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated in the
Rights Agreement for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder of record to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof, another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right, subject to adjustment or (ii) may be exchanged in whole
or in part for shares of the Company's Common Stock, par value $.01 per share,
shares of Preferred Stock or substantially equivalent rights or other
consideration as determined by the Company.
No fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth (1/100) of a share) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
and in lieu thereof the Company may cause depositary receipts to be issued
and/or a cash payment may be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or
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<PAGE> 76
subscription rights, or otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company. Dated as of ____________.
DOUBLETREE CORPORATION
By:_________________________
Name:
Title:
Countersigned:
HARRIS TRUST COMPANY OF
CALIFORNIA
By: __________________________
Name:
Title:
3
<PAGE> 77
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificates.)
FOR VALUE RECEIVED______________________________________________
hereby sells, assigns and transfers unto_______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
Rights evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint____________
_________________________________________ Attorney to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _____________
__________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
Signature Guaranteed:
4
<PAGE> 78
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Associate or an Affiliate thereof (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: ____________________ ________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
5
<PAGE> 79
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Rights Certificate.)
TO DOUBLETREE CORPORATION:
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock (or other securities) issuable upon the exercise of
such Rights and requests that certificates for such share(s) be issued in the
following name:
Please insert social security
or other identifying number:___________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:___________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ________________
___________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
Signature Guaranteed:
6
<PAGE> 80
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being exercised by
or on behalf of a Person who is or was an Acquiring Person or an Associate or an
Affiliate thereof (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: ____________________ ______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Rights Certificate)
7
<PAGE> 1
EXHIBIT 10.1
STOCK OPTION AGREEMENT (DOUBLETREE)
STOCK OPTION AGREEMENT, dated as of September 1, 1997 (the "Agreement"),
between DOUBLETREE CORPORATION., a Delaware corporation (the "Grantee"), and
PROMUS HOTEL CORPORATION, a Delaware corporation (the "Grantor").
WHEREAS, the Grantee, Parent Holding Corp., a Delaware corporation
("Parent"), and the Grantor are entering into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), which provides, among
other things, for the merger (the "Doubletree Merger") of a subsidiary of Parent
with and into the Grantee and the merger (the "Promus Merger") of another
subsidiary of Parent with and into the Grantor, such that the Grantee and the
Grantor will become wholly-owned subsidiaries of Parent and the stockholders of
the Grantee and the Grantor will become stockholders of Parent (the Doubletree
Merger and the Promus Merger collectively, the "Mergers");
WHEREAS, pursuant to a Stock Option Agreement dated as of the date
hereof between the Grantee and the Grantor, the Grantee has granted the Grantor
an option to acquire shares of common stock of the Grantee on terms that are
substantially similar to the terms of this Agreement (the "Promus Option");
WHEREAS, as a condition and inducement to their willingness to enter
into the Merger Agreement and the Promus Option, the Grantee and Parent have
requested that the Grantor grant to the Grantee an option to purchase 9,929,485
shares of Common Stock, par value $0.10 per share, of the Grantor (the "Common
Stock"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee to enter into the Merger
Agreement and grant the Promus Option, the Grantor is willing to grant the
Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments; Payment of Spread.
(a) Contemporaneously herewith the Grantee, Parent and the
Grantor are entering into the Merger Agreement. Subject to the other terms and
conditions set forth herein, the Grantor hereby grants to the Grantee an
irrevocable option (the "Option") to purchase up to 9,929,485 (as adjusted as
provided herein) shares of Common Stock (together with the associated purchase
rights issued with respect thereto pursuant to the Rights Agreement dated as of
June 30, 1995 between the Grantor and Continental Stock Transfer & Trust Company
(the "Grantor Rights Plan")) (the "Shares") at a per share cash purchase price
equal to the lower of (i) $38.8125 per Share or (ii) the average closing sales
price of the Common Stock on the New York Stock Exchange Composite Tape (the
"NYSE Composite Tape") for the five consecutive trading days beginning on and
including the day that the Mergers are publicly announced (as adjusted as
provided herein) (such lower price being the "Purchase Price"). The Option may
be exercised by the Grantee, in whole or in part, at any time, or from time to
time, following the occurrence of
<PAGE> 2
one of the events set forth in Section 2(c) hereof and prior to the termination
of the Option in accordance with the terms of this Agreement.
(b) In the event the Grantee wishes to exercise the Option,
the Grantee shall send a written notice to the Grantor (the "Stock Exercise
Notice") specifying a date (subject to the HSR Act (as defined below)) not later
than 10 business days and not earlier than the next business day following the
date such notice is given for the closing of such purchase. In the event of any
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, stock split, split-up, reclassification,
recapitalization, merger or other change in the corporate or capital structure
of the Grantor (including the occurrence of a Distribution Date under the
Grantor Rights Plan), the number of Shares subject to this Option and the
purchase price per Share shall be appropriately adjusted to restore the Grantee
to its rights hereunder, including its right to purchase Shares representing
19.9% of the capital stock of the Grantor entitled to vote generally for the
election of the directors of the Grantor which is issued and outstanding
immediately prior to the exercise of the Option at an aggregate purchase price
equal to the Purchase Price multiplied by 9,929,485. In the event that any
additional shares of Common Stock are issued after the date of this Agreement
(other than pursuant to an event described in the preceding sentence), the
number of Shares subject to this Option shall be increased by 19.9% of the
number of the additional shares of Common Stock so issued (and such additional
Shares shall have a purchase price per share equal to the Purchase Price).
(c) If at any time the Option is then exercisable pursuant to
the terms of Section 1(a) hereof, the Grantee may elect, in lieu of exercising
the Option to purchase Shares provided in Section 1(a) hereof, to send a written
notice to the Grantor (the "Cash Exercise Notice") specifying a date not later
than 20 business days and not earlier than 10 business days following the date
such notice is given on which date the Grantor shall pay to the Grantee an
amount in cash equal to the Spread (as hereinafter defined) multiplied by all or
such portion of the Shares subject to the Option as Grantee shall specify. As
used herein "Spread" shall mean the excess, if any, over the Purchase Price of
the higher of (x) if applicable, the highest price per share of Common Stock
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by any person in an Alternative Transaction (as defined in clause
(i), (ii) or (iii) of Section 7.3(e) of the Merger Agreement) (the "Alternative
Purchase Price") or (y) the closing sales price of the shares of Common Stock on
the NYSE Composite Tape on the last trading day immediately prior to the date of
the Cash Exercise Notice (the "Closing Price"). If the Alternative Purchase
Price includes any property other than cash, the Alternative Purchase Price
shall be the sum of (i) the fixed cash amount, if any, included in the
Alternative Purchase Price plus (ii) the fair market value of such other
property. If such other property consists of securities with an existing public
trading market, the average of the closing sales prices (or the average of the
closing bid and asked prices if closing sales prices are unavailable) for such
securities in their principal public trading market on the five trading days
ending five days prior to the date of the Cash Exercise Notice shall be deemed
to equal the fair market value of such property. If such other property consists
of something other than cash or securities with an existing public trading
market and, as of the payment date for the Spread, agreement on the value of
such other property has not been reached, the Alternative Purchase Price shall
be deemed to equal the Closing Price. Upon exercise of the Grantee's right to
receive cash pursuant to this Section 1(c) and the payment of such cash to the
Grantee, the obligations of the Grantor to deliver Shares pursuant to Section 3
2
<PAGE> 3
shall be terminated with respect to such number of Shares for which the Grantee
shall have elected to be paid the Spread.
2. Conditions to Delivery of Shares. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated and all other consents, approvals, orders, notifications or
authorizations, the failure of which to obtain or make would have the effect of
making the issuance of the Shares illegal (collectively, the "Regulatory
Approvals") shall have been obtained or made; and
(c) (i) a proposal for an Alternative Transaction (as defined in
the Merger Agreement) involving the Grantor shall have been publicly announced
prior to the time the Merger Agreement is terminated pursuant to the terms
thereof (the "Merger Termination Date") and one or more of the following events
shall have occurred on or after the time of the making of such proposal: (A) the
requisite vote of the stockholders of the Grantor in favor of adoption and
approval of the Merger Agreement shall not have been obtained at the Promus
Stockholders' Meeting (as defined in the Merger Agreement) or any adjournment or
postponement thereof; (B) the Board of Directors of the Grantor shall have
withdrawn or modified its recommendation of the Merger Agreement or the Promus
Merger or failed to confirm its recommendation of the Merger Agreement or the
Promus Merger to the stockholders of the Grantor within ten business days after
a written request by the Grantee to do so; (C) the Board of Directors of the
Grantor shall have recommended to the stockholders of the Grantor an Alternative
Transaction (as defined in the Merger Agreement); (D) a tender offer or exchange
offer for 20% or more of the outstanding shares of Grantor Common Stock shall
have been commenced (other than by the Grantee or an affiliate of the Grantee)
and the Board of Directors of the Grantor shall have recommended that the
stockholders of the Grantor tender their shares in such tender or exchange
offer; or (E) for any reason Grantor shall have failed to call and hold the
Promus Stockholders' Meeting (as defined in the Merger Agreement) by the Outside
Date (as defined in the Merger Agreement; provided, however, that the Option may
not be exercised if the Grantee is in material breach of any of its material
representations, warranties, covenants or agreements contained in this Agreement
or in the Merger Agreement; or (ii) the Merger Agreement shall have been
terminated by the Grantor pursuant to Section 7.1(g) of the Merger Agreement.
3. The Closing.
(a) Any closing hereunder shall take place on the date specified
by the Grantee in its Stock Exercise Notice or Cash Exercise Notice, as the case
may be, at 8:00 A.M., local time, at the offices of Latham & Watkins, 633 West
Fifth Street, Suite 4000, Los Angeles, CA 90071, or, if the conditions set forth
in Section 2(a) or 2(b) have not then been satisfied, on
3
<PAGE> 4
the second business day following the satisfaction of such conditions, or at
such other time and place as the parties hereto may agree (the "Closing Date").
On the Closing Date, (i) in the event of a closing pursuant to Section 1(b)
hereof, the Grantor will deliver to the Grantee a certificate or certificates,
duly endorsed (or accompanied by duly executed stock powers), representing the
Shares in the denominations designated by the Grantee in its Stock Exercise
Notice and the Grantee will purchase such Shares from the Grantor at the price
per Share equal to the Purchase Price or (ii) in the event of a closing pursuant
to Section 1(c) hereof, the Grantor will deliver to the Grantee cash in an
amount determined pursuant to Section 1(c) hereof. Any payment made by the
Grantee to the Grantor, or by the Grantor to the Grantee, pursuant to this
Agreement shall be made by certified or official bank check or by wire transfer
of federal funds to a bank designated by the party receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
4. Representations And Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that (a) the Grantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to enter
into and perform this Agreement; (b) the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Grantor and this Agreement has been duly executed and delivered by a duly
authorized officer of the Grantor and constitutes a valid and binding obligation
of the Grantor, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles; (c) the Grantor has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and the
Shares, when issued and delivered by the Grantor upon exercise of the Option,
will be duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights; (d) except as otherwise required by the HSR Act and other
than any filings required under the blue sky laws of any states or by the New
York Stock Exchange, Inc. (the "NYSE"), the execution and delivery of this
Agreement by the Grantor and the issuance of Shares upon exercise of the Option
do not require the consent, waiver, approval or authorization of or any filing
with any person or public authority and will not violate, result in a breach of
or the acceleration of any obligation under, or constitute a default under, any
provision of any charter or by-law, indenture, mortgage, lien, lease, agreement,
contract, instrument, order, law, rule, regulation, judgment, ordinance, or
decree, or restriction by which the Grantor or any of its subsidiaries or any of
their respective properties or assets is bound; (e) no "fair price",
"moratorium", "control share acquisition" or other form of antitakeover statute
or regulation (including, without limitation, the restrictions on "business
combinations" set forth in Section 203 of the Delaware General Corporation Law)
is or shall be applicable to the acquisition of Shares pursuant to this
Agreement (and the Board of Directors of Grantor has taken all action to approve
the acquisition of the Shares to the extent necessary to avoid such application)
and (f) the Grantor has taken all corporate action necessary so that the grant
and any subsequent exercise of the Option by the Grantee will not result in the
separation or exercisability of rights under the Grantor Rights Plan.
4
<PAGE> 5
5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that (a) the execution and delivery of
this Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and will constitute a
valid and binding obligation of Grantee; and (b) the Grantee is acquiring the
Option after the Grantee has been afforded the opportunity to obtain, and has
obtained, sufficient information regarding the Grantor to make an informed
investment decision with respect to the Grantee's purchase of the Shares
issuable upon the exercise thereof, and, if and when the Grantee exercises the
Option, it will be acquiring the Shares issuable upon the exercise thereof for
its own account and not with a view to distribution or resale in any manner
which would be in violation of the Securities Act.
6. Listing of Shares; HSR Act Filings; Regulatory Approvals. Subject
to applicable law and the rules and regulations of the NYSE, the Grantor will
promptly file an application to list the Shares on the NYSE and will use its
best efforts to obtain approval of such listing and to file all necessary
filings by the Grantor under the HSR Act; provided, however, that if the Grantor
is unable to effect such listing on the NYSE by the Closing Date, the Grantor
will nevertheless be obligated to deliver the Shares upon the Closing Date. Each
of the parties hereto will use its best efforts to obtain consents of all third
parties and all Regulatory Approvals, if any, necessary to the consummation of
the transactions contemplated.
7. Repurchase of Shares; Sale of Shares. If a Change in Control
Event has not occurred prior to the first anniversary date of the Merger
Termination Date, then beginning on such anniversary date, the Grantor shall
have the right to purchase (the "Repurchase Right") all, but not less than all,
of the Shares then beneficially owned by the Grantee or any of its affiliates at
a price per share equal to the greater of (i) the Purchase Price, or (ii) the
average of the closing sales prices for shares of Common Stock on the twenty
trading days ending five days prior to the date the Grantor gives written notice
of its intention to exercise the Repurchase Right. If the Grantor does not
exercise the Repurchase Right within thirty days following the first anniversary
of the Merger Termination Date, the Repurchase Right terminates. In the event
the Grantor wishes to exercise the Repurchase Right, the Grantor shall send a
written notice to the Grantee specifying a date (not later than 10 business days
and not earlier than the next business day following the date such notice is
given) for the closing of such purchase. For purposes of the Agreement, a
"Change in Control Event" shall be deemed to have occurred if (i) any person or
group has a acquired beneficial ownership of more than fifty percent (excluding
the Shares) of the outstanding shares of Common Stock or (ii) the Grantor shall
have entered into an agreement, including without limitation an agreement in
principle, providing for (x) a merger or other business combination involving
the Grantor in which the Grantor's stockholders do not own a majority of the
outstanding capital stock of the entity surviving such merger or business
combination immediately following such transaction or (y) the acquisition of 20%
or more of the assets of the Grantor and its subsidiaries, taken as a whole.
8. Registration Rights.
(a) In the event that the Grantee shall desire to sell any of
the Shares within two years after the purchase of such Shares pursuant hereto,
and such sale requires, in the
5
<PAGE> 6
opinion of counsel to the Grantee, which opinion shall be reasonably
satisfactory to the Grantor and its counsel, registration of such Shares under
the Securities Act, the Grantor will cooperate with the Grantee and any
underwriters in registering such Shares for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, entering into an
underwriting agreement with such underwriters upon such terms and conditions as
are customarily contained in underwriting agreements with respect to secondary
distributions; provided that the Grantor shall not be required to have declared
effective more than two registration statements hereunder and shall be entitled
to delay the filing or effectiveness of any registration statement for up to 120
days if the offering would, in the judgment of the Board of Directors of the
Grantor, require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of the Grantor or any other material transaction involving the
Grantor.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 8, the Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered thereby
in such numbers as the Grantee may from time to time reasonably request and (ii)
if any event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep effective for at least 90 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
the Grantee such numbers of copies of the registration statement and prospectus
as amended or supplemented as may reasonably be requested. The Grantor shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Grantor, except that the Grantee shall pay the
fees and disbursements of its counsel, the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Grantee. The
Grantor shall indemnify and hold harmless Grantee, its affiliates and its
officers, directors and controlling persons from and against any and all losses,
claims, damages, liabilities and expenses arising out of or based upon any
statements contained or incorporated by reference in, and omissions or alleged
omissions from, each registration statement filed pursuant to this paragraph;
provided, however, that this provision does not apply to any loss, liability,
claim, damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Grantor by the Grantee, its affiliates and its officers
expressly for use in any registration statement (or any amendment thereto) or
any preliminary prospectus filed pursuant to this paragraph. The Grantor shall
also indemnify and hold harmless each underwriter and each person who controls
any underwriter within the meaning of either the Securities Act or the
Securities Exchange Act of 1934, as amended, against any and all losses, claims,
damages, liabilities and expenses arising out of or based upon any statements
contained or incorporated by reference in, and omissions or alleged omissions
from, each registration statement filed pursuant to this paragraph; provided,
however, that this provision does not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Grantor by the underwriters expressly for use in any
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registration statement (or any amendment thereto) or any preliminary prospectus
filed pursuant to this paragraph.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed $65
million and, if it does exceed such amount, the Grantee, at its sole election,
shall, within five business days, either (a) deliver to the Grantor for
cancellation Shares (valued, for the purposes of this Section 9(a), at the
average closing sales price of the Common Stock on the NYSE Composite Tape for
the twenty consecutive trading days preceding the day on which the Grantee's
Total Profit exceeds $65 million) previously purchased by the Grantee, (b) pay
cash or other consideration to the Grantor or (c) undertake any combination
thereof, so that the Grantee's Total Profit shall not exceed $65 million after
taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by the Grantee pursuant to Section 7.3(c) of the Merger Agreement and
Section 1(c) hereof, (ii)(x) the net cash amount received by the Grantee
pursuant to the Grantor's repurchase of Shares pursuant to Section 7 hereof,
less (y) the Grantee's purchase price for such Shares, and (iii)(x) the amount
received by the Grantee pursuant to the sale of Shares (or any other securities
into which such Shares are converted or exchanged), less (y) the Grantee's
purchase price for such Shares.
10. Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as otherwise specifically provided
herein.
11. Specific Performance. The Grantor acknowledges that if the
Grantor fails to perform any of its obligations under this Agreement immediate
and irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees that
the Grantee shall have the right, in addition to any other rights it may have,
to specific performance of this Agreement. Accordingly, if the Grantee should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the Grantor hereby waives the claim or defense that the Grantee has an
adequate remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists. The Grantor
further agrees to waive any requirements for the securing or posting of any bond
in connection with obtaining any such equitable relief.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested, or if sent by
facsimile transmission, upon receipt of oral confirmation that such transmission
has been received, to the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the same manner, by such
person:
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If to the Grantee:
Doubletree Corporation
410 North 44th Street, Suite 700
Phoenix, AZ 85008
Attn: Richard M. Kelleher
Telecopy: (602) 220-6753
With a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019-6092
Attn: William J. Phillips, Esq.
Telecopy: (212) 295-6333
If to the Grantor:
Promus Hotel Corporation
755 Crossover Lane
Memphis, TN 38117
Attn: Raymond E. Schultz
Telecopy: (901) 374-5636
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attn: John M. Newell, Esq.
Telecopy: (213) 891-8763
13. Parties in Interest. This Agreement shall inure to the benefit of
and be binding upon the parties named herein and their respective permitted
successors and assigns; provided, however, that such successor in interest or
assigns shall agree to be bound by the provisions of this Agreement. Except as
set forth in Section 8, nothing in this Agreement, express or implied, is
intended to confer upon any person other than the Grantor or the Grantee, or
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
15. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any of its direct or
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indirect wholly owned subsidiaries, but no such transfer shall relieve the
Grantee of its obligations hereunder if such transferee does not perform such
obligations. Any assignment made in violation of this Section 15 shall be void.
16. Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (regardless of the laws
that might otherwise govern under applicable Delaware principles of conflicts of
law).
19. Termination. The right to exercise the Option granted pursuant to
this Agreement shall terminate at the earlier of (i) the Effective Time (as
defined in the Merger Agreement), (ii) the date on which the Grantee realizes a
Total Profit of $65 million, (iii) the date on which the Merger Agreement is
terminated; provided the Option is not exercisable at such time and does not
become exercisable simultaneous with such termination and (iv) 90 days after the
date the Option becomes exercisable (the date referred to in clause (iv) being
hereinafter referred to as the "Option Termination Date"); provided that, if the
Option cannot be exercised or the Shares cannot be delivered to the Grantee upon
such exercise because the conditions set forth in Section 2(a) or Section 2(b)
hereof have not yet been satisfied, the Option Termination Date shall be
extended until thirty days after such impediment to exercise has been removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
20. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
21. Public Announcement. The Grantee will consult with the Grantor
and the Grantor will consult with the Grantee before issuing any press release
with respect to the initial announcement of this Agreement, the Option or the
transactions contemplated hereby and neither party shall issue any such press
release prior to such consultation except as may be required by law.
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<PAGE> 10
Signature page for Stock Option Agreement (Doubletree)
IN WITNESS WHEREOF, the Grantee and the Grantor have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
DOUBLETREE CORPORATION
/s/ Richard M. Kelleher
-------------------------------------------
By: Richard M. Kelleher
Its: President and Chief Executive Officer
PROMUS HOTEL CORPORATION
/s/ Raymond E. Schultz
-------------------------------------------
By: Raymond E. Schultz
Its: President and Chief Executive Officer
S-1
<PAGE> 1
EXHIBIT 10.2
STOCK OPTION AGREEMENT (PROMUS)
STOCK OPTION AGREEMENT, dated as of September 1, 1997 (the
"Agreement"), between PROMUS HOTEL CORPORATION, a Delaware corporation (the
"Grantee"), and DOUBLETREE CORPORATION, a Delaware corporation (the "Grantor").
WHEREAS, the Grantee, Parent Holding Corp., a Delaware corporation
("Parent"), and the Grantor are entering into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), which provides, among
other things, for the merger (the "Doubletree Merger") of a subsidiary of Parent
with and into the Grantor and the merger (the "Promus Merger") of another
subsidiary of Parent with and into the Grantee, such that the Grantor and the
Grantee will become wholly-owned subsidiaries of Parent and the stockholders of
the Grantor and the Grantee will become stockholders of Parent (the Doubletree
Merger and the Promus Merger collectively, the "Mergers");
WHEREAS, pursuant to a Stock Option Agreement dated as of the date
hereof between the Grantee and the Grantor, the Grantee has granted the Grantor
an option to acquire shares of common stock of the Grantee on terms that are
substantially similar to the terms of this Agreement (the "Doubletree Option");
WHEREAS, as a condition and inducement to their willingness to enter
into the Merger Agreement and the Doubletree Option, the Grantee and Parent have
requested that the Grantor grant to the Grantee an option to purchase 7,898,003
shares of Common Stock, par value $0.01 per share, of the Grantor (the "Common
Stock"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee to enter into the Merger
Agreement and grant the Doubletree Option, the Grantor is willing to grant the
Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments; Payment of Spread.
(a) Contemporaneously herewith the Grantee, Parent and the Grantor
are entering into the Merger Agreement. Subject to the other terms and
conditions set forth herein, the Grantor hereby grants to the Grantee an
irrevocable option (the "Option") to purchase up to 7,898,003 (as adjusted as
provided herein) shares of Common Stock (together with the associated purchase
rights issued with respect thereto pursuant to the Rights Agreement dated as of
September 1, 1997 between the Grantor and Harris Trust & Savings Bank (the
"Grantor Rights Plan")) (the "Shares") at a per share cash purchase price equal
to the lower of (i) $50.00 per Share or (ii) the average closing sales price of
the Common Stock on the NASDAQ National Market ("NASDAQ") for the five
consecutive trading days beginning on and including the day that the Mergers are
publicly announced (as adjusted as provided herein) (such lower price being the
"Purchase Price"). The Option may be exercised by the Grantee, in whole or in
part, at any
<PAGE> 2
time, or from time to time, following the occurrence of one of the events set
forth in Section 2(c) hereof and prior to the termination of the Option in
accordance with the terms of this Agreement.
(b) In the event the Grantee wishes to exercise the Option, the
Grantee shall send a written notice to the Grantor (the "Stock Exercise Notice")
specifying a date (subject to the HSR Act (as defined below)) not later than 10
business days and not earlier than the next business day following the date such
notice is given for the closing of such purchase. In the event of any change in
the number of issued and outstanding shares of Common Stock by reason of any
stock dividend, stock split, split-up, reclassification, recapitalization,
merger or other change in the corporate or capital structure of the Grantor
(including the occurrence of a Distribution Date under the Grantor Rights Plan),
the number of Shares subject to this Option and the purchase price per Share
shall be appropriately adjusted to restore the Grantee to its rights hereunder,
including its right to purchase Shares representing 19.9% of the capital stock
of the Grantor entitled to vote generally for the election of the directors of
the Grantor which is issued and outstanding immediately prior to the exercise of
the Option at an aggregate purchase price equal to the Purchase Price multiplied
by 7,898,003 . In the event that any additional shares of Common Stock are
issued after the date of this Agreement (other than pursuant to an event
described in the preceding sentence), the number of Shares subject to this
Option shall be increased by 19.9% of the number of the additional shares of
Common Stock so issued (and such additional Shares shall have a purchase price
per share equal to the Purchase Price).
(c) If at any time the Option is then exercisable pursuant to the
terms of Section 1(a) hereof, the Grantee may elect, in lieu of exercising the
Option to purchase Shares provided in Section 1(a) hereof, to send a written
notice to the Grantor (the "Cash Exercise Notice") specifying a date not later
than 20 business days and not earlier than 10 business days following the date
such notice is given on which date the Grantor shall pay to the Grantee an
amount in cash equal to the Spread (as hereinafter defined) multiplied by all or
such portion of the Shares subject to the Option as Grantee shall specify. As
used herein "Spread" shall mean the excess, if any, over the Purchase Price of
the higher of (x) if applicable, the highest price per share of Common Stock
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by any person in an Alternative Transaction (as defined in clause
(i), (ii) or (iii) of Section 7.3(e) of the Merger Agreement) (the "Alternative
Purchase Price") or (y) the closing sales price of the shares of Common Stock on
NASDAQ on the last trading day immediately prior to the date of the Cash
Exercise Notice (the "Closing Price"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If such
other property consists of securities with an existing public trading market,
the average of the closing sales prices (or the average of the closing bid and
asked prices if closing sales prices are unavailable) for such securities in
their principal public trading market on the five trading days ending five days
prior to the date of the Cash Exercise Notice shall be deemed to equal the fair
market value of such property. If such other property consists of something
other than cash or securities with an existing public trading market and, as of
the payment date for the Spread, agreement on the value of such other property
has not been reached, the Alternative Purchase Price shall be deemed to equal
the Closing Price. Upon exercise of the Grantee's right to receive cash pursuant
to this Section 1(c) and the payment of such cash to the Grantee, the
obligations of the Grantor to deliver Shares pursuant to Section 3 shall be
terminated
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with respect to such number of Shares for which the Grantee shall have elected
to be paid the Spread.
2. Conditions to Delivery of Shares. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated and all other consents, approvals, orders, notifications or
authorizations, the failure of which to obtain or make would have the effect of
making the issuance of the Shares illegal (collectively, the "Regulatory
Approvals") shall have been obtained or made; and
(c) (i) a proposal for an Alternative Transaction (as defined in
the Merger Agreement) involving the Grantor shall have been publicly announced
prior to the time the Merger Agreement is terminated pursuant to the terms
thereof (the "Merger Termination Date") and one or more of the following events
shall have occurred on or after the time of the making of such proposal: (A) the
requisite vote of the stockholders of the Grantor in favor of adoption and
approval of the Merger Agreement shall not have been obtained at the Doubletree
Stockholders' Meeting (as defined in the Merger Agreement) or any adjournment or
postponement thereof; (B) the Board of Directors of the Grantor shall have
withdrawn or modified its recommendation of the Merger Agreement or the
Doubletree Merger or failed to confirm its recommendation of the Merger
Agreement or the Doubletree Merger to the stockholders of the Grantor within ten
business days after a written request by the Grantee to do so; (C) the Board of
Directors of the Grantor shall have recommended to the stockholders of the
Grantor an Alternative Transaction (as defined in the Merger Agreement); (D) a
tender offer or exchange offer for 20% or more of the outstanding shares of
Grantor Common Stock shall have been commenced (other than by the Grantee or an
affiliate of the Grantee) and the Board of Directors of the Grantor shall have
recommended that the stockholders of the Grantor tender their shares in such
tender or exchange offer; or (E) for any reason the Grantor shall have failed to
call and hold the Doubletree Stockholders' Meeting (as defined in the Merger
Agreement) by the Outside Date (as defined in the Merger Agreement); provided,
however, that the Option may not be exercised if the Grantee is in material
breach of any of its material representations, warranties, covenants or
agreements contained in this Agreement or in the Merger Agreement; or (ii) the
Merger Agreement shall have been terminated by the Grantor pursuant to Section
7.1(g) of the Merger Agreement.
3. The Closing.
(a) Any closing hereunder shall take place on the date specified by
the Grantee in its Stock Exercise Notice or Cash Exercise Notice, as the case
may be, at 8:00 A.M., local time, at the offices of Latham & Watkins, 633 West
Fifth Street, Suite 4000, Los Angeles, CA 90071, or, if the conditions set forth
in Section 2(a) or 2(b) have not then been satisfied, on
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<PAGE> 4
the second business day following the satisfaction of such conditions, or at
such other time and place as the parties hereto may agree (the "Closing Date").
On the Closing Date, (i) in the event of a closing pursuant to Section 1(b)
hereof, the Grantor will deliver to the Grantee a certificate or certificates,
duly endorsed (or accompanied by duly executed stock powers), representing the
Shares in the denominations designated by the Grantee in its Stock Exercise
Notice and the Grantee will purchase such Shares from the Grantor at the price
per Share equal to the Purchase Price or (ii) in the event of a closing pursuant
to Section 1(c) hereof, the Grantor will deliver to the Grantee cash in an
amount determined pursuant to Section 1(c) hereof. Any payment made by the
Grantee to the Grantor, or by the Grantor to the Grantee, pursuant to this
Agreement shall be made by certified or official bank check or by wire transfer
of federal funds to a bank designated by the party receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
4. Representations And Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that (a) the Grantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to enter
into and perform this Agreement; (b) the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Grantor and this Agreement has been duly executed and delivered by a duly
authorized officer of the Grantor and constitutes a valid and binding obligation
of the Grantor, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles; (c) the Grantor has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and the
Shares, when issued and delivered by the Grantor upon exercise of the Option,
will be duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights; (d) except as otherwise required by the HSR Act and other
than any filings required under the blue sky laws of any states or by NASDAQ,
the execution and delivery of this Agreement by the Grantor and the issuance of
Shares upon exercise of the Option do not require the consent, waiver, approval
or authorization of or any filing with any person or public authority and will
not violate, result in a breach of or the acceleration of any obligation under,
or constitute a default under, any provision of any charter or by-law,
indenture, mortgage, lien, lease, agreement, contract, instrument, order, law,
rule, regulation, judgment, ordinance, or decree, or restriction by which the
Grantor or any of its subsidiaries or any of their respective properties or
assets is bound; (e) no "fair price", "moratorium", "control share acquisition"
or other form of antitakeover statute or regulation (including, without
limitation, the restrictions on "business combinations" set forth in Section 203
of the Delaware General Corporation Law) is or shall be applicable to the
acquisition of Shares pursuant to this Agreement (and the Board of Directors of
Grantor has taken all action to approve the acquisition of the Shares to the
extent necessary to avoid such application) and (f) the Grantor has taken all
corporate action necessary so that the grant and any subsequent exercise of the
Option by the Grantee will not result in the separation or exercisability of
rights under the Grantor Rights Plan.
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<PAGE> 5
5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that (a) the execution and delivery of
this Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and will constitute a
valid and binding obligation of Grantee; and (b) the Grantee is acquiring the
Option after the Grantee has been afforded the opportunity to obtain, and has
obtained, sufficient information regarding the Grantor to make an informed
investment decision with respect to the Grantee's purchase of the Shares
issuable upon exercise thereof, and, if and when the Grantee exercises the
Option, it will be acquiring the Shares issuable upon the exercise thereof for
its own account and not with a view to distribution or resale in any manner
which would be in violation of the Securities Act.
6. Quotation of Shares; HSR Act Filings; Regulatory Approvals. Subject
to applicable law and the rules and regulations of NASDAQ, the Grantor will
promptly file an application to have the Shares quoted on NASDAQ and will use
its best efforts to obtain approval of such quotation and to file all necessary
filings by the Grantor under the HSR Act; provided, however, that if the Grantor
is unable to effect such quotation on NASDAQ by the Closing Date, the Grantor
will nevertheless be obligated to deliver the Shares upon the Closing Date. Each
of the parties hereto will use its best efforts to obtain consents of all third
parties and all Regulatory Approvals, if any, necessary to the consummation of
the transactions contemplated.
7. Repurchase of Shares; Sale of Shares. If a Change in Control Event
has not occurred prior to the first anniversary date of the Merger Termination
Date, then beginning on such anniversary date, the Grantor shall have the right
to purchase (the "Repurchase Right") all, but not less than all, of the Shares
then beneficially owned by the Grantee or any of its affiliates at a price per
share equal to the greater of (i) the Purchase Price, or (ii) the average of the
closing sales prices for shares of Common Stock on the twenty trading days
ending five days prior to the date the Grantor gives written notice of its
intention to exercise the Repurchase Right. If the Grantor does not exercise the
Repurchase Right within thirty days following the first anniversary of the
Merger Termination Date, the Repurchase Right terminates. In the event the
Grantor wishes to exercise the Repurchase Right, the Grantor shall send a
written notice to the Grantee specifying a date (not later than 10 business days
and not earlier than the next business day following the date such notice is
given) for the closing of such purchase. For purposes of the Agreement, a
"Change in Control Event" shall be deemed to have occurred if (i) any person or
group has a acquired beneficial ownership of more than fifty percent (excluding
the Shares) of the outstanding shares of Common Stock or (ii) the Grantor shall
have entered into an agreement, including without limitation an agreement in
principle, providing for (x) a merger or other business combination involving
the Grantor in which the Grantor's stockholders do not own a majority of the
outstanding capital stock of the entity surviving such merger or business
combination immediately following such transaction or (y) the acquisition of 20%
or more of the assets of the Grantor and its subsidiaries, taken as a whole.
8. Registration Rights.
(a) In the event that the Grantee shall desire to sell any of the
Shares within two years after the purchase of such Shares pursuant hereto, and
such sale requires, in the
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opinion of counsel to the Grantee, which opinion shall be reasonably
satisfactory to the Grantor and its counsel, registration of such Shares under
the Securities Act, the Grantor will cooperate with the Grantee and any
underwriters in registering such Shares for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, entering into an
underwriting agreement with such underwriters upon such terms and conditions as
are customarily contained in underwriting agreements with respect to secondary
distributions; provided that the Grantor shall not be required to have declared
effective more than two registration statements hereunder and shall be entitled
to delay the filing or effectiveness of any registration statement for up to 120
days if the offering would, in the judgment of the Board of Directors of the
Grantor, require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of the Grantor or any other material transaction involving the
Grantor.
(b) If the Common Stock is registered pursuant to the provisions of
this Section 8, the Grantor agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as the Grantee may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep effective for at least 90 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
the Grantee such numbers of copies of the registration statement and prospectus
as amended or supplemented as may reasonably be requested. The Grantor shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Grantor, except that the Grantee shall pay the
fees and disbursements of its counsel, the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Grantee. The
Grantor shall indemnify and hold harmless Grantee, its affiliates and its
officers, directors and controlling persons from and against any and all losses,
claims, damages, liabilities and expenses arising out of or based upon any
statements contained or incorporated by reference in, and omissions or alleged
omissions from, each registration statement filed pursuant to this paragraph;
provided, however, that this provision does not apply to any loss, liability,
claim, damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Grantor by the Grantee, its affiliates and its officers
expressly for use in any registration statement (or any amendment thereto) or
any preliminary prospectus filed pursuant to this paragraph. The Grantor shall
also indemnify and hold harmless each underwriter and each person who controls
any underwriter within the meaning of either the Securities Act or the
Securities Exchange Act of 1934, as amended, against any and all losses, claims,
damages, liabilities and expenses arising out of or based upon any statements
contained or incorporated by reference in, and omissions or alleged omissions
from, each registration statement filed pursuant to this paragraph; provided,
however, that this provision does not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Grantor by the underwriters expressly for use in any
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registration statement (or any amendment thereto) or any preliminary prospectus
filed pursuant to this paragraph.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed $65
million and, if it does exceed such amount, the Grantee, at its sole election,
shall, within five business days, either (a) deliver to the Grantor for
cancellation Shares (valued, for the purposes of this Section 9(a), at the
average closing sales price of the Common Stock on NASDAQ for the twenty
consecutive trading days preceding the day on which the Grantee's Total Profit
exceeds $65 million) previously purchased by the Grantee, (b) pay cash or other
consideration to the Grantor or (c) undertake any combination thereof, so that
the Grantee's Total Profit shall not exceed $65 million after taking into
account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by the Grantee pursuant to Section 7.3(b) of the Merger Agreement and
Section 1(c) hereof, (ii)(x) the net cash amount received by the Grantee
pursuant to the Grantor's repurchase of Shares pursuant to Section 7 hereof,
less (y) the Grantee's purchase price for such Shares, and (iii)(x) the amount
received by the Grantee pursuant to the sale of Shares (or any other securities
into which such Shares are converted or exchanged), less (y) the Grantee's
purchase price for such Shares.
10. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement, except as otherwise specifically provided
herein.
11. Specific Performance. The Grantor acknowledges that if the Grantor
fails to perform any of its obligations under this Agreement immediate and
irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees that
the Grantee shall have the right, in addition to any other rights it may have,
to specific performance of this Agreement. Accordingly, if the Grantee should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the Grantor hereby waives the claim or defense that the Grantee has an
adequate remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists. The Grantor
further agrees to waive any requirements for the securing or posting of any bond
in connection with obtaining any such equitable relief.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested, or if sent by
facsimile transmission, upon receipt of oral confirmation that such transmission
has been received, to the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the same manner, by such
person:
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<PAGE> 8
If to the Grantee:
Promus Hotel Corporation
755 Crossover Lane
Memphis, TN 38117
Attn: Raymond E. Schultz
Telecopy: (901) 374-5636
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attn: John M. Newell, Esq.
Telecopy: (213) 891-8763
If to the Grantor:
Doubletree Corporation
North 44th Street, Suite 700
Phoenix, AZ 85008
Attn: Richard M. Kelleher
Telecopy: (602) 220-6753
With a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019-6092
Attn: William J. Phillips, Esq.
Telecopy: (212) 295-6333
13. Parties in Interest. This Agreement shall inure to the benefit of
and be binding upon the parties named herein and their respective permitted
successors and assigns; provided, however, that such successor in interest or
assigns shall agree to be bound by the provisions of this Agreement. Except as
set forth in Section 8, nothing in this Agreement, express or implied, is
intended to confer upon any person other than the Grantor or the Grantee, or
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
15. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any of its direct or
8
<PAGE> 9
indirect wholly owned subsidiaries, but no such transfer shall relieve the
Grantee of its obligations hereunder if such transferee does not perform such
obligations. Any assignment made in violation of this Section 15 shall be void.
16. Headings. The section headings herein are for convenience only and
shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (regardless of the laws
that might otherwise govern under applicable Delaware principles of conflicts of
law).
19. Termination. The right to exercise the Option granted pursuant to
this Agreement shall terminate at the earlier of (i) the Effective Time (as
defined in the Merger Agreement), (ii) the date on which the Grantee realizes a
Total Profit of $65 million, (iii) the date on which the Merger Agreement is
terminated; provided that the Option is not exercisable at such time and does
not become exercisable simultaneous with such termination and (iv) 90 days after
the date the Option becomes exercisable (the date referred to in clause (iv)
being hereinafter referred to as the "Option Termination Date"); provided that,
if the Option cannot be exercised or the Shares cannot be delivered to the
Grantee upon such exercise because the conditions set forth in Section 2(a) or
Section 2(b) hereof have not yet been satisfied, the Option Termination Date
shall be extended until thirty days after such impediment to exercise has been
removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
20. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
21. Public Announcement. The Grantee will consult with the Grantor and
the Grantor will consult with the Grantee before issuing any press release with
respect to the initial announcement of this Agreement, the Option or the
transactions contemplated hereby and neither party shall issue any such press
release prior to such consultation except as may be required by law.
9
<PAGE> 10
Signature Page for Stock Option Agreement (Promus)
IN WITNESS WHEREOF, the Grantee and the Grantor have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
DOUBLETREE CORPORATION
/s/ Richard M. Kelleher
-------------------------------------------
By: Richard M. Kelleher
Its: President and Chief Executive Officer
PROMUS HOTEL CORPORATION
/s/ Raymond E. Schultz
-------------------------------------------
By: Raymond E. Schultz
Its: President and Chief Executive Officer
S-1
<PAGE> 1
EXHIBIT 10.3
STOCKHOLDER SUPPORT AGREEMENT
STOCKHOLDER SUPPORT AGREEMENT dated as of September 1, 1997
(this "Agreement"), by GE Investment Management Incorporated ("GEIM"), GE
Investment Hotel Partners I, Limited Partnership ("GEHOP" and together with
GEIM, the "GE Entities"), the Trustees of General Electric Pension Trust
("GEPT"), Red Lion, a California limited partnership ("Red Lion"), Richard J.
Ferris ("Ferris"), Ridge Partners, L.P. ("Ridge"), Kelrick, Inc. ("Kelrick" and
together with Ferris and Ridge, the "Ferris Entities"), Peter V. Ueberroth
("Ueberroth"), The Ueberroth Family Trust ("Ueberroth FT") and The Ueberroth
Investment Trust ("Ueberroth IT" and together with Ueberroth and Ueberroth FT,
the "Ueberroth Entities"), to and for the benefit of Promus Hotel Corporation, a
Delaware corporation ("Promus"). Each of the GE Entities, GEPT, Red Lion, the
Ferris Entities and the Ueberroth Entities are referred to herein as a
"Stockholder" and collectively as the "Stockholders." Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to them
in the Merger Agreement referred to below.
WHEREAS, as of the date hereof, the GE Entities own of record
and beneficially 6,060,981 shares (such shares, together with any other voting
or equity securities of Doubletree hereafter acquired by the GE Entities prior
to the termination of this Agreement, being referred to herein collectively as
the "GE Shares") of common stock, par value $.01 per share ("Doubletree Common
Stock"), of Doubletree Corporation, a Delaware corporation ("Doubletree");
WHEREAS, as of the date hereof, GEPT owns of record and
beneficially 3,027,441 shares (such shares, together with any other voting or
equity securities of Doubletree hereafter acquired by GEPT prior to the
termination of this Agreement, being referred to herein collectively as "GEPT
Shares") of Doubletree Common Stock;
WHEREAS, as of the date hereof, Red Lion owns of record and
beneficially 3,882,283 shares (such shares, together with any other voting or
equity securities of Doubletree hereafter acquired by Red Lion prior to the
termination of this Agreement, being referred to herein collectively as the "Red
Lion Shares") of Doubletree Common Stock;
WHEREAS, as of the date hereof, the Ferris Entities own of
record and beneficially 1,576,182 shares (such shares, together with any other
voting or equity securities of Doubletree hereafter acquired by the Ferris
Entities prior to the termination of this Agreement, being referred to herein
collectively as the "Ferris Shares") of Doubletree Common Stock;
WHEREAS, as of the date hereof, the Ueberroth Entities own of
record and beneficially 1,124,182 shares (such shares, together with any other
voting or equity securities of Doubletree hereafter acquired by the Ueberroth
Entities prior to the termination of this Agreement, being referred to herein
collectively as the "Ueberroth Shares" and, together with the GE Shares, the
GEPT Shares, the Red Lion Shares and the Ferris Shares, the "Shares") of
Doubletree Common Stock;
WHEREAS, concurrently with the execution of this Agreement,
Doubletree, Promus and Parent Holding Corp., a Delaware corporation ("Parent"),
are entering into an
<PAGE> 2
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), pursuant to which, upon the terms and subject to the conditions
thereof, (i) a newly formed subsidiary of Parent will be merged with and into
Doubletree (the "Doubletree Merger"), and (ii) a second newly formed subsidiary
of Parent will be merged with and into Promus (the "Promus Merger") such that
Doubletree and Promus will become wholly-owned subsidiaries of Parent and the
stockholders of Doubletree and Promus will become stockholders of Parent; and
WHEREAS, as a condition to the willingness of Promus and
Doubletree to enter into the Merger Agreement and the Stock Option Agreements
(as defined in the Merger Agreement), Promus has requested the Stockholders
agree, and in order to induce Promus to enter into the Merger Agreement and the
Stock Option Agreements, the Stockholders are willing to agree, severally but
not jointly, to vote in favor of adopting the Merger Agreement and approving the
Doubletree Merger, upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereby agree, severally and not jointly, as follows:
Section 1. Voting of Shares. Until the termination of
this Agreement in accordance with the terms hereof, each Stockholder hereby
agrees that, at the Doubletree Stockholders' Meeting or any other meeting of the
stockholders of Doubletree, however called, and in any action by written consent
of the stockholders of Doubletree, such Stockholder will vote all of its
respective Shares (a) in favor of adoption of the Merger Agreement and approval
of the Doubletree Merger and the other transactions contemplated by the Merger
Agreement, and (b) in favor of any other matter necessary to the consummation of
the transactions contemplated by the Merger Agreement and considered and voted
upon by the stockholders of Doubletree (or any class thereof). In addition, each
Stockholder agrees that it will, upon request by Promus, furnish written
confirmation, in form and substance reasonably satisfactory to Promus, of such
Stockholder's support for the Merger Agreement and the Doubletree Merger. Each
Stockholder acknowledges receipt and review of a copy of the Merger Agreement.
Section 2. Transfer of Shares. Each Stockholder
represents and warrants that it has no present intention of taking any action,
prior to the termination of this Agreement in accordance with the terms hereof,
to, directly or indirectly, (a) sell, assign, transfer (including by merger,
testamentary disposition, interspousal disposition pursuant to a domestic
relations proceeding or otherwise by operation of law), pledge, encumber or
otherwise dispose of any of its respective Shares, (b) deposit any of its
respective Shares into a voting trust or enter into a voting agreement or
arrangement with respect to any such Shares or grant any proxy or power of
attorney with respect thereto which is inconsistent with this Agreement or (c)
enter into any contract, option or other arrangement or undertaking with respect
to the direct or indirect sale, assignment, transfer (including by merger,
testamentary disposition, interspousal disposition pursuant to a domestic
relations proceeding or otherwise by operation of law) or other disposition of
any Shares.
Section 3. No Solicitation. Prior to the termination of
this Agreement in accordance with its terms, each Stockholder agrees (a) that it
will not, nor will it authorize or
2
<PAGE> 3
permit any of its officers, directors, employees, agents and representatives to,
directly or indirectly, initiate or solicit any inquiries or the making of any
Acquisition Proposal and (b) that it will notify Promus as soon as possible (and
in any event within 48 hours) if any such inquiries or proposals are received
by, any information or documents is requested from, or any negotiations or
discussions are sought to be initiated or continued with, it or any of its
affiliates.
Section 4. Termination. This Agreement shall terminate
upon the earliest to occur of (i) the Effective Time or (ii) any termination of
the Merger Agreement in accordance with the terms thereof; provided that the
provisions of Section 7 shall survive any termination of this Agreement, and
provided further that no such termination shall relieve any party of liability
for a breach hereof prior to termination.
Section 5. Registration Rights. Until the termination
of this Agreement in accordance with the terms hereof, no Stockholder will
exercise any of its rights to request or require registration of any securities
under the Incorporation and Registration Rights Agreement dated as of December
16, 1993, as amended on June 30, 1994, February 27, 1996 and November 8, 1996,
by and among Doubletree and certain stockholders of Doubletree (the
"Registration Rights Agreement).
Section 6. Specific Performance. The parties hereto
agree that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
Section 7. Miscellaneous.
(a) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect thereto. This Agreement may not be amended,
modified or rescinded except by an instrument in writing signed by each of the
parties hereto.
(b) If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
(c) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to the
principles of conflicts of law thereof.
(d) Notwithstanding anything herein to the contrary,
the covenants and agreements set forth herein shall not prevent any of the
Stockholders' designees, partners or
3
<PAGE> 4
affiliates serving on the Board of Directors of Doubletree from taking any
action, subject to the applicable provisions of the Merger Agreement, while
acting in such capacity as a director of Doubletree.
(e). Notwithstanding any provisions hereof, none of the
obligations of any Stockholder under or contemplated by this Agreement shall be
an obligation of (i) any officer, director, stockholder, limited partner,
general partner or owner of such Stockholder, or any of their respective
officers, directors, stockholders, limited partners, general partners or owners,
or successors or assigns or (ii) any other Stockholder. Each Stockholder shall
be the only person or entity liable with respect to its obligations. Any
monetary liability of a Stockholder under this Agreement shall be satisfied
solely out of the assets of such Stockholder. Each Stockholder hereby
irrevocably waives any right it may have against any such officer, director,
stockholder, limited partner, general partner, owner, successor or assign
identified above as a result of the performance of the provisions under or
contemplated by this Agreement. Nothing in this Section 7(e) shall prevent
Promus from obtaining specific enforcement of the obligations of any Stockholder
under this Agreement.
(f) This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
4
<PAGE> 5
Signature Page for Stockholder Support Agreement
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
GE INVESTMENT MANAGEMENT INCORPORATED
/s/ JOHN MYERS
---------------------------------------------
By: John Myers
Its:
GE INVESTMENT HOTEL PARTNERS I,
LIMITED PARTNERSHIP
By: GE Investment Management Inc.
Its: General Partner
/s/ JOHN MYERS
----------------------------------------
By: John Myers
Its:
TRUSTEES OF GENERAL ELECTRIC PENSION TRUST
/s/ JOHN MYERS
---------------------------------------------
By: John Myers
Its:
RED LION
By: RLA-GP, Inc.
Its: General Partner
/s/ MICHAEL MICHELSON
----------------------------------------
By: Michael Michelson
Its:
S-1
<PAGE> 6
/s/ RICHARD J. FERRIS
---------------------------------------------
Richard J. Ferris
RIDGE PARTNERS, L.P.
By: Kelrick, Inc.
Its: General Partner
/s/ RICHARD J. FERRIS
----------------------------------------
By: Richard J. Ferris
Its: President
KELRICK, INC.
/s/ RICHARD J. FERRIS
---------------------------------------------
By: Richard J. Ferris
Its: President
/s/ PETER V. UEBERROTH
---------------------------------------------
Peter V. Ueberroth
THE UEBERROTH FAMILY TRUST
/s/ PETER V. UEBERROTH
---------------------------------------------
By: Peter V. Ueberroth
Its: Trustee
S-2
<PAGE> 7
Signature Page for Stockholder Support Agreement
THE UEBERROTH INVESTMENT TRUST
/s/ PETER V. UEBERROTH
-------------------------------------
By: Peter V. Ueberroth
Its: Trustee
Agreed and Acknowledged:
PROMUS HOTEL CORPORATION
/s/ RAYMOND E. SCHULTZ
- -----------------------------------
By: Raymond E. Schultz
Its: President and Chief Executive Officer
S-3
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: For Doubletree: For Promus:
William L. Perocchi, CFO John C. Hawkins, Corporate Communications
Doubletree Corporation Promus Hotel Corporation
(602)220-6810 (901)374-5529
Ruth Pachman/Michael Freitag Gregg A. Swearingen, Investor Relations
Kekst and Company Promus Hotel Corporation
(212)521-4800 (901)374-5468
DOUBLETREE CORPORATION AND PROMUS HOTEL CORPORATION
SIGN $4.7 BILLION DEFINITIVE MERGER AGREEMENT
PHOENIX, AZ AND MEMPHIS, TN, SEPTEMBER 2, 1997 - Doubletree Corporation
(NASDAQ: TREE) and Promus Hotel Corporation (NYSE: PRH) today announced the
execution of a definitive merger agreement, creating one of the world's largest
hotel companies with a portfolio of fast-growing upscale and mid-priced brands
including Doubletree Hotels, Embassy Suites, Doubletree Guest Suites, Homewood
Suites, Club Hotels by Doubletree, Hampton Inn, Hampton Inn & Suites, and Red
Lion. This stock-for-stock transaction, valued at approximately $4.7 billion, is
a merger of equals, combining Doubletree's strength in hotel management with
Promus' strength in franchising and building brands.
With approximately $5 billion in annual system-wide revenues under
management contract for franchise agreement, the combined company will be the
lodging industry's third largest revenue producer. As of June 30, the new
company had 1,136 hotels, approximately 172,000 rooms, and more than 40,000
employees in all regions of the United States and its major markets, as well as
selected locations in Latin America and Asia.
The terms of the agreement call for the two companies to be merged into
subsidiaries of a new holding company to be named Promus Hotel Corporation.
Doubletree shareholders will receive one share in the new company for each of
their shares in Doubletree. Promus shareholders will receive 0.925 shares in the
new company for each of their shares in Promus. The transaction is intended to
be accounted for as a pooling-of-interests and is expected to be tax-free. The
merger is
<PAGE> 2
expected to be accretive to earnings per share in the first full year, excluding
costs related to the transaction. The shares of the new company are expected to
be listed on the New York Stock Exchange.
The companies have agreed that:
- Promus' President and Chief Executive Officer, Raymond E.
Schultz, will serve as Chairman and Chief Executive Officer of
the new company, and as a member of the Board's Executive
Committee.
- Doubletree's President and Chief Executive Officer, Richard M.
Kelleher, will serve as President and Chief Operating Officer
following the merger, and will succeed Mr. Schultz as Chief
Executive Officer upon his retirement. He will also be an
ex-officio member of the Board's Executive Committee.
- The key management team will consist of top managers of both
Doubletree and Promus, including William L. Perocchi,
currently Executive Vice President and Chief Financial Officer
of Doubletree, as Executive Vice President and Chief Financial
Officer, and Thomas L. Keltner, currently Executive Vice
President and Chief Development Officer of Promus, as
Executive Vice President and Chief Development Officer.
- The new company will be governed by a 14-member Board of
Directors, with seven directors designated by each company.
The Board will include Richard J. Ferris and Peter V.
Ueberroth, Doubletree Co-Chairmen, and Michael D. Rose, Promus
Chairman, who will serve as members of the Board's Executive
Committee.
- Each company has granted the other an option to acquire 19.9
percent of its common stock under certain conditions.
Doubletree also announced that it has adopted a Stockholder Rights
Plan, the details of which will be released separately.
Approximately 40% of Doubletree's shareholders, including, among
others, General Electric Pension Trust and Kohlberg Kravis Roberts & Co., have
indicated they intend to vote in
<PAGE> 3
favor of the merger. GE and KKR will continue to be represented on the Board of
the new company.
Raymond E. Schultz, Promus President and Chief Executive Officer, said:
"This transaction is truly a merger of equals. The combined company will greatly
benefit from the complementary strengths of each partner. Doubletree has grown
rapidly through acquisitions and an aggressive conversion strategy. It has an
outstanding record and reputation as a quality operator and brand marketer of
full service hotels. Promus has grown through franchising and new hotel
development. We have grown our proprietary brands primarily on a one-at-a-time
basis with emphasis on product quality and consistency and our unique 100%
satisfaction guaranteed service culture, which will be extended to all
Doubletree's brands."
Mr. Schultz added, "This merger is a `defining moment' for Promus. We
have achieved a significant presence in the upscale suites and extended-stay
markets, and are the industry leader in the mid-priced limited service segment.
In joining with a quality upscale full-service brand in Doubletree Hotels, as
well as its other brands, the combined company will be able to offer a full
range of quality accommodations to meet the needs of business and leisure
travelers in markets throughout the United States. Our ability to cross-sell and
cross-market our brands will be a key driver of our future growth. We will also
be able to offer to franchisees, developers and investors an even more complete
line of hotel development opportunities in virtually every important segment of
the lodging business.
"The combination of two of the strongest and most successful management
teams in our industry will provide the depth to continue to grow rapidly and
expand to new areas. Rick Kelleher and I worked together for many years, so I
know we share the same values and commitment to product quality, customer
service and creating shareholder value. The cultures of our companies are
remarkably similar and that should make the transition more seamless. We will
immediately form transition task forces so that we will hit the ground running,"
Mr. Schultz continued.
Richard M. Kelleher, President and Chief Executive Officer of
Doubletree Corporation, said, "The merger of Doubletree and Promus is a natural
marriage of two strong institutions with a common heritage and a focus on
growth. Doubletree traces its roots to a company that was one of
<PAGE> 4
the original franchisees of Embassy Suites. Today, Embassy Suites is the clear
market leader in the upscale all-suites segment and accounts for more than half
of Promus' operating profit. The blending of Embassy Suites and Doubletree Guest
Suites will give the new company an even stronger base on which to build market
share."
"There are also tremendous opportunities for growth in the
extended-stay market, with the upscale Homewood Suites brand complementing
Doubletree's investment in the mid-market Candlewood Hotels brand. Likewise, our
smaller Club Hotels by Doubletree and Red Lion brands will benefit from Promus'
strength as a franchisor and builder of brands. We are also excited about having
Hampton Inn, one of this decade's fastest growing mid-market brands, included in
our combined portfolio."
Mr. Kelleher added, "At a time when the lodging industry is rapidly
consolidating, the merger creates a company with significant free cash flow, one
of the strongest balance sheets in our industry and access to sources of
lower-cost capital than most of our competitors. We are very well positioned to
leverage these financial strengths to accelerate our growth in the future.
Both companies expect to realize substantial synergies and cost savings
from the merger. They will be able to combine their respective reservation
systems, information system development and maintenance, purchasing functions,
accounting, payroll, and many other corporate support functions to provide
substantial efficiencies. The companies said that their preliminary estimated
cost savings and synergies should yield approximately $15 to $20 million
annually. Both companies have preferred vendor programs which provide growing
revenue streams that will benefit from the combined larger room count.
Consummation of this transaction is subject to customary conditions,
including regulatory approvals and approval of the merger by shareholders of
each company. It is anticipated that this transaction will close prior to 1997
year-end.
Morgan Stanley & Co. served as financial adviser to Doubletree and BT
Wolfensohn served as financial adviser to Promus.
<PAGE> 5
Doubletree Corporation is a leading hotel management company and is the
exclusive franchisor of Doubletree Hotels, Doubletree Guest Suites, Club Hotels
by Doubletree and Red Lion hotel brands.
Promus Hotel Corporation is one of the world's premier lodging
companies and the franchisor and operator of the Embassy Suites, Hampton Inn,
Hampton Inn & Suites, Homewood Suites, Embassy Vacation Resort and Hampton
Vacation Resort brands. Based in Memphis, Tenn., the company currently serves
guests with an unconditional 100% Satisfaction Guarantee in more than 900 hotels
and 115,000 rooms throughout the United States, Canada, Mexico, Latin America
and Asia. A company overview and financial highlights can be found on the
internet by accessing http://www.promus-hotel.com.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995: The statements contained in this release which are not historical
facts, such as those concerning future financial performance and growth, are
forward looking statements that are subject to change based on various factors
which may be beyond Doubletree's and Promus' control. Accordingly, the future
performance and financial results of the new company may differ materially from
those expressed or implied in any such forward looking statements. Such factors
include, but are not limited to, those described in Doubletree's and Promus'
filings with the Securities and Exchange Commission, as well as various factors
related to the transaction described in this release, including the costs of
integrating their business and the realization of synergies anticipated with
respect to the transaction.
(Fact Sheet Attached)
<PAGE> 6
DOUBLETREE AND PROMUS MERGER
FACT SHEET
TRANSACTION
- - Merger of Doubletree and Promus to create one of the world's largest
hotel companies.
- - Tax-free exchange of stock into a new issue of a new company to be
called Promus Hotel Corp.
- - Each share of Doubletree will be converted into one share of new
Promus.
- - Each share of Promus will be converted into 0.925 shares of new Promus.
- - The transaction is intended to be accounted for as a pooling of
interests, with no goodwill created.
STRATEGIC RATIONALE
- - Creates a powerful presence in the U.S. hotel market with a portfolio
of brands including:
-Doubletree Hotels
-Embassy Suites
-Embassy Vacation Resort
-Doubletree Guest Suites
-Homewood Suites
-Club Hotels by Doubletree
-Hampton Inn
-Hampton Inn & Suites
-Hampton Vacation Resort
-Red Lion
-Highlights of new Promus Hotel Corp.:
-1,136 hotels (as of June 30, 1997)
-172,000 rooms (as of June 30, 1997)
-#3 in total system-wide revenues under management or franchise
-#4 in market capitalization
-#5 in number of hotels
-#5 in number of rooms
- - Strong balance sheet, increased size and complementary hotel brands
create platform for further expansion
-Full-service segment and international market expansion opportunities
-Further development
- - Compatible organizations
-Complementary lines of business (franchising and management
operations)
-History of delivering shareholder value -#1 in customer satisfaction
index
-Proven ability to grow organically and through acquisitions
-Proven ability to integrate mergers and acquisitions
<PAGE> 7
DOUBLETREE AND PROMUS MERGER
FACT SHEET CONTINUED
POTENTIAL MERGER BENEFITS
SHAREHOLDERS
- - Promus' franchise and development expertise combined with Doubletree's
management expertise provides significant opportunities for growth.
- - Potential for savings in corporate overhead, information technology,
purchasing, reservation systems and financing costs.
- - Cross-selling opportunities
- - Enhances new and existing developer, franchisee and investor
relationships Increased financial strength
-Larger, more diversified asset base
-Maintains low debt level
- - Strong cash flow from business and increase size enhance prospects for
continued growth
- - Likely reduction in cost of capital
CUSTOMERS
- - Ability to leverage a larger, more diversified portfolio of brand
names
- - Continued focus on providing quality service across entire range of
hotel brands
- - Ability to leverage Doubletree brands through Promus franchise network
EMPLOYEES
- - New company will be one of the strongest and best positioned domestic
U.S. hotel companies
- - Ability to participate both financially and professionally in growth
companies
PRO FORMA FINANCIAL PROFILE
Annual System-wide Revenues under Management or Franchise $5.0 billion
1996 Revenues $937 million
1996 EBITDA $322 million
1996 Net Income $106 million
Book Value (as of June 30, 1997) $1.1 billion
Assets (as of June 30, 1997) $2.4 billion
Debt to Capital (as of June 30, 1997) 40%
Shares Outstanding (as of August 29, 1997) 86 million
Market Capitalization (as of August 29, 1997) $4.0 billion
Enterprise Value (as of August 29, 1997) $4.7 billion
ORGANIZATION
Key Officers:
Chairman & CEO Raymond E. Schultz
President & COO Richard M. Kelleher
Chief Financial Officer William L. Perocchi
Chief Development Officer Thomas L. Keltner
Board of Directors 14 Members (7 each from Promus and
Doubletree)
Employees Approximately 40,000
State of Incorporation Delaware
<PAGE> 8
DOUBLETREE AND PROMUS MERGER
----------------------------
FACT SHEET CONTINUED
<TABLE>
<CAPTION>
HOTEL PORTFOLIO (AS OF 6/30/07)
BRAND HOTELS ROOMS REVPAR
<S> <C> <C> <C>
Doubletree Guest Suites 42 8,987 $95.34
Embassy Suites 136 32,810 86.97
Homewood Suites 43 4,439 71.84
Doubletree Hotels 101 30,368 70.54
Red Lion 16 2,902 59.29
Club Hotels 19 3,977 51.77
Hampton Inn & Suites 23 2,500 48.75
Hampton Inn 679 73,326 46.00
Non-Branded 77 12,344 58.38
----- -------
TOTAL 1,136 171,653
OWNERSHIP HOTELS ROOMS
Owned 45 8,105
Joint Venture 26 7,264
Leased 86 14,448
Managed 164 41,920
Franchise 815 99,916
----- -------
TOTAL 1,136 171,653
</TABLE>
OTHER INFORMATION
Form of Transaction Merger of equals, stock-for-stock exchange
Subject to Approval of Promus and Doubletree shareholders;
approximately 40% of Doubletree shareholders have
agreed to vote in favor of the merger
Hart-Scott-Rodino review
Expected Closing By year-end 1997
<PAGE> 1
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
Contact: William L. Perocchi, CFO
Doubletree Corporation
(602) 220-6810
DOUBLETREE CORPORATION ADOPTS
STOCKHOLDER RIGHTS PLAN
PHOENIX, ARIZONA, SEPTEMBER 2, 1997 -- Doubletree Corporation (NASDAQ:
TREE) (the "Company"), announced that its Board of Directors has today adopted
a Stockholder Rights Plan in which preferred stock purchase rights will be
distributed as a dividend at the rate of one Right for each share of common
stock, par value $0.01 per share, of the Company held by stockholders of record
as of the close of business on September 11, 1997.
Each Right initially will entitle stockholders to buy one one-hundredth
of a share of preferred stock for $180. The Rights will be exercisable only if
a person or group acquires beneficial ownership of 15% or more of the Company's
common stock or commences a tender or exchange offer upon consummation of which
such person or group would beneficially own 15% or more of the Company's common
stock. The Rights will expire immediately prior to the consummation of the
"merger of equals" transaction with Promus Hotel Corporation.
If any person becomes the beneficial owner of 15% or more of the
Company's common stock, other than pursuant to a tender or exchange offer for
all outstanding shares of the Company approved by a majority of the independent
directors not affiliated with a 15%-or-more stockholder, then each Right not
owned by a 15%-or-more stockholder or related parties will entitle its holder
to purchase, at the Right's then current exercise price, shares of the
Company's common stock (or, in certain circumstances as determined by the
Board, cash, other property, or other securities) having a value of twice the
Right's then current exercise price. In addition, if after any person has
become a 15%-or-more stockholder, the Company is involved in a merger or other
business combination transaction with another person in which the Company
<PAGE> 2
does not survive or in which its common stock is changed or exchanged, or sells
50% or more of its assets or earning power to another person, each Right will
entitle its holder to purchase, at the Right's then current exercise price,
shares of common stock of such other person having a value of twice the Right's
then current exercise price. If any person acquires beneficial ownership of
between 15% and 50% of the outstanding voting stock, the Board may, in lieu of
allowing Rights to be exercised, require each outstanding Right, other than any
Rights held by the acquiring person, to be exchanged for one share of Common
Stock.
The Company will generally be entitled to redeem the Rights at $0.01
per Right at any time until 10 days (subject to extension) following a public
announcement that a 15% position has been acquired.
Doubletree Corporation is a leading hotel management company and is the
exclusive franchisor of Doubletree Hotels, Doubletree Guests Suites, Club
Hotels by Doubletree and Red Lion hotel brands.
# # #
