<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1997
REGISTRATION NO. 333-16661
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CHARTWELL LEISURE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3326054
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
605 THIRD AVENUE
NEW YORK, NEW YORK 10158
(212) 692-1400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
RICHARD L. FISHER
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
605 THIRD AVENUE
NEW YORK, NEW YORK 10158
(212) 692-1400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
JOHN N. TURITZIN, ESQ.
BATTLE FOWLER LLP
75 EAST 55TH STREET
NEW YORK, NEW YORK 10022
(212) 856-7000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
MAXIMUM PROPOSED
OFFERING MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY OFFERING PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share,
reserved for issuance
upon exercise of 2,502,000
rights................ shares $14.00 $35,028,000 $10,615(1)
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2,502,000
Rights................. rights -- -- --(2)
</TABLE>
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(1) Previously paid. On November 22, 1996, the Registrant filed its
Registration Statement on Form S-3 (File No. 333-16661) (the "Original S-
3") covering up to 5,175,000 shares of Common Stock that the Registrant
had intended to sell in an underwritten public offering. At that time the
Registrant paid a registration fee in the amount of $20,583. The
Registrant now amends the Original S-3 to reflect its intent to issue up
to approximately 2,413,356 transferable subscription rights to its
existing stockholders and to sell up to approximately 2,413,356 shares of
Common Stock pursuant to a rights offering. The Registrant no longer
intends to sell shares of Common Stock in an underwritten public offering.
(2)Pursuant to Rule 457(g) under the Securities Act, no separate registration
fee is required with respect to the Rights.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
On November 22, 1996, the Registrant filed its Registration Statement on
Form S-3 (File No. 333-16661) (the "Original S-3") covering up to 5,175,000
shares of Common Stock that the Registrant had intended to sell in an
underwritten public offering. The Registrant now amends the Original S-3 to
reflect its intent to issue up to approximately 2,502,000 transferable
subscription rights to its existing stockholders and to sell up to
approximately 2,502,000 shares of Common Stock pursuant to a rights offering.
The Registrant no longer intends to sell shares of Common Stock in an
underwritten public offering.
<PAGE>
PROSPECTUS
CHARTWELL LEISURE INC.
TRANSFERABLE RIGHTS TO PURCHASE UP TO
2,413,356 SHARES OF COMMON STOCK
EXPIRING MARCH , 1997
Chartwell Leisure Inc., a Delaware corporation (the "Company"), is
distributing transferable subscription rights ("Rights") to holders of record
at the close of business on February , 1997 (the "Record Date") of its shares
of common stock, par value $.01 per share (the "Common Stock"). The Rights
entitle stockholders to subscribe for and purchase an aggregate of
approximately 2,413,356 shares of Common Stock (the "Rights Offering") at a
cash price of $14.00 per share (the "Subscription Price"). Holders of Rights
("Rights Holders") will be able to exercise Rights until 5:00 p.m., New York
City time, on March , 1997, unless the period for the exercise of Rights is
extended or terminated by the Board of Directors of the Company in its sole
discretion (such time and date, the "Expiration Date"). Commencement of the
Rights Offering is subject to receipt of a waiver by the Company's bank
lenders to permit the distribution of the Rights. See "The Rights Offering."
Stockholders of the Company on the Record Date will receive .23 Rights to
purchase shares of Common Stock for each share of Common Stock held on the
Record Date. Rights Holders are entitled to purchase, at the Subscription
Price, one share of Common Stock for each whole Right held (the "Basic
Subscription Privilege"). An aggregate of approximately 2,413,356 Rights will
be distributed pursuant to the Rights Offering. In lieu of fractional Rights,
the aggregate number of Rights issued by the Company to a Rights Holder will
be rounded up to the next whole number. Each Right also entitles any Rights
Holder exercising the Basic Subscription Privilege in full to subscribe at the
Subscription Price for up to one additional share of Common Stock for each
share of Common Stock purchased by the Rights Holder pursuant to Basic
Subscription Privilege (the "Oversubscription Privilege"), to the extent
shares are not otherwise subscribed for pursuant to the exercise of the Basic
Subscription Privilege. If an insufficient number of shares of Common Stock
are available to satisfy fully all subscriptions pursuant to the
Oversubscription Privilege, then the available shares will be prorated among
those who subscribe pursuant to the Oversubscription Privilege. See "The
Rights Offering--Subscription Privileges--Oversubscription Privilege." The
Rights will be evidenced by transferable certificates. Chartwell Leisure
Associates L.P. II ("CL Associates") and FSNL LLC ("FSNL"), which collectively
own approximately 46.8% of the outstanding Common Stock, have informed the
Company that they intend to exercise their Basic Subscription Privilege in
full for a total investment of approximately $15.8 million by CL Associates
and FSNL in the Rights Offering. See "The Rights Offering."
The Common Stock is traded in the Nasdaq Market under the symbol "CHRT." On
January 22, 1997, the last full trading day prior to the public announcement
of the Company's intention to commence the Rights Offering, the last sale
reported for the Common Stock on the Nasdaq National Market was $14 1/8. On
February 6, 1997, the last sale reported for the Common Stock on the Nasdaq
National Market was $16. There has been no prior market for the Rights. The
Rights are expected to be approved for listing on the Nasdaq National Market
under the symbol "CHRTR"; however, no assurances can be given that a market
for the Rights will develop or, if a market develops, that such market will
remain available throughout the Rights Offering.
After the Expiration Date, the Rights will no longer be exercisable and will
have no value. Accordingly, Rights Holders are strongly urged either to
exercise or to sell their Rights.
SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF THIS PROSPECTUS FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
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<TABLE>
<CAPTION>
SUBSCRIPTION PRICE UNDERWRITING DISCOUNTS AND COMMISSIONS(1) PROCEEDS TO COMPANY(2)
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<S> <C> <C> <C>
Per Share............... $ None $
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Total................... $ None $
</TABLE>
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(1) The Shares are being offered and sold directly by the Company, and no
commissions or other remuneration is intended to be paid to any person for
soliciting purchases of the shares in this Offering. See "The Rights
Offering--Method of Offering."
(2) Before deducting expenses payable by the Company estimated at $1,170,000.
Assumes the exercise of all Rights, other than approximately 299,000
Rights issuable to a stockholder of the Company which has agreed not to
exercise its Rights. See "Prospectus Summary--Recent Developments--Sale of
Common Stock to Brahman Funds".
February , 1997
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON IS AUTHORIZED IN CONNECTION WITH THE
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE RIGHTS OR THE
COMMON STOCK OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
No action has been or will be taken in any jurisdiction by the Company that
would permit an issuance of the Rights, an offering of Common Stock or
possession or distribution of this Prospectus in any jurisdiction where action
for that purpose is required, other than in the United States. Persons into
whose possession this Prospectus comes are required by the Company to inform
themselves about and to observe any restrictions as to the issuance of the
Rights, the offering of Common Stock and the distribution of this Prospectus.
In this Prospectus references to "dollars" and "$" are to United States
dollars unless otherwise stated, and the terms "United States" and "U.S." mean
the United States of America, its states, its territories, its possessions and
all areas subject to jurisdiction.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information..................................................... 3
Incorporation of Certain Information by Reference.......................... 4
Prospectus Summary......................................................... 5
Risk Factors............................................................... 12
The Rights Offering........................................................ 19
Use of Proceeds............................................................ 27
Price Range of Common Stock................................................ 27
Dividend Policy............................................................ 28
State and Foreign Securities Laws.......................................... 28
Capitalization............................................................. 29
Description of Capital Stock............................................... 30
Shares Eligible for Future Sale............................................ 33
Plan of Distribution....................................................... 34
Legal Matters.............................................................. 34
Experts.................................................................... 34
</TABLE>
----------------
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. The factors discussed under "Risk
Factors," among others, could cause actual results to differ materially from
those contained in forward-looking statements made in this Prospectus, filings
by the Company with the Securities and Exchange Commission (the "Commission"),
in the Company's press releases and in oral statements made by authorized
officers of the Company. When used in this Prospectus, the words "estimate,"
"project," "anticipate," "expect," "intend," "believe," and similar expressions
are intended to identify forward-looking statements.
2
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statement and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected without charge at the office of the Commission at the
Public Reference Section located at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and copies thereof may be
obtained from the Commission upon payment of the prescribed fees. The
Commission also maintains a site on the World Wide Web, the address of which
is http://www.sec.gov., that contains reports, proxy and information
statements and other information regarding issuers, such as the Company, that
file electronically with the Commission. Such reports, proxy statements and
other information concerning the Company can also be inspected at the office
of the National Association of Securities Dealers, 1735 K Street, N.W.,
Washington, D.C. 20006, which supervises the NASDAQ National Market on which
the Company's Common Stock is traded.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 (of which this Prospectus is a part) under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
the Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents
of any contract or other document referred to are not necessarily complete and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference and the exhibits
and schedules thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration
Statement and such exhibits and schedules.
3
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are incorporated in this
Prospectus by reference:
(i) The Company's Annual Report of Form 10-K for the fiscal year ended
December 31, 1995 (File No. 0-24794) filed with the Commission on April 1,
1996, as amended by the Company's Annual Report on Form 10-K/A filed with
the Commission on May 24, 1996, as amended by the Company's Annual Report
on Form 10-K/A filed with the Commission on July 3, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996 filed with the Commission on May 15, 1996;
(iii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1996 filed with the Commission on August 8, 1996, as amended
by the Company's Quarterly Report on Form 10-Q/A filed with the Commission
on August 9, 1996;
(iv) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996 filed with the Commission on November 12, 1996;
(v) The Company's Current Report on Form 8-K, dated January 23, 1996,
filed with the Commission on February 7, 1996, as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on April 2, 1996, as
amended by the Company's Current Report on Form 8-K/A filed with the
Commission on July 3, 1996, as amended by the Company's Current Report on
Form 8-K/A filed with the Commission on July 9, 1996; and
(vi) The Company's Current Report on Form 8-K, dated October 1, 1996,
filed with the Commission on October 15, 1996, as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on December 12,
1996, as amended by the Company's Current Report on Form 8-K/A filed with
the Commission on February 7, 1997.
All documents subsequently filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date hereof and, prior to the termination of the Offering, shall be deemed
incorporated by reference in this Prospectus and to be a part of this
Prospectus from the date of the filing of such reports. The Company hereby
undertakes to provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written oral request of any such person,
a copy of any or all of the information that has been incorporated by
reference in this Prospectus (not including exhibits to the information that
is incorporated by reference unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to Chartwell
Leisure Inc., 605 Third Avenue, New York, New York 10158 (telephone (212) 692-
1400), Attention: Douglas H. Verner, Esq.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
4
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES THERETO INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. EACH INVESTOR IS URGED TO READ THIS PROSPECTUS IN
ITS ENTIRETY PRIOR TO MAKING AN INVESTMENT IN THE SHARES OF COMMON STOCK
OFFERED HEREBY.
THE COMPANY
Chartwell Leisure Inc. ("Chartwell" or the "Company") is an opportunistic
acquiror of diversified hotel properties that it believes provide the potential
for cash flow and earnings growth, principally through rebranding,
repositioning, reimaging and remarketing. Chartwell owns, directly or with
joint venture partners, 133 hotel properties in both the full-service and
limited-service segments, including approximately 11,520 guest rooms, located
in 26 states and six Canadian provinces. In the full-service segment, Chartwell
operates 27 hotels aggregating approximately 5,430 guest rooms that contributed
57% of Chartwell's gross room revenues (including gross room revenues of
unconsolidated joint ventures) during the nine-month period ended September 30,
1996 on a pro forma basis. Chartwell's remaining 106 hotels, consisting of
approximately 6,100 rooms, operate in the limited-service segment, principally
under the Travelodge(R) brand.
Chartwell was spun-off from HFS Incorporated ("HFS") in 1994 and until late
1995 was engaged in the business of investing in casino gaming facilities. In
December 1995, an investment group ("CL Associates") primarily consisting of
members of the Fisher Brothers family and a trust for the benefit of Gordon
Getty and members of his family acquired a 16.6% equity interest in Chartwell
by purchasing newly issued shares of Common Stock. In connection with that
purchase, Richard L. Fisher, a member of the Fisher Brothers family, was
elected to Chartwell's Board of Directors and to the chairmanship of
Chartwell's executive committee. At the same time, Chartwell's Board of
Directors decided to redirect the focus of Chartwell's business from gaming to
lodging and Chartwell agreed to acquire full and partial interests in 115
Travelodge hotels, consisting of approximately 8,000 guest rooms, from Forte
Hotels, Inc. (the "Travelodge Acquisition") for approximately $98 million (a
cost of approximately $13,000 per guest room after accounting for joint venture
interests and other assets acquired).
In connection with the closing of the Travelodge Acquisition in January 1996,
Chartwell agreed in principle to issue four million shares of Common Stock for
an aggregate purchase price of $57 million to an expanded investment group,
consisting of CL Associates and a limited liability company ("FSNL") owned
principally by a trust for the benefit of Charles de Gunzburg (the "CL
Associates/FSNL Investment"), Mr. Fisher was elected Chairman and Chief
Executive Officer of Chartwell, a new senior management team was assembled, and
Mr. Fisher and that new management team began to implement Chartwell's current
strategy. Since that time, Chartwell has (i) acquired 21 Travelodge hotels in
Canada (including a one-half interest in a joint venture) totalling
approximately 3,500 guest rooms, for approximately $77 million (a cost of
approximately $22,000 per guest room) (the "Canadian Acquisition"), (ii)
obtained the 30-year exclusive master franchise licenses for the Travelodge
brand in Canada and Mexico, (iii) formed a joint venture with Grupo Piasa, S.A.
de C.V., a diversified Mexican real estate and development company ("Grupo
Piasa"), for the purpose of developing and operating Travelodge hotels
throughout Mexico ("Chartwell de Mexico") and (iv) formed a strategic alliance
with Hilton Hotels Corporation ("Hilton") to develop Hilton Garden Inn(R)
hotels in target markets nationwide. Chartwell has curtailed future activities
in the gaming industry and, during the twelve-month period ended December 31,
1996, derived no revenues from gaming.
5
<PAGE>
RECENT DEVELOPMENTS
. Capital Investments: Chartwell has launched an extensive capital improvement
program to increase room and occupancy rates of its hotels by improving the
quality of its properties. By mid-1997, Chartwell intends to have completed
approximately $30 million in capital improvements at its current hotels in
addition to amounts budgeted for regular capital maintenance. This program
is expected to enhance the competitiveness of its Travelodge hotels and
increase profitability.
. Strategic Alliance with Hilton: On January 20, 1997, Chartwell announced
that it had formed a strategic alliance with Hilton in which Chartwell will
develop, own, manage and operate up to 20 Hilton Garden Inn hotels in target
markets nationwide under a franchise license. The initial term of the
franchise license is three years and will require a total investment of up
to $200 million by Chartwell. Construction financing and permanent mortgage
financing have been arranged for the Hilton Garden Inn development program
through NationsBank Corp. ("NationsBank") and Nomura Asset Capital
Corporation ("Nomura"). Of the total construction costs, NationsBank is
committed to provide up to 80% of the financing, with Hilton guaranteeing up
to 25% of the loan. Chartwell is required to put up the remaining 20% of the
capital as equity. Upon obtaining a certificate of occupancy for each Hilton
Garden Inn, the construction loan allocated for such hotel will convert to a
15-year permanent mortgage through an arrangement with Nomura. Chartwell
expects to commence construction of its first Hilton Garden Inn shortly at
Albuquerque International Airport and this spring expects to commence
construction of its second Hilton Garden Inn site in Santa Fe, New Mexico at
its Anasazi Plaza site. Chartwell expects to break ground on other Hilton
Garden Inns as additional sites are secured. In addition to the Hilton
Garden Inn franchise license, Hilton has formally approved the conversion of
the 207 room, Chartwell-owned San Diego Travelodge to a full-service Hilton
hotel. The property, on Harbor Island Drive, will undergo a $4 million
renovation, expected to be completed by this summer.
. Sale of Common Stock to Brahman Funds: On January 31, 1997, Chartwell sold
1,000,000 shares of Common Stock to funds managed by affiliates of Brahman
Management, LLC (collectively, "Brahman") at $14 per share, for a total
investment of $14 million by Brahman (the "Brahman Private Placement").
Brahman manages investment funds, including one affiliated with George
Soros. As a result of the Brahman Private Placement, the Brahman-Soros group
owns approximately 1,300,000 shares of Common Stock, or approximately 12.4%
of the Company's outstanding Common Stock, before giving effect to the
issuance of any shares of Common Stock pursuant to the Rights Offering.
Chartwell is required to hold the proceeds of the Brahman Private Placement
in a segregated interest-bearing account until CL Associates and FSNL have
purchased at least 1,071,428 shares of Common Stock in the Rights Offering
by April 15, 1997. If that condition is not satisfied, Brahman may require
the Company to repurchase the shares sold to Brahman in the Brahman Private
Placement at a price of $14.00 per share plus the interest accrued in that
segregated account. CL Associates and FSNL have informed the Company that
they intend to exercise their Basic Subscription Privilege (for
approximately 1,128,134 shares of Common Stock) in full. Chartwell has
agreed to file a registration statement under the Securities Act to register
the resale of the shares sold to Brahman, to use its best efforts to cause
that registration statement to become effective by May 1, 1997 and to
maintain that registration in effect until Brahman has sold all of the
shares it purchased in the Brahman Private Placement or until those shares
may be sold under Rule 144 under the Securities Act without limitation.
Brahman has agreed not to sell, transfer or otherwise dispose, directly or
indirectly, of any of the shares it purchased in the Brahman Private
Placement, without the prior written consent of the Company, until August 1,
1997. Brahman has agreed not to exercise or transfer any of the
approximately 299,000 Rights that it receives through the Basic Subscription
Privilege and the Oversubscription Privilege, and to allow such Rights to
expire unexercised.
. Proposed Sale of Common Stock to Baron Funds: Chartwell has reached an
agreement in principle to sell approximately 535,000 shares of Common Stock
to Baron Funds at $14 per share, for a total investment of
6
<PAGE>
$7.5 million by Baron Funds (the "Baron Private Placement"). Baron Funds is
the parent organization for a family of funds managed by Ronald Baron. The
closing of the Baron Private Placement is expected to occur at
approximately the same time as the closing of the Rights Offering. The
resale of the shares sold to Baron Funds is expected to be registered under
the Securities Act in the registration statement used to register the
resale of the shares sold to Brahman in the Brahman Private Placement. See
"Prospectus Summary--Recent Developments--Sale of Common Stock to Brahman
Funds."
. Amendment to Stockholders' Agreement: CL Associates and FSNL are parties to
a stockholders' agreement (the "Stockholders' Agreement") that includes
certain voting arrangements (the "Voting Arrangements") which provide that
CL Associates and FSNL will vote their shares of Common Stock to elect as a
director of the Company one mominee selected by FSNL and any number of
nominees selected by CL Associates, and that FSNL will vote its shares of
Common Stock at all meetings of stockholders of the Company and in any
written consent in the manner directed by CL Associates. The Stockholders'
Agreement also includes certain transfer restrictions (the "Transfer
Restrictions") which provide for certain restrictions on the transfer of
their shares of Common Stock and on future acquisitions of shares of Common
Stock by CL Associates and FSNL. Additionally, under the Stockholders'
Agreement, FSNL is afforded certain "tag-along" rights (the "Tag Along
Arrangements") exercisable by it upon a sale of shares by CL Associates. CL
Associates may also require FSNL to sell its shares to a third party
offering to purchase all of CL Associates' and FSNL's shares of Common
Stock (the "Drag Along Arrangements"). CL Associates and FSNL have informed
the Company that they intend to amend the Stockholders' Agreement in
connection with the Rights Offering to provide that the shares purchased by
them in the Rights Offering will not be subject to the Transfer
Restrictions, Tag Along Arrangements or Drag Along Arrangements, but will
be subject to the Voting Arrangements.
. Results for the Fourth Quarter ended December 31, 1996: The Company
reported hotel revenue of $26.2 million, and total revenue of $26.9 million
resulting in a net loss for the three month period of $(14.5) million, or
$(1.47) per share. Included in the loss were $(2.2) million in non-cash
provisions for losses on gaming assets, a charge of $(9.5) million for
cancellation of a corporate services agreement with HFS, and an additional
$(.8) million charge for the Company's termination of its San Diego Harbor
Island Travelodge franchise agreement in connection with the planned
conversion of that hotel to a Hilton franchise.
BACKGROUND
The Company's original gaming business was conducted as a division of HFS
from August 1993 until September 1994, when the Company was formed as National
Gaming Corp., a Delaware corporation and a wholly owned subsidiary of HFS
created for the purpose of carrying on that business. In November 1994, the
Company became an independent public company when HFS distributed all of the
outstanding shares of the Company's Common Stock to the stockholders of HFS
(the "Distribution"). In January 1996, the Company's name was changed to
National Lodging Corp., and on August 8, 1996, the Company's name became
Chartwell Leisure Inc. The Company's principal executive offices are located
at 605 Third Avenue, New York, New York 10158, and its telephone number is
(212) 692-1400. Unless the context otherwise requires, all references in this
Prospectus to the Company include the Company, its subsidiaries and their
respective predecessors, and references to "hotels" include both hotels and
motels.
7
<PAGE>
THE RIGHTS OFFERING
Rights............. Each record holder (a "Rights Holder") of Common
Stock at the close of business on February , 1997
(the "Record Date") will receive .23 transferable
subscription rights ("Rights") for each share of
Common Stock held on the Record Date. The number of
Rights issued by the Company to a Rights Holder will
be rounded up to the nearest whole number. Each Right
will entitle the Rights Holder to purchase from the
Company one share of Common Stock for a cash price of
$14.00 (the "Subscription Price") on the terms and
subject to the conditions of the offering. The
distribution of Rights and sale of shares of Common
Stock upon the exercise of Rights are referred to as
the "Rights Offering." An aggregate of approximately
2,413,356 Rights will be distributed pursuant to the
Rights Offering. After March , 1997 (the "Expiration
Date"), the Rights will no longer be exercisable and
will have no value. Rights Holders are strongly urged
either to exercise or to sell their Rights prior to
the Expiration Date.
Record Date........ February , 1997.
Expiration Date.... March , 1997, 5:00 p.m., New York City time, unless
terminated or extended by the Board of Directors of
the Company, in its sole discretion.Basic Subscription
Rights Holders are entitled to purchase, at the
Privilege.......... Subscription Price, one share of Common Stock for
each whole Right held (the "Basic Subscription
Privilege"). See "The Rights Offering--Subscription
Privileges--Basic Subscription Privilege."
Oversubscription Each Rights Holder who elects to exercise the Basic
Privilege.......... Subscription Privilege in full also may subscribe at
the Subscription Price for up to one additional share
of Common Stock (the "Excess Shares") for each share
of Common Stock purchased by the Rights Holder
pursuant to the Basic Subscription Privilege (the
"Oversubscription Privilege"), to the extent shares
of Common Stock have not been purchased pursuant to
the Basic Subscription Privilege, subject to
proration and reduction by the Company under certain
circumstances.
There can be no assurance that there will be Excess
Shares sufficient to satisfy all exercises of the
Oversubscription Privilege. If an insufficient number
of Excess Shares is available to satisfy fully all
exercises of the Oversubscription Privilege, then the
Excess Shares will be prorated among Rights Holders
who exercise their Oversubscription Privilege based
upon the respective numbers of shares of Common Stock
for which each such Rights Holder subscribes pursuant
to the Basic Subscription Privilege. See "The Rights
Offering--Subscription Privileges--Oversubscription
Privilege."
Subscription Price...... $14.00, in cash, for each share of Common Stock.
Procedure for The Basic Subscription Privilege may be exercised and
Exercising Rights....... the Oversubscription Privilege may be subscribed for
by properly completing the Subscription Certificate
evidencing the Rights (a "Subscription
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<PAGE>
Certificate") and forwarding such Subscription
Certificate (or following the Guaranteed Delivery
Procedures (as defined below)), with payment of the
Subscription Price for each share of Common Stock
purchased pursuant to the Basic Subscription
Privilege and subscribed for pursuant to the
Oversubscription Privilege, to the Subscription Agent
(as defined below) for receipt by the Subscription
Agent on or prior to the Expiration Date. If the mail
is used to forward Subscription Certificates, it is
recommended that insured, registered mail be used. If
time does not permit a Holder of a Right to deliver
its Subscription Certificate to the Subscription
Agent on or before the Expiration Date, such Holder
should make use of the Guaranteed Delivery Procedures
described under "The Rights Offering--Exercise of
Rights."
If paying by uncertified personal check, please note
that the funds paid thereby may take at least five
business days to clear. Accordingly, Holders who wish
to pay the Subscription Price by means of uncertified
personal check are urged to make payment sufficiently
in advance of the Expiration Date to ensure that such
payment is received and clears by such date and are
urged to consider payment by means of certified or
cashier's check or money order.
A Right may not be exercised in part and fractional
Rights will not be issued.
If the aggregate Subscription Price paid by an
exercising Rights Holder is insufficient to purchase
the number of shares of Common Stock that such holder
indicates on the Subscription Certificate are being
purchased or subscribed for, or if no number of
shares of Common Stock to be purchased or subscribed
for is specified, then the Rights Holder will be
deemed to have exercised the Basic Subscription
Privilege to purchase shares of Common Stock to the
full extent of the payment tendered. If the aggregate
Subscription Price paid by an exercising Rights
Holder exceeds the amount necessary to purchase the
number of shares of Common Stock for which the Rights
Holder has indicated on the Subscription Certificate
an intention to purchase, then the Rights Holder will
be deemed to have subscribed pursuant to the
Oversubscription Privilege to the full extent of the
excess payment tendered. If any Rights Holder is
allocated a fewer number of shares than such Rights
Holder subscribed for pursuant to the
Oversubscription Privilege, then the excess funds
paid by that holder will be returned with interest.
See "The Rights Offering--Exercise of Rights."
No Revocation...... Once a Rights Holder has exercised the Basic
Subscription Privilege or subscribed for the
Oversubscription Privilege, such exercise or
subscription may not be revoked by such Rights
Holder. See "The Rights Offering--No Revocation."
Shares of Common Stock
Outstanding After the
Rights Offering....
Assuming the Rights Offering is fully subscribed for,
the Company will have approximately 12,607,206 shares
outstanding after the Rights Offering, based on
10,492,850 shares outstanding immediately prior to
the
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<PAGE>
consummation of the Rights Offering, and assuming no
exercise by Brahman of the Rights it receives in
respect of its shares of Common Stock.
Transferability of The Rights are freely transferable and will be quoted
Rights............. on the Nasdaq National Market under the trading
symbol "CHRTR" until the close of business on the
last trading day prior to the Expiration Date. Any
transfer of Rights will be deemed a transfer of both
the Basic Subscription Privilege and the
Oversubscription Privilege. The Subscription Agent
will endeavor to sell Rights for Rights Holders who
have so requested and have delivered one or more
Subscription Certificate(s) evidencing such Rights,
with the instruction for sale included thereon
properly executed, to the Subscription Agent by 5:00
p.m., New York City time, on or before March , 1997
(three business days prior to the Expiration Date).
There can be no assurance, however, that any market
for Rights will develop, or that the Subscription
Agent will be able to sell any Rights for Holders. If
less than all sales orders received by the
Subscription Agent can be filled, sales proceeds will
be prorated among the Holders based upon the number
of Rights each has instructed the Subscription Agent
to sell during the term of the Rights Offering,
irrespective of when during such period the
instructions are received by the Subscription Agent.
See "The Rights Offering--Method of Transferring
Rights."
Amendments and The Rights Offering may be extended, and its terms
Termination........ and conditions amended by the Company, at the
Company's option. If the Company amends the terms of
the Rights Offering, a new definitive Prospectus will
be distributed to all Rights Holders who had
previously exercised Rights and to all Rights Holders
of record on the date of such amendment, together
with a form on which each exercising Rights Holder
can consent to the amended terms. Any Rights Holder
who has previously exercised any Rights, or who
exercises Rights within four (4) business days after
the mailing of the new definitive Prospectus, and who
does not so consent within ten (10) business days
after the mailing of the definitive Prospectus and
form of consent, will be deemed to have canceled such
exercise and the Company will refund as soon as
practicable the full amount of the Subscription Price
paid by such Rights Holder, with interest. Any
completed Subscription Certificate received by the
Subscription Agent five (5) or more business days
after the date of the amendment will be deemed to
constitute the consent of the Rights Holder who
completed such Subscription Certificate to the
amended terms.
The Company may terminate the Rights Offering at any
time prior to delivery of the shares of Common Stock.
See "The Rights Offering--Amendments and
Termination."
Persons Holding Shares,
or Wishing to Exercise
Rights, Through
Others.............
Persons holding shares of Common Stock, and receiving
the Rights distributable with respect to such shares,
through a broker, dealer, commercial bank, trust
company or other nominee, as well as persons holding
certificates of Common Stock personally who would
prefer to
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<PAGE>
have such institutions effect transactions relating
to the Rights on their behalf, should contact the
appropriate institution or nominee and request it to
effect the transactions for them. See "The Rights
Offering--Exercise of Rights."
Issuance of Common Certificates representing shares of Common Stock
Stock.............. purchased pursuant to the Basic Subscription
Privilege or the Oversubscription Privilege will be
delivered to subscribers as soon as practicable after
the Expiration Date and after all prorations have
been effected. See "The Rights Offering--Subscription
Privileges."
Use of Proceeds.... The net proceeds available to the Company from the
Rights Offering will be approximately $28.4 million.
The Company currently plans to use such net proceeds
from the Rights Offering, together with available
cash, for general corporate purposes. In addition,
all or a portion of the proceeds may be used to fund
the construction of Hilton Garden Inns under the
Company's alliance with Hilton, to fund the Company's
Mexican joint venture and to fund the redevelopment
of the Company's existing hotels. At the present
time, the Company has not determined a specific use
for the proceeds. See "Use of Proceeds."
Subscription Agent...... ChaseMellon Shareholder Services, L.L.C.
Information Agent....... Any questions regarding the Rights Offering,
including the procedure for exercising Rights, and
requests for additional copies of this Prospectus,
the Subscription Certificate or the notice of
guaranteed delivery should be directed to ChaseMellon
Shareholder Services, L.L.C. (the "Information
Agent") at (800) 414-2879.
Nasdaq National Market
Symbol for Common
Stock..............
CHRT
Nasdaq National Market
Symbol for Rights.......
CHRTR
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<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following factors, in
addition to the other information contained in this Prospectus, before
purchasing the shares of Common Stock offered hereby.
EXPANSION RISKS
The Company's strategy includes increasing the number of its hotels through
the acquisition and the redevelopment of existing hotels and development of
new hotels. The Company's ability to expand depends on a number of factors,
including the selection and availability of suitable locations at acceptable
prices, the hiring and training of sufficiently skilled management and
personnel and the availability of financing. There can be no assurance that
financing, or desirable locations for acquisitions or new development, will be
available or, if available, will be on terms acceptable to the Company.
Acquisition Risks: Expansion by acquisition of hotels entails risks that
investments will fail to perform in accordance with expectations and that the
anticipated costs of renovation or conversion will prove inaccurate, as well
as general investment risks associated with any new real estate investment. In
connection with acquired properties, the Company will incur additional costs
relating to renovation and, if applicable, rebranding activities and operating
expenses, which could adversely affect the Company's financial performance.
Development Risks: Expansion by development of new hotels is subject to a
number of risks, including site acquisition cost and availability, risks of
construction delay, inclement weather and labor or material shortages or cost
overruns, risks that properties will not achieve anticipated occupancy levels
or sustain expected room rate levels and commencement risks such as receipt of
zoning, occupancy and other required governmental permits and authorizations,
which in each case could adversely affect the Company's financial performance.
Newly opened hotels generally begin with lower occupancy and room rates and
improve those rates over time.
Redevelopment Risks: The redevelopment of hotels involves risks associated
with construction and renovation of real property, including the possibility
of construction cost overruns and delays due to various factors (including
receipt of regulatory approvals, inclement weather and labor or material
shortages) and market or site determination after acquisition or renovation.
The operations at the hotels under redevelopment can be substantially
curtailed during portions of the redevelopment activity.
There can be no assurance that the Company's expansion strategy will be
implemented successfully. The Company's inability to successfully implement
its expansion plans would limit the Company's ability to increase its revenue
base. Furthermore, there can be no assurance that suitable hotel acquisition
candidates or development sites will be located, that hotel acquisitions can
be consummated successfully or that acquired or developed hotels can be
operated profitably or integrated successfully into the Company's operations.
LODGING INDUSTRY RISKS
The lodging industry in general may be adversely affected by such factors as
changes in national and regional economic conditions (particularly in
geographic areas in which the Company has a high concentration of hotels),
changes in local market conditions, oversupply of hotel space or a reduction
in local demand for rooms and related services, competition in the hotel
industry, changes in interest rates, the availability of financing and other
factors relating to the operation of hotels.
Operating Risks: Operating factors affecting the Company and the lodging
industry generally include (i) competition from other hotels, motels and
recreational properties, (ii) demographic changes, (iii) the recurring need
for renovations, refurbishment and improvements of hotels and increased
expenses related to hotel security, (iv) restrictive changes in zoning and
similar land use laws and regulations, or in health, safety, disability and
environmental laws, rules and regulations, (v) changes in government
regulations that influence or determine wages, prices or construction costs,
(vi) changes in the characteristics of hotel locations, (vii) the inability to
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<PAGE>
secure property and liability insurance to fully protect against all losses or
to obtain such insurance at reasonable costs, (viii) changes in real estate
tax rates and other operating costs, (ix) changes or cancellations in local
tourist, athletic or cultural events, (x) changes in travel patterns that may
be affected by increases in transportation costs or gasoline prices, changes
in airline schedules and fares, strikes, weather patterns or relocation or
construction of highways, (xi) increases in operating expenses and litigation
as a result of injuries to guests, and (xii) changes in brand identity and
reputation. Unexpected or adverse changes in any of the foregoing factors
could have a material adverse effect on the Company's business, assets,
financial condition or results of operations.
Cyclicality: The hotel industry is subject to periods of cyclical growth and
downturn. In the past, the hotel industry has experienced cyclical downturns
resulting from, among other things, overbuilding in the industry and sluggish
general economic conditions in the United States. There can be no assurance
that downturns or prolonged adverse conditions in the hotel industry, in real
estate or capital markets or in national or local economics will not have a
material adverse impact on the Company. In addition, the Company's hotels are
located throughout the United States and Canada, but the Company has a
geographic concentration of hotels in the State of California. As a result,
the Company's cash flow may be affected by economic conditions and demand for
hotel rooms within the State of California.
Seasonality: The hotel industry is seasonal in nature. Room occupancy rates
at the Company's hotels are affected by normally recurring seasonal patterns
and, in most locations in the United States and Canada, are higher in the late
spring through early fall months (May through October) than during the balance
of the year, with the lowest occupancy rates occurring in the first quarter of
the year. As a result, the Company expects to experience seasonal lodging
revenue patterns similar to the hotel industry with the summer months, due to
the increase in leisure travel, producing a higher revenue than in other
periods during the year.
IMPORTANCE OF FRANCHISOR RELATIONSHIPS
Substantially all of the Company's hotels are operated under the Travelodge
brand name pursuant to franchise agreements with affiliates of HFS. The
Company expects that substantially all of the hotels that it acquires or
develops in the future will be operated under hotel brands franchised by major
hotel franchisors. While the Company believes that franchise arrangements
offer the Company competitive advantages over nonfranchised lodging
properties, the value of a brand name under which the Company's hotels operate
and, as a result, the Company's business as a whole, could be adversely
affected by a number of factors relating to the franchisor of that brand over
which the Company has no control. These risks include the general reputation
of the brand and the success of the franchisor's marketing efforts. In
addition, pursuant to the terms of an applicable franchise agreement, a
franchisor can terminate the agreement if, among other things, its quality
standards are not maintained or if payments due are not made in a timely
fashion. If any of the franchise agreements were terminated by the franchisor,
the Company could explore entering into a franchise agreement with another
franchisor. There can be no assurance, however, that a desirable replacement
relationship would be available.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company has begun to expand its hotel operations in Mexico and Canada.
As a result, the Company's operations may be affected adversely as a result of
political changes or instability, general economic conditions, the imposition
of regulations relating to the ownership of hotel properties or real estate or
the franchising of hotel properties, the imposition of taxes, and other
charges on international business activities, in Mexico or Canada, and the
fluctuations in the value of the U.S. dollar against the Canadian dollar or
the Mexican peso, as the case may be, or restrictions on international
currency transactions.
RISKS OF NEW MANAGEMENT TEAM
The Company's senior management team, including the Chief Executive Officer,
the President, the Chief Operating Officer and the Chief Financial Officer,
have been appointed only recently and have had only a limited opportunity to
work as a management team. As a result, there can be no assurance that the
Company's
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<PAGE>
management team will be successful in managing the operations of the Company or
be able to effectively implement the Company's business and expansion strategy.
RELIANCE ON CURRENT MANAGEMENT
Although the Company's management team includes individuals with substantial
experience in operating, managing, developing and acquiring hotels and real
estate properties, the Company relies upon the services and expertise of
Richard L. Fisher, the Company's Chairman and Chief Executive Officer, Martin
L. Edelman, a Director and the Company's President, Ronald E. Jackson, its
Chief Operating Officer and Kenneth J. Weber, its Chief Financial Officer. The
occurrence of any event which would cause the Company to lose the services of
any of Messrs. Fisher, Edelman, Jackson or Weber could have a material adverse
effect on the Company. The Company has purchased $5 million key-man life
insurance policies covering each of Messrs. Fisher and Edelman, and $2 million
key-man life insurance policies covering each of Messrs. Jackson and Weber.
There is no assurance, however, that the Company will continue to maintain such
insurance policies in effect or that any proceeds thereof would be sufficient
to compensate the Company for the loss of services of any of Messrs. Fisher,
Edelman, Jackson or Weber. In addition to the substantial amounts of time that
Messrs. Fisher and Edelman devote to the Company's business activities, both
Messrs. Fisher and Edelman engage in other business activities. Neither Mr.
Fisher nor Mr. Edelman has an employment agreement with the Company.
RELATIONSHIP WITH HFS
In addition to the Company's relationship with HFS as the franchisor of the
Travelodge brand name under which substantially all of the Company's hotels
operate, $75 million of the Company's borrowings under its Credit Facility
among the Company, Chartwell Canada Corp., which is a subsidiary of the
Company, the Chase Manhattan Bank, as Administrative Agent, The Bank of Nova
Scotia, as Syndication Agent, and the Banks (as defined therein) from time to
time parties thereto (the "Credit Facility") are currently guaranteed by HFS.
The amount and availability of the Credit Facility could be adversely affected
by adverse changes in the financial condition of HFS.
CONFLICTS OF INTEREST
Three members of the Company's Board of Directors also serve as directors of
HFS. This commonality of directors could result in various conflicts of
interest with respect to the administration of the ongoing relationships
between HFS and the Company. In particular, conflicts may arise with respect to
various agreements, such as franchise agreements, entered into between the
Company and HFS. No assurance can be given that all conflicts will be resolved
in favor of the Company and its stockholders.
RISKS ASSOCIATED WITH OWNING REAL ESTATE
The Company's investments will be subject to varying degrees of risk
generally incident to the ownership of real estate. These risks include, among
others, changes in national, regional and local economic conditions, local real
estate market conditions, changes in interest rates and in the availability,
cost and terms of financing, the potential for uninsured casualty and other
losses, the impact of present or future environmental legislation and
compliance with environmental laws, the ongoing need for capital improvements,
particularly in older structures, civil unrest, acts of God, including
earthquakes, flooding and other natural disasters (which may result in
uninsured losses), acts of war and adverse changes in zoning laws and other
regulations, many of which are beyond the control of the Company. In addition,
real estate investments are relatively illiquid, which means that the ability
of the Company to vary its portfolio of hotels in response to changes in
economic and other conditions may be limited. If the Company must sell an
investment, there can be no assurance that the Company will be able to dispose
of it in the time period it desires or that the sale price of any investment
will recoup or exceed the amount of the Company's investment.
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<PAGE>
RISK OF EXPIRATION OF GROUND LEASES
Approximately 67% of the Company's hotels are located on property covered by
ground leases with unaffiliated third parties. Although the Company intends to
attempt to obtain renewals of the ground leases or the purchase of the real
property from the lessor when it considers renewal or purchase to be
advantageous, there can be no assurance that the Company will be able to do so.
The Company's failure to renew these ground leases or purchase the real
property from the lessor could adversely affect the Company's financial
performance.
COMPETITION
The hotel industry is highly competitive. The success of a hotel in its
market, in large part, is dependent upon its ability to compete in such areas
as reasonableness of room rates, quality of accommodations, service level and
convenience of location. The Company's hotels compete with existing hotel
facilities in their geographic markets, as well as future hotel facilities that
may be developed in proximity to the existing hotels. The Company's hotels
generally operate in areas that contain numerous competitors. The Company's
hotels compete with numerous other hotels, motels and other lodging
establishments in their market areas. Chains such as Days Inn and Howard
Johnson, both of which are franchised by HFS, Comfort Inns, Fairfield Inns,
Hampton Inns, La Quinta, Motel 6 and Red Roof Inns are direct competitors of
the Company's limited-service Travelodge brand hotels and Ramada, Holiday Inn
and Quality Inns are direct competitors, of the Company's full-service hotels.
Demographic, geographic or other changes in one or more of the Company's
markets could impact the convenience or desirability of the sites of certain
hotels, which would adversely affect the operations of those hotels. There can
be no assurance that new or existing competitors will not significantly lower
rates or offer greater convenience, services or amenities or significantly
expand or improve facilities in a market in which the Company's hotels compete,
thereby adversely affecting the Company's operations. In addition, some of the
Company's competitors have a larger network of locations and greater resources
than the Company. These competitors may generally be able to accept more risk
than the Company can prudently manage, including risks with respect to the
geographic proximity of its investments. Competition may generally reduce the
number of suitable hotel acquisition opportunities offered to the Company and
increase the bargaining power of property owners seeking to sell, which could
adversely affect the Company's financial performance.
CONTROL BY PRINCIPAL STOCKHOLDERS
CL Associates and FSNL have informed the Company that they intend to exercise
their Basic Subscription Privilege in full. After consummation of the Rights
Offering and the exercise by CL Associates and FSNL of their Basic Subscription
Privilege, CL Associates and FSNL will beneficially own approximately 6,033,064
shares of the Company's Common Stock, representing approximately 47.9% of the
outstanding shares of Common Stock, and will have voting and investment power
with respect to such stock. Accordingly, CL Associates and FSNL will retain
effective control, subject to the terms of the Amended and Restated Stock
Purchase Agreement, dated as of March 14, 1996, by and among CL Associates,
FSNL and the Company (the "CL Associates/FSNL Stock Purchase Agreement"), over
the election of Directors of the Company and most corporate actions, as well as
the outcome of most issues submitted to the Company's stockholders. Certain
conflicts of interest may arise between CL Associates, FSNL and their
affiliates and the Company. Such conflicts could arise with respect to business
dealings between CL Associates, FSNL and their affiliates and the Company and
other corporate matters. However, pursuant to the CL Associates/FSNL Stock
Purchase Agreement, CL Associates and FSNL have agreed to certain limitations
on their activities and certain limits on the exercise of their control over
the Company.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the Rights Offering, if the Rights Offering is fully
subscribed (other than by Brahman which has agreed not to exercise or transfer
any of the approximately 299,000 Rights it will receive pursuant to the Rights
Offering), the Company will have outstanding an aggregate of approximately
12,607,206 shares of Common Stock (based on the number of shares outstanding as
of February 6, 1997), assuming no
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<PAGE>
exercise of outstanding options. Of the total outstanding shares of Common
Stock, the 2,114,356 shares of Common Stock sold in the Rights Offering, if it
is fully subscribed (other than by Brahman which has agreed not to exercise or
transfer any of the approximately 299,000 Rights it will receive pursuant to
the Rights Offering), will be freely tradable without restriction or further
registration under the Securities Act, unless purchased by "affiliates" of the
Company, as that term is defined in Rule 144 under the Securities Act (which
sales would be subject to certain volume limitations and other restrictions
described below). In addition, of the 6,033,064 shares of Common Stock held by
CL Associates and FSNL after the full exercise by CL Associates and FSNL of
their Basic Subscription Privilege in the Rights Offering, the 1,128,134
shares purchased by CL Associates and FSNL in the Rights Offering will be
immediately eligible for resale in the public market, subject to certain
volume and other restrictions under Rule 144, 904,930 of the shares of Common
Stock held by them will be eligible for resale in the public market, subject
to certain volume and other restrictions under Rule 144, in December 1997, and
the remaining 4,000,000 shares of Common Stock held by them will be eligible
for resale in the public market, subject to certain volume and other
restrictions under Rule 144, in August 1998, but the sale of those 4,000,000
shares in the public market will be not be permitted until August 1999 by the
terms of the CL Associates/FSNL Stock Purchase Agreement. The 1,000,000 shares
of Common Stock purchased by Brahman in the Brahman Private Placement are
subject to a "lock up" agreement with the Company under which those shares
will not be permitted to be sold, transferred or otherwise disposed of by them
until August 1, 1997. The Company is obligated to register all of the shares
of Common Stock purchased by Brahman in the Brahman Private Placement and
expects to be obligated to register all the shares of Common Stock purchased
by Baron in the Baron Private Placement by May 1, 1997. As a result, at the
conclusion of the Brahman lock-up period and shortly after the close of the
Baron Private Placement, the shares purchased in the Brahman Private Placement
and the Baron Private Placement may be sold in the public market. See "Shares
Eligible for Future Sale." No prediction can be made as to the effect, if any,
that future sales of shares, or the availability of shares for future sales,
will have on the market price of the shares of Common Stock from time to time.
The sale of substantial amounts of shares of Common Stock, or the perception
that such sales could occur, could adversely affect prevailing market prices
for the Common Stock. See "Shares Eligible for Future Sale."
REGULATORY RISKS
The lodging industry is subject to numerous federal, state and local
government regulations, including building and zoning requirements. Also, the
Company is subject to laws governing its relationship with employees,
including minimum wage requirements, overtime, working conditions and work
permit requirements. An increase in the minimum wage rate, employee benefit
costs or other costs associated with employees, could adversely affect the
Company. Under the Americans with Disabilities Act of 1990 (the "ADA"), all
public accommodations are required to meet certain federal requirements
related to access and use by disabled persons. Although the Company has taken
actions to comply with the ADA, no assurance can be given that a material ADA
claim will not be asserted against the Company. These and other initiatives
could adversely affect the Company, as well as the lodging industry in
general. The Company is also subject to dramshop statutes or equivalent common
law in some jurisdictions that give an injured person the right to recover
damages from any establishment that wrongfully served alcoholic beverages to
an intoxicated person who causes the injury. The Company believes that its
insurance coverage with respect to any such liquor liability is adequate. The
Company has hotels that are subject to alcohol sales regulations and/or
dramshop statutes in Canada and the following states: California, Florida,
Georgia, New Jersey, New York, Oregon, Pennsylvania and Texas.
DIVIDEND POLICY
The Company has never paid any dividends on the Common Stock and does not
anticipate paying dividends on the Common Stock in the foreseeable future. In
addition, the Company's Credit Facility prohibits the payment of dividends on
the Common Stock. See "Dividend Policy."
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ENVIRONMENTAL MATTERS
Various United States Federal, state and local, Canadian and Mexican laws
and regulations impose liability on present and former real property owners
and operators for the cost of cleaning up or removing contamination caused by
hazardous or toxic materials. Under certain of these laws and regulations,
liability may be imposed without regard to fault or legality of the original
actions, and may be joint and several with other responsible parties.
Consequently, the Company could be responsible for payment of the full amount
of the liability, whether or not any other responsible party is also liable.
The presence of contamination at, adjacent to or near, a property also can
affect the valuation of that property or the ability of the owner to sell,
lease or obtain financing for the property and may in certain circumstances
form the basis for liability to third persons for personal injury or other
damages. Some of the Company's hotels are located on or near properties, such
as gasoline stations, on which activities have been conducted which have or
may have released petroleum products or other hazardous substances into the
soil or groundwater. The Company is aware of soil contamination, which the
Company believes was caused by unrelated third parties, at several of its
hotel sites in the United States and Canada. The Company has not received any
notices of liability in connection with such contamination. Based on its
present knowledge, the Company does not believe that environmental matters are
likely to have a material adverse effect on the Company's business, assets,
financial condition or results of operations. However, due to the absence of
complete information, possible future changes in laws and regulations,
possible future changes in the condition of the Company's properties, and
other factors, no assurance can be given that environmental matters will not
have a material adverse effect on the Company's business, assets, financial
condition or results of operations.
DIVESTITURE AND LOSS OF VOTING RIGHTS
Because the Company was formerly engaged in investing in casino gaming
activities, the Company's certificate of incorporation includes provisions
that may have the effect of permitting the Company to redeem or require a
stockholder of the Company to divest its shares of Common Stock or forfeit its
voting rights in certain circumstances where such stockholder's ownership of
Common Stock would adversely affect the Company's ability to secure requisite
gaming-related approvals or comply with certain other governmental
requirements. These provisions may be waived with the consent of the Company's
Board of Directors. See "Description of Capital Stock."
UNCERTAIN MARKET FOR RIGHTS; MARKET CONDITIONS; MARKET CONSIDERATIONS
Because the Rights are new securities, the trading market for the Rights may
be volatile. Moreover, there can be no assurance that a market for the Rights
will develop or as to the price at which the Rights will trade.
The Subscription Price of the Rights has been determined by the Board of
Directors of the Company and represents a discount to the market price of the
Common Stock at the date of this Prospectus. However, there can be no
assurance that the market price for the Common Stock will not decline during
the subscription period or that, following the Expiration Date, a subscribing
Rights Holder will be able to sell shares of Common Stock purchased in the
Rights Offering at a price equal to or greater than the Subscription Price.
When made, the election of a Rights Holder to exercise Rights in the Rights
Offering is irrevocable. Moreover, until certificates are delivered,
subscribing Rights Holders may not be able to sell the Common Stock that they
have purchased in the Rights Offering. Certificates representing shares of
Common Stock purchased pursuant to the Basic Subscription Privilege or the
Oversubscription Privilege will be delivered to subscribers as soon as
practicable after the Expiration Date and after all prorations have been
effected. No interest will be paid to Rights Holders on funds delivered to the
Subscription Agent pursuant to the exercise of Rights pending delivery of
shares of Common Stock acquired upon exercise of Rights.
IMPACT OF RIGHTS OFFERING ON HOLDERS OF COMMON STOCK; DILUTION
The Rights entitle the holders of shares of Common Stock to purchase shares
of Common Stock at a price below the prevailing market price of the Common
Stock immediately prior to the commencement of the Rights
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Offering. Holders of shares of Common Stock who exercise their Rights will
preserve their proportionate interest in their equity ownership and voting
power of the Company on a fully-diluted basis. Rights Holders who do not
exercise their Basic Subscription Privilege will, and Rights Holders who do not
exercise their Oversubscription Privilege may, experience a decrease in their
proportionate interest in the equity ownership and voting power of the Company.
The sale of the Rights may not compensate a holder for all or any part of the
reduction in the market value of such stockholder's shares of Common Stock, if
any, resulting from the Rights Offering. Stockholders who do not exercise or
sell their Rights will relinquish any value inherent in the Rights.
Assuming all of the Rights are exercised (other than by Brahman which has
agreed not to exercise or transfer any of the approximately 299,000 Rights it
will receive pursuant to the Rights Offering) and based on 10,492,850 shares of
Common Stock outstanding on February 6, 1997 the consummation of the Rights
Offering would result (on a pro forma basis as of such date) in an increase of
approximately 2,114,356 shares of Common Stock. CL Associates and FSNL own
approximately 46.75% of the Common Stock as of such date on a fully diluted
basis and have informed the Company that they intend to exercise the Rights
they receive through the Basic Subscription Privilege in full. Assuming that
all of the holders of the Rights exercise such Rights and that CL Associates
and FSNL exercise the Rights they receive through the Basic Subscription
Privilege in full and do not exercise the Rights they receive through the
Oversubscription Privilege, CL Associates and FSNL would own 47.85% of the
Common Stock of the Company after the Rights Offering on a fully diluted basis.
Assuming that no Rights are exercised by the holders thereof but that CL
Associates and FSNL exercise their Basic Subscription Privilege but do not
exercise their Oversubscription Privilege, CL Associates and FSNL would own
51.92% of the Common Stock after the Rights Offering on a fully diluted basis.
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THE RIGHTS OFFERING
THE RIGHTS
The Company is distributing transferable subscription rights ("Rights") to
the record holders ("Rights Holders") of its outstanding Common Stock as of
the close of business on February , 1997 (the "Record Date"). The Company
will distribute, at no cost to the record holders, .23 Rights for each share
of Common Stock held on the Record Date. An aggregate of approximately
2,413,356 Rights will be distributed pursuant to the "Rights Offering." Rights
will be evidenced by transferable subscription certificates ("Subscription
Certificates"), which are being distributed to each Rights Holder
contemporaneously with the delivery of this Prospectus. Commencement of the
Rights Offering is subject to receipt of a waiver by the Company's bank
lenders under its Credit Facility to permit the distribution of the Rights.
No fractional Rights or cash in lieu thereof will be issued or paid. The
number of Rights distributed to each holder of Common Stock will be rounded up
to the nearest whole number. No Subscription Certificate may be divided in
such a way as to permit the holders of Common stock to receive a greater
number of rights than the number to which such Subscription Certificate
entitles its holder, except that a depository, bank, trust company, and
securities broker or dealer holding shares of Common Stock on the Record Date
for more than one beneficial owner may, upon proper showing to the
Subscription Agent (defined below), exchange its Subscription Certificate to
obtain a Subscription Certificate for the number of Rights to which all such
beneficial owners in the aggregate would have been entitled had each been a
holder on the Record Date. The Company reserves the right to refuse to issue
any such Subscription Certificate if such issuance would be inconsistent with
the principle that each beneficial owner's holdings will be rounded up to the
nearest whole Right.
Because the number of Rights distributed to each stockholder will be rounded
up to the nearest whole number, beneficial owners of Common Stock who are also
the record holders of such shares might receive more Rights under certain
circumstances than beneficial owners of Common Stock who are not the record
holders of their shares and who do not obtain (or cause the record owner of
their shares of Common Stock to obtain) a separate Subscription Certificate
with respect to the shares beneficially owned by them, including shares held
in an investment advisory or similar account. To the extent that record
holders of Common Stock or beneficial owners of Common Stock who obtain a
separate Subscription Certificate receive more Rights, they will be able to
subscribe for more shares pursuant to the Basic Subscription Privilege and
Oversubscription Privilege described below.
CL Associates and FSNL, which beneficially own approximately 46.75% of the
Common Stock (based on 10,492,850 shares of outstanding Common Stock as of
February 6, 1997), have informed the Company that they intend to exercise the
Rights they receive through the Basic Subscription Privilege. If no holder of
Rights other than CL Associates and FSNL exercises its Rights, and if CL
Associates and FSNL fully exercise the Basic Subscription Privilege, then
approximately 46.75% of the Rights distributed by the Company will be
exercised, and CL Associates and FSNL's beneficial ownership in the Company
would increase to 51.92%, assuming CL Associates and FSNL do not exercise the
Rights they receive through the Oversubscription Privilege.
Brahman, which may be deemed to own beneficially on behalf of its investment
advisory client accounts 12.39% of the Common Stock, has agreed not to
exercise or transfer any of the approximately 299,000 Rights that it receives
through the Basic Subscription Privilege or the Oversubscription Privilege,
and to allow such Rights to expire unexercised.
The Rights will expire at 5:00 p.m., New York City time, on March , 1997
("Expiration Date"). After the Expiration Date, unexercised Rights will be
null and void. The Company will not be obligated to honor any purported
exercise of Rights received by the Subscription Agent after the Expiration
Date, regardless of when the documents relating to such exercise were sent,
except pursuant to the "Guaranteed Delivery Procedures" described below.
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SUBSCRIPTION PRIVILEGES
Basic Subscription Privilege
Stockholders of the Company will receive .23 Rights to purchase shares of
Common Stock at the Subscription Price for each share of Common Stock held on
the Record Date (the "Basic Subscription Privilege"). Each Right entitles the
holder to purchase at the Subscription Price one share of Common Stock. Each
Rights Holder is entitled to subscribe for all, or any portion of, the shares
of Common Stock subject to Rights.
Oversubscription Privilege
Each Right also entitles any Rights Holder exercising the Basic Subscription
Privilege in full to subscribe for up to one additional share of Common Stock
for each share of Common Stock purchased pursuant to the Basic Subscription
Privilege (the "Oversubscription Privilege"), to the extent all shares have
not been purchased pursuant to the Basic Subscription Privilege. Only Rights
Holders who exercise all of the Rights pursuant to the Basic Subscription
Privilege will be entitled to exercise the Oversubscription Privilege.
Shares of Common Stock will be available for purchase pursuant to the
Oversubscription Privilege only to the extent that any shares of Common Stock
are not subscribed for through the Basic Subscription Privilege. If the shares
of Common Stock not subscribed for through the Basic Subscription Privilege
(the "Excess Shares") are not sufficient to satisfy all subscriptions pursuant
to the Oversubscription Privilege, the Excess Shares will be allocated pro
rata (subject to the elimination of fractional shares) among the Rights
Holders exercising the Oversubscription Privilege in proportion to the number
of shares of Common Stock a Rights Holder exercising the Oversubscription
Privilege has subscribed for pursuant to the Basic Subscription Privilege.
Banks, brokers and other nominee Rights Holders who exercise the Basic
Subscription Privilege and subscribe pursuant to the Oversubscription
Privilege on behalf of beneficial owners of Rights will be required to certify
to the Subscription Agent and the Company, in connection with the subscription
pursuant to the Oversubscription Privilege, as to the aggregate number of
Rights that have been exercised and the number of shares of Common Stock that
are being subscribed for pursuant to the Oversubscription Privilege by each
beneficial owner of Rights on whose behalf such nominee holder is acting.
SUBSCRIPTION PRICE
The Subscription Price is $14.00 per share of Common Stock.
EXERCISE OF RIGHTS
Rights may be exercised by delivering to ChaseMellon Shareholder Services,
L.L.C. (the "Subscription Agent") at the addresses specified below, on or
prior to the Expiration Date, the properly completed and executed Subscription
Certificate evidencing such Rights with any signatures guaranteed as required,
together with payment in full of the Subscription Price for each share of
Common Stock purchased pursuant to the Basic Subscription Privilege and
subscribed for pursuant to the Oversubscription Privilege. Payment may be made
only by check or bank draft drawn upon a U.S. bank or postal, telegraphic or
express money order payable to ChaseMellon Shareholder Services, L.L.C., as
Subscription Agent. The Subscription Price will be deemed to have been
received by the Subscription Agent only upon (i) clearance of any uncertified
check or (ii) receipt by the Subscription Agent of any certified check or bank
draft drawn upon a U.S. bank or of any postal, telegraphic or express money
order. If paying by uncertified personal check, please note that the funds
paid thereby may take at least five business days to clear. Accordingly,
Rights Holders who wish to pay the Subscription Price by means of uncertified
personal check are urged to make payment sufficiently in advance of the
Expiration date to ensure that such payment is received and clears by such
date and are urged to consider payment by means of certified or cashier's
check or money order. All funds received in payment of the Subscription Price
will be held by the Subscription Agent and invested at the direction of the
Company in short-term certificates of deposit,
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short-term obligations of the United States or any state or any agency of the
United States or money market mutual funds investing in such instruments.
Subscription Certificates and payment of the Subscription Price or, if
applicable, Notices of Guaranteed Delivery or DTC Participant Oversubscription
Subscription Forms (each, as defined below) should be delivered to the
Subscription Agent at the following addresses for the Subscription Agent set
forth below.
If a Rights Holder wishes to exercise Rights, but time will not permit such
holder to cause the Subscription Certificate or Subscription Certificates
evidencing such Rights to reach the Subscription Agent on or prior to the
Expiration Date, such Rights may nevertheless be exercised if all of the
following conditions (the "Guaranteed Delivery Procedures") are met:
(i) such holder has caused payment in full to the Subscription Price for
each share of Common Stock being purchased pursuant to the Basic
Subscription Privilege and subscribed for pursuant to the Oversubscription
Privilege to be received (in the manner set forth above) by the
Subscription Agent on or prior to the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration Date,
a guarantee notice (a "Notice of Guaranteed Delivery"), which has been
distributed with the Subscription Certificates, from a member firm of a
registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., from a commercial bank or trust
company having an office or correspondent in the United States, or from a
financial institution acceptable to the Subscription Agent (each an
"Acceptable Institution"), stating the name of the exercising Rights
Holder, the number of Rights represented by the Subscription Certificate or
Subscription Certificates held by such exercising Rights Holder, the number
of shares of Common Stock being purchased pursuant to the Basic
Subscription Privilege and the number of shares of Common Stock, if any,
being subscribed for pursuant to the Oversubscription Privilege, and
guaranteeing the delivery to the Subscription Agent of any Subscription
Certificate evidencing such Rights within five trading days on the Nasdaq
National Market following the date of the Notice of Guaranteed Delivery;
and
(iii) the properly completed Subscription Certificate(s), with any
required signatures guaranteed, evidencing the Rights being exercised, with
any required guaranties, is received by the Subscription Agent within five
trading days on the Nasdaq National Market following the date of the Notice
of Guaranteed Delivery relating thereto. The Notice of Guaranteed Delivery
may be delivered to the Subscription Agent in the same manner as
Subscription Certificates at the addresses set forth above, or may be
transmitted to the Subscription Agent by facsimile transmission at the
facsimile number set forth below. Additional copies of the form of Notice
of Guaranteed Delivery are available upon request from the Subscription
Agent or the Information Agent, whose address and telephone number is set
forth below.
If an exercising Rights Holder does not indicate the number of Rights being
exercised, or does not forward full payment of the aggregate Subscription
Price for the number of Rights that the Rights Holder indicates are being
exercised, then the Rights Holder will be deemed to have exercised the Basic
Subscription Privilege with respect to the maximum number of Rights that may
be exercised for the aggregate Subscription Price payment delivered by the
Rights Holder, and to the extent that the aggregate Subscription Price payment
delivered by the Rights Holder exceeds the product of (a) the Subscription
Price and (b) the number of Rights evidenced by the Subscription Certificates
delivered by the Rights Holder (such excess being the "Subscription Excess"),
the Rights Holder will be deemed to have subscribed pursuant to the
Oversubscription Privilege to purchase, to the extent available, that number
of whole Excess Shares equal to the quotient of (i) the Subscription Excess
and (ii) the Subscription Price, for up to one additional share of Common
Stock for each share of Common Stock such Rights Holder would be entitled to
purchase pursuant to the Basic Subscription Privilege.
Funds received in payment of the Subscription Price for Excess Shares
subscribed for pursuant to the Oversubscription Privilege will be held in a
segregated account pending issuance of such remaining Shares. If a Rights
Holder subscribing pursuant to the Oversubscription Privilege is allocated
less than all of the shares of
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Common Stock which such holder wished to subscribe for pursuant to the
Oversubscription Privilege, the excess funds paid by such holder in respect of
the Subscription Price for shares not issued will be returned promptly after
the Expiration Date by mail, with interest at the rate earned on such funds.
Unless a Subscription Certificate (i) provides that the shares of Common
Stock to be issued pursuant to the exercise of Rights represented thereby are
to be delivered to the holder of such Rights or (ii) is submitted for the
account of an Acceptable Institution, signatures on such Subscription
Certificate must be guaranteed by a participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or the New York
Stock Exchange Inc. Medallion Signature Program.
Persons who hold shares of Common Stock for the account of others, such as
brokers, trustees or depositories for securities, should notify the respective
beneficial owners of such shares as soon as possible to ascertain such
beneficial owners' intentions and to obtain instructions with respect to the
Rights. If the beneficial owner so instructs, the record holder of such Right
should complete Subscription Certificates and submit them to the Subscription
Agent with the proper payment. In addition, beneficial owners of Common Stock
or Rights held through such a holder should contact the holder and request the
holder to effect transactions in accordance with the beneficial owners'
instructions.
The instructions accompanying the Subscription Certificates should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE
COMPANY.
THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK
OF THE RIGHTS HOLDERS, BUT IF SENT BY MAIL, IT IS RECOMMENDED THAT SUCH
CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, YOU ARE
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIER'S CHECK OR MONEY ORDER.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights or subscriptions pursuant to the Oversubscription
Privilege will be determined by the Company, whose determinations will be
final and binding. The Company in its sole discretion may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Right or
subscription pursuant to the Oversubscription Privilege. Subscriptions will
not be deemed to have been received or accepted until all irregularities have
been waived or cured within such time as the Company determines in its sole
discretion. Neither the Company nor the Subscription Agent will be under any
duty to give notification of any defect or irregularity in connection with the
submission of Subscription Certificates or incur nay liability for failure to
give such notification.
Any questions or requests for assistance concerning the method of exercising
Rights or subscribing pursuant to the Oversubscription Privilege or requests
for additional copies of this Prospectus or the Notice of Guaranteed Delivery
should be directed to the Information Agent, ChaseMellon Shareholder Services,
L.L.C., Inc., at its addresses set forth under "Information Agent."
NO REVOCATION
ONCE A RIGHTS HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE AND/OR
SUBSCRIBED PURSUANT TO THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE OR
SUBSCRIPTION MAY NOT BE REVOKED BY SUCH RIGHTS HOLDER.
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METHOD OF TRANSFERRING RIGHTS
The Rights will be quoted on the Nasdaq National Market under the trading
symbol CHRTR and may be purchased or sold through usual investment channels,
including banks and brokers. Trading in Rights will cease on the close of
business of the Nasdaq National Market trading day preceding the Expiration
Date.
The Rights evidenced by a single Subscription Certificate may be transferred
in whole by endorsing the Subscription certificate for transfer in accordance
with the accompanying instructions. A portion of the Rights evidenced by a
single Subscription Certificate (but not fractional Rights) may be transferred
by delivering to the Subscription Agent a Subscription Certificate properly
endorsed for transfer, with instructions to register such portion of the Rights
evidenced thereby in the name of the transferee (and to issue a new
Subscription Certificate to the transferee evidencing such transferred Rights).
In such event, a new Subscription Certificates evidencing the balance of the
Rights will be issued to the Rights Holder or, if the Rights Holder so
instructs, to an additional transferee.
The Rights evidenced by a Subscription Certificate also may be sold, in whole
or in part, through the Subscription Agent by delivering to the Subscription
Agent such Subscription Certificate properly executed for sale by the
Subscription Agent. If only a portion of the Rights (but not fractional Rights)
evidenced by a single Subscription Certificate is to be sold by the
Subscription Agent, such Subscription Certificate must be accompanied by
instructions setting forth the action to be taken with respect to the Rights
that are not to be sold.
Promptly following the Expiration Date, the Subscription Agent will send the
Rights Holder a check for the net proceeds from the sale of such Rights. If the
Rights can be sold, sales of such Rights will be deemed to have been effected
at the weighted average price received by the Subscription Agent for all Rights
sold by it at the request of Rights Holders, less any applicable brokerage
commissions, taxes and other direct expenses of sale. The Company will pay the
fees charged by the Subscription Agent for effecting such sales. Order to sell
Rights must be received by the Subscription Agent prior to 5:00 p.m., New York
City time, on the third business day preceding the Expiration Date. If less
than all sales orders received by the Subscription Agent can be filled, sales
proceeds will be prorated among the Rights Holders based upon the number of
Rights each has instructed the Subscription Agent to sell during such period,
irrespective of when during such period the instructions are received by the
Subscription Agent. The Subscription Agent's obligation to execute orders for
the sale of Rights is subject to its ability to find buyers.
Rights Holders of Common Stock wishing to transfer all or a portion of their
Rights (but not fractional Rights) should allow a sufficient amount of time
prior to the Expiration Date for (i) the transfer instructions to be received
and processed by the Subscription Agent, (ii) a new Subscription Certificate to
be issued and transmitted to the transferee or transferees with respect to
transferred Rights, and to the transferor with respect to retained Rights, if
any, and (iii) the Rights evidenced by such new Subscription Certificates to be
exercised or sold by the recipients thereof. If time does not permit a
transferee of a Right who wishes to exercise its Right to deliver its
Subscription Certificate to the Subscription Agent on or before the Expiration
Date, such transferee should make use of the Guaranteed Delivery Procedure
described under "The Rights Offering--Exercise of Rights." Neither the Company
nor the Subscription Agent shall have any liability to a transferee or
transferor of Rights if Subscription Certificates are not received in time for
exercise or sale prior to the Expiration Date.
Except for the fees charged by the Subscription Agent, all commissions, fees
and other expenses (including brokerage commissions and transfer taxes)
incurred in connection with the purchase, sale or exercise of Rights will be
for the account of the transferor of the Rights, and none of such commissions,
fees or expenses will be paid by the Company or the Subscription Agent.
PROCEDURES FOR DTC PARTICIPANTS
The Company anticipates that the exercise of the Basic Subscription Privilege
and the Oversubscription Privilege may be effected through the facilities of
The Depository Trust Company ("DTC"). Rights exercised
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through DTC are referred to as "DTC Exercised Rights." The holder of a DTC
Exercised Right may subscribe pursuant to the Oversubscription Privilege in
respect of such DTC Exercised Right by properly executing and delivering to the
Subscription Agent, at or prior to 5:00 p.m., New York City time on the
Expiration Date, a DTC Participant Oversubscription Exercise Form, together
with payment of the appropriate Subscription Price for the number of shares of
Common Stock subscribed for pursuant to the Oversubscription Privilege. Copies
of the DTC Participant Oversubscription Exercise Form may be obtained from the
Information Agent at the address set forth below.
AMENDMENTS AND TERMINATION
The Company reserves the right to extend the Expiration Date and to amend the
terms and conditions of the Rights Offering. If the Company amends the terms of
the Rights Offering, the Registration Statement of which this Prospectus forms
a part will be amended, and a new definitive Prospectus will be distributed to
all Rights Holders who have previously exercised Rights and to holders of
record of unexercised Rights on the date the Company amends such terms. In
addition, all Rights Holders who have previously exercised Rights, or who
exercise Rights within four (4) business days after the mailing of the new
definitive Prospectus, will be provided with a form of Consent to Amended
Rights Offering Terms, on which such Rights Holders can confirm their exercise
of Rights and their subscriptions under the terms of the Rights Offering as
amended by the Company; any Rights Holder who has previously exercised any
Rights, or who exercises Rights within (4) business days after the mailing of
the new definitive Prospectus, and who does not return such Consent within ten
(10) business days after the mailing of such Consent by the Company will be
deemed to have canceled such Rights Holder's exercise of Rights, and the full
amount of the Subscription Price theretofore paid by such Rights Holder will be
returned promptly after the Expiration Date by mail, with interest at the rate
earned on such funds. Any completed Subscription Certificate received by the
Subscription Agent five (5) or more business days after the date of the
amendment will be deemed to constitute the consent of the Rights Holder who
completed such Subscription Certificate to the amended terms.
The Company reserves the right at any time prior to delivery of the shares of
Common Stock purchased in the Rights Offering to terminate the Rights Offering.
Such termination would be effected by the Company by giving oral or written
notice of such termination to the Subscription Agent and making a public
announcement thereof. If the Rights Offering is so terminated, the Subscription
Price will be returned promptly after the Expiration Date by mail, with
interest at the rate earned on such funds. Neither the Company nor any selling
Rights Holder will have any obligation to a purchaser of Rights, whether such
purchase was made through the Subscription Agent or otherwise, in the event the
Rights Offering is terminated.
SHARES NOT PURCHASED IN RIGHTS OFFERING
Any shares of Common Stock remaining after exercise of the Basic Subscription
Privilege and the Oversubscription Privilege will be retained by the Company
and will not be offered to the public.
SUBSCRIPTION AGENT
The Company has appointed ChaseMellon Shareholder Services, L.L.C. as
Subscription Agent for the Rights Offering. The Subscription Agent's addresses,
which are the addresses to which the Subscription Certificates and payment of
the Subscription Price should be delivered, as well as the address to which a
Notice of Guaranteed Delivery or DTC Participant Oversubscription Form must be
delivered, and numbers are:
Address if my mail:
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
P.O. Box 798
Midtown Station
New York, N.Y. 10018
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Address if by hand or overnight courier:
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway
13th Floor
New York, N.Y. 10271
Facsimile Number:
Facsimile (For Eligible Institutions Only)
(201) 329-8936
For Confirming Fax Only: (201) 296-4209 or (201) 296-4381
The Company will pay the fees and expenses of the Subscription Agent and has
agreed to indemnify the Subscription Agent from certain liability which it may
incur in connection with the Rights Offering.
INFORMATION AGENT
The Company has appointed ChaseMellon Shareholder Services, L.L.C. as
Information Agent for the Rights Offering. Any questions or requests for
additional copies of this Prospectus, the Instructions, the Notice of
Guaranteed Delivery or the DTC Participant Oversubscription Subscription Form
may be directed to the Information Agent at the address and numbers below:
Address:
ChaseMellon Shareholder Services, L.L.C.
Information Agent
450 West 33rd Street, 15th Floor
New York, New York 10001
Telephone Number:
(800) 414-2879
The Company will pay the fees and expenses of the Information Agent and has
agreed to indemnify the Information Agent from certain liabilities which it
may incur in connection with the Rights Offering.
NO BOARD RECOMMENDATION
An investment in the Common Stock must be made pursuant to each Rights
Holder's or prospective investor's evaluation of the investor's best
interests. Accordingly, the Board of Directors of the Company makes no
recommendation to any Rights Holder or prospective investor regarding the
exercise of Rights.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain U.S. federal income tax
considerations relevant to beneficial owners of Common Stock upon the issuance
of Rights, and to Rights Holders upon the exercise, disposition or lapse of
Rights. This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly with
retroactive effect. This summary is addressed only to Rights Holders that hold
Rights and any Common Stock as capital assets and does not discuss state,
local or foreign tax consequences of the Rights Offering. This summary does
not discuss all aspects of federal income taxation that may be relevant to a
particular investor or to certain types of investors subject to special
treatment under the federal income tax laws, including banks, dealers in
securities, life insurance companies, tax-exempt
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organizations, foreign taxpayers, and investors that hold their Common Stock
or Rights as part of a "straddle" for federal income tax purposes or as part
of an integrated investment.
BENEFICIAL OWNERS OF COMMON STOCK AND RIGHTS HOLDERS ARE URGED TO CONSULT
THEIR TAX ADVISORS AS TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE RIGHTS OFFERING.
ISSUANCE OF RIGHTS
Beneficial owners of Common Stock are not expected to recognize taxable
income, for federal income tax purposes, in connection with the distribution
of Rights. Pursuant to Section 305(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company intends to so treat the distribution of
Rights as a nontaxable distribution. If the Internal Revenue Service were to
take a contrary position with respect to this matter, by deeming the
distribution of Rights to constitute a taxable distribution, a person
receiving a Right would recognize a dividend, taxable as ordinary income, in
an amount equal to the fair market value of the Right received, but only to
the extent of the current and accumulated earnings and profits of the Company.
To the extent the deemed distribution exceeds the current and accumulated
earnings and profits of the Company, such excess would be treated first as a
nontaxable recovery of adjusted tax basis in the Common Stock with respect to
which the Right was distributed and then as gain from the sale or exchange of
such Common Stock. A person's tax basis in a Right received in a taxable
distribution would equal the fair market value of the Right as of the date of
distribution of the Right.
BASIS AND HOLDING PERIOD OF RIGHTS
Except as provided below, the basis of Rights received by a beneficial owner
of Common Stock will be zero. If, however, either (i) the fair market value of
the Rights on the date the Rights are issued is 15% or more of the fair market
value (on the date of issuance) of the Common Stock with respect to which the
Rights are received, or (ii) the beneficial owner elects, in its federal
income tax return for the taxable year in which the Rights are received, to
allocate part of the basis of such Common Stock to the Rights, then upon
exercise or sale of the Rights, the Rights Holder's basis in such Common Stock
will be allocated between such Common Stock and the Rights in proportion to
the fair market values of each on the date the Rights are issued, except that,
in either case, no allocation of basis will be made to the Rights if the
Rights are not exercised or sold (e.g., the Rights expire unexercised). The
holding period of a Rights Holder with respect to Rights received as a
distribution on such Rights Holder's Common Stock will include the Rights
Holder's holding period for the Common Stock with respect to which the Rights
were distributed. In the case of a purchaser of Rights, the tax basis of the
purchased Rights will be equal to the purchase price paid therefor, and the
holding period for such Rights will begin on the day following the date of the
purchase.
SALE OF RIGHTS
Upon a sale or other taxable disposition of Rights, Rights Holders will
recognize gain or loss equal to the difference between the amount realized on
the sale or other disposition and the Rights Holder's basis in such Rights.
Such gain or loss will be capital gain or loss if gain or loss from a sale of
Common Stock by the beneficial holder would be characterized as capital gain
or loss at the time of such sale. Any such gain or loss will be long-term
capital gain or loss if Rights are treated as held (under the holding period
rules described above in "Basis and Holding Period of Rights") for more than
one year at the time of such sale or other disposition. Any gain or loss
recognized on a sale of Rights acquired by purchase will be short term capital
gain or loss if Common Stock acquired through the exercise of such Rights
would be a capital asset in the hands of the seller.
LAPSE OF RIGHTS
Upon the lapse of any Rights received by Rights Holders, such Rights Holders
will not recognize any gain or loss and, as indicated above, no allocation of
basis in such Rights Holders' Common Stock will be made to
26
<PAGE>
the Rights. A purchaser of Rights will be entitled to a short term capital
loss equal to its tax basis in the Rights upon a lapse of the Rights if Common
Stock acquired through the exercise of such Rights would be a capital asset in
the hands of the purchaser.
EXERCISE OF RIGHTS; BASIS AND HOLDING PERIOD OF THE COMMON STOCK ACQUIRED
THROUGH EXERCISE
Rights Holders will not recognize any gain or loss upon the exercise of
Rights. The basis of the Common Stock acquired upon exercise of Rights will be
equal to the sum of the Subscription Price therefor and the Rights Holder's
basis in the Rights exercised. The holding period for the Common Stock
acquired through exercise of Rights will begin on the day following the date
the Rights are exercised.
USE OF PROCEEDS
The net proceeds to be received by the Company from the Rights Offering
depends on the number of Rights exercised. If all Rights are exercised, the
Company expects the net proceeds available to it from the Rights Offering to
be approximately $28.4 million after payment of related fees and expenses
estimated to be $1.17 million. However, no assurance can be given that any or
all of the Rights will be exercised. Therefore, the actual proceeds from the
Rights Offering could be substantially lower.
The Company currently plans to use the net proceeds from the Rights
Offering, together with available cash, for general corporate purposes. In
addition, all or a portion of the proceeds may be used to fund the
construction of Hilton Garden Inns under the Company's alliance with Hilton,
to fund the Company's Mexican joint venture and to fund the redevelopment of
the Company's existing hotels. At the present time, however, the Company has
not determined the specific use for the proceeds of the Rights Offering.
Pending use, the net proceeds will be invested in short-term, interest
bearing securities.
PRICE RANGE OF COMMON STOCK
The Common Stock commenced trading on the NASDAQ National Market on November
14, 1994 under the symbol "NAGC." From January 1996 until August 8, 1996, the
Common Stock traded under the symbol "NALC" and, since August 8, 1996, has
traded under the symbol "CHRT." The following table sets forth for the periods
indicated the high and low sale prices of the Common Stock as reported on the
NASDAQ National Market.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1994
Fourth Quarter (commencing November 14, 1994)................ $19 1/8 $ 9 1/2
1995
First Quarter................................................ $14 1/4 $ 8 1/4
Second Quarter............................................... $11 $ 8
Third Quarter................................................ $10 1/2 $ 7 1/8
Fourth Quarter............................................... $12 1/2 $ 8 1/2
1996
First Quarter................................................ $14 3/4 $10 1/2
Second Quarter............................................... $17 1/2 $13
Third Quarter................................................ $18 1/2 $12 7/8
Fourth Quarter............................................... $17 3/4 $11 1/2
1997
First Quarter (through February 6, 1997)..................... $17 1/4 $11 7/8
</TABLE>
27
<PAGE>
As of February 6, 1997, there were 142 holders of record of Common Stock. A
recent reported last sale price of the Common Stock on the NASDAQ National
Market is set forth on the cover of this Prospectus.
DIVIDEND POLICY
The Company has never paid any dividends on the Common Stock, other than the
dividend of the Rights in the Rights Offering. The Company expects to retain
its earnings for the development and expansion of its business and the
repayment of indebtedness and does not anticipate paying dividends on the
Common Stock in the foreseeable future. Any future dividend policy will be
determined by the Company's Board of Directors, and the payment of any dividend
in the future will be based upon conditions then existing, including the
Company's earnings, financial condition and capital requirements, as well as
such economic and other factors as the Board of Directors may deem relevant at
the time. In addition, the Company's Credit Facility prohibits the payment of
dividends on the Common Stock.
STATE AND FOREIGN SECURITIES LAWS
The Rights may not be exercised by any person, and neither this Prospectus
nor any Subscription Certificate shall constitute an offer to sell or a
solicitation of an offer to purchase any shares of Common Stock in any
jurisdiction in which such transactions would be unlawful. The Company believes
that any action required of the Company has been taken in all jurisdictions of
the United States to permit exercises of the Rights and purchases of the Common
Stock by the stockholders of the Company. No action has been taken in any
jurisdiction outside the United States to permit offers and sales of the Rights
or the Common Stock. Consequently, the Company may reject subscriptions
pursuant to the exercise of Rights by any holder of Rights outside the United
States, and the Company may also reject subscriptions from holders in
jurisdictions within the United States if it should later determine that it may
not lawfully issue shares to such holders, even if it could do so by qualifying
the shares for sale or by taking other actions in such jurisdictions.
28
<PAGE>
CAPITALIZATION
The following table sets forth the pro forma capitalization of the Company
as of September 30, 1996 as adjusted to give effect to the Canadian
Acquisition and related borrowings which occurred on October 1, 1996, and as
adjusted to give effect to the sale of 2,114,356 shares of Common Stock (which
reflects Brahman's agreement not to exercise or transfer any of the
approximately 299,000 Rights it will receive pursuant to the Rights Offering)
pursuant to the Rights Offering at the Subscription Price and the application
of the estimated net proceeds therefrom (after deduction of the estimated
expenses of the Rights Offering). See "Use of Proceeds." For additional
information, see other financial and statistical information included
elsewhere as incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------------
PRO FORMA AS ADJUSTED(1)(2)(3)
--------- --------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt.............................. $ 84,655 $ 84,655
Stockholders' equity:
Preferred stock, $1.00 par value--
10,000,000 authorized, none issued and
outstanding.............................. -- --
Common Stock, $.01 par value--100,000,000
authorized; 9,467,750 issued and
outstanding, 11,645,333 issued and
outstanding, as adjusted(4).............. 95 116
Additional paid-in capital................ 161,521 190,816
Accumulated deficit....................... (35,874) (35,874)
Foreign currency translation adjustment... 86 86
-------- --------
Total stockholders' equity.............. 125,828 155,144
-------- --------
Total capitalization........................ $210,483 $239,799
======== ========
</TABLE>
- --------
(1) Assumes the issuance of 2,114,356 shares of Common Stock (which reflects
Brahman's agreement not to exercise or transfer any of the approximately
299,000 Rights it will receive pursuant to the Rights Offering) pursuant
to the Rights Offering. Also assumes the payment of expenses attributable
to the Rights Offering estimated to equal approximately $1,170,000. The
number of shares reserved for issuance upon exercise of the Rights will be
dependent on the number of shares outstanding as of the Commencement of
the Rights Offering, which is anticipated to be approximately 10,492,850
shares.
(2) Excludes 1,000,000 shares of Common Stock sold on January 31, 1997 in the
Brahman Private Placement for total proceeds of $14 million before
expenses.
(3) Excludes the results of the fourth quarter ended December 31, 1996 which
resulted in a reported loss of $(14.5) million.
(4) Excludes an aggregate of 2,000,000 shares of Common Stock reserved for
issuance under the Company's Stock Option Plan as of September 30, 1996,
including 1,623,000 shares as to which options were then outstanding, of
which 45,000 were exercisable on such date. Also excludes 398,480 shares
reserved for issuance under HFS' 1992 Incentive Stock Option Plan as of
September 30, 1996, including 398,480 shares as to which options were then
outstanding, of which 308,720 were exercisable on such date. In November
1996, the number of shares reserved for issuance under the Company's Stock
Option Plan was increased to 3,000,000 shares and options to purchase
514,000 shares of Common Stock were granted.
29
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description summarizes certain information regarding the
capital stock of the Company. This information does not purport to be complete
and is subject in all respects to the applicable provisions of the Delaware
General Corporation Law, as amended (the "DGCL"), the Company's Restated
Certificate of Incorporation (the "Certificate of Incorporation") and the
Company's Amended and Restated Bylaws (the "Bylaws").
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $0.01 par value per share, and 10,000,000 shares of Preferred
Stock, $1.00 par value per share. Upon consummation of the Rights Offering,
approximately 12,607, 206 shares of Common Stock will be issued and
outstanding if the Rights Offering is fully subscribed (other than by Brahman
which has agreed not to exercise or transfer any of the approximately 299,000
Rights it will receive pursuant to the Rights Offering). The Company has no
shares of Preferred Stock issued and outstanding, nor will any shares of
Preferred Stock be issued and outstanding upon consummation of the Rights
Offering.
COMMON STOCK
Each share of Common Stock entitles the holder thereof to one vote on all
matters submitted to a vote of stockholders, including the election of
directors. There is no cumulative voting in the election of directors;
consequently, the holders of a majority of the outstanding shares of Common
Stock can elect all of the directors then standing for election.
Holders of Common Stock are entitled to receive such dividends, if any, as
may be declared from time to time by the Board of Directors out of funds
legally available therefor. See "Dividend Policy." Holders of Common Stock
have no conversion, redemption or preemptive rights to subscribe to any
securities of the Company. All outstanding shares of Common Stock are, and the
shares to be sold in the Rights Offering when issued and paid for will be,
validly issued, fully paid and nonassessable. In the event of any liquidation,
dissolution or winding up of the affairs of the Company, holders of Common
Stock will be entitled to share ratably in the assets of the Company remaining
after provision for payment of liabilities to creditors. The rights,
preferences and privileges of holders of Common Stock are subject to the
rights of the holders of any shares of preferred stock that the Company may
issue in the future.
PREFERRED STOCK
The Certificate of Incorporation authorizes the Board of Directors to create
and issue one or more series of Preferred Stock and determine the rights and
preferences of each series, to the extent permitted by the Certificate of
Incorporation and applicable law. Among other rights, the Board of Directors
may determine with respect to any such series of preferred stock (i) the
designation of such series; (ii) the rate and time of, and conditions and
preferences with respect to, dividends, and whether such dividends are
cumulative; (iii) the voting rights, if any, of shares of such series; (iv)
the price, timing and conditions regarding the redemption of shares of such
series and whether a sinking fund should be established for such series; (v)
the rights and preferences of shares of such series in the event of voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company; and (vi) the right, if any, to convert or exchange shares of such
series into or for stock or securities of any other series or class. Except
for any difference so provided by the Board of Directors, the shares of all
series of Preferred Stock will rank on a parity with respect to the payment of
dividends and to the distribution of assets of liquidation.
The provisions of any such series of preferred stock could have an adverse
effect on the earnings of the Company available for dividends on the Common
Stock and for other corporate purposes and on amounts distributable to the
holders of Common Stock if the Company were liquidated. Such provisions may
also include restrictions on the ability of the Company to pay dividends on,
repurchase or redeem shares of Common Stock or other series of preferred
stock.
30
<PAGE>
DIVESTITURE AND LOSS OF VOTING RIGHTS
The Certificate of Incorporation contains a provision (the "Gaming
Provision") that provides that except as otherwise approved by the Company's
Board of Directors, no stockholder who is a "Disqualified Stockholder" would
be entitled to vote, directly or indirectly, any shares of the Company's
capital stock beneficially owned by such stockholder on any matter. A
"Disqualified Stockholder" is defined as any stockholder who (i) owns
beneficially five percent or more of the outstanding capital stock of the
Company and has not fully cooperated with the Company and/or any regulatory
gaming authority with respect to providing information or complying with other
similar requests, (ii) is required by any gaming authority to be qualified
with respect to any of the Company's or its subsidiaries' gaming licenses or
authorizations (collectively, the "Gaming Licenses") and who has neither been
qualified by nor obtained a waiver of qualification from each gaming authority
requiring such qualification (a "Waiver") in a timely manner, (iii) has been
found unsuitable or disqualified by any gaming authority with respect to any
Gaming Licenses, if such finding has not been reversed, vacated or superseded
or (iv) is not a United States citizen (as defined under the Shipping Act or
the Merchant Marine Act) and who acquires beneficial ownership of shares of
the Company's capital stock, which when aggregated with all other shares of
the Company's capital stock that are owned by non-U.S. citizens, represents
more than 25% of the Company's outstanding capital stock (such shares of
capital stock in excess of 25% of the Company's outstanding capital stock
being the "Disqualifying Excess Shares"). Shares of the Company's capital
stock held by a Disqualified Stockholder would not be considered as
outstanding stock entitled to vote for any purpose.
In addition, under the Gaming Provision, the Company has the right, upon
written notice, to require that a Disqualified Stockholder that holds
"Publicly-traded Securities" dispose of any and all (or the Disqualifying
Excess Shares in the case of a Disqualified Stockholder described in (iv)
above) of the Company's Publicly-traded Securities held by such Disqualified
Stockholder. "Publicly-traded Securities" are defined as any securities that
are listed or admitted to trading on any national securities exchange or are
quoted on the NASDAQ.
The Company also has the right, at its option, to call for redemption any or
all of the shares (or the Disqualifying Excess Shares in the case of a
Disqualified Stockholder described in (iv) above) of the Company's capital
stock beneficially owned by a Disqualified Stockholder. Generally, the
"Redemption Price" paid to the Disqualified Stockholder for each share of
capital stock, in the case of exchange-listed or NASDAQ-quoted stock, would be
equal to the average closing price of such shares for the 20-day period
preceding the date of the notice of redemption, and if the stock were not
listed or quoted, then the Redemption Price would be the fair market value as
determined by the Company's Board of Directors. The Company has the right to
pay the Redemption Price to the Disqualified Stockholder in cash, property or
rights, including securities of the Company, as the Board of Directors might
determine. If, on the date set for redemption, a holder failed to deliver the
certificates for the shares to be redeemed properly endorsed for transfer, the
payment to be delivered by the Company would be set aside to be delivered to
the holder, without interest, upon surrender of the certificates.
Unsurrendered certificates would no longer represent outstanding shares, the
right to receive further dividends with respect to those shares would cease,
and all rights of the person holding those shares would cease, except for the
right to receive the payment that had been set aside with respect to those
shares.
CLASSIFIED DIRECTORS
The Certificate of Incorporation provides that the number of directors shall
not be less than three nor more than 15 and, within such limits and subject to
the rights of holders of any class or series of preferred stock, the number
may be fixed from time to time by the Board of Directors of the Company. The
Certificate of Incorporation provides that directors shall be divided into
three classes, designated Class I, Class II and Class III, each class
consisting, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. Each director serves for
a term ending on the date of the third annual meeting of stockholders next
following the annual meeting at which such director was elected, provided that
directors originally designated as Class I, Class II and Class III directors,
respectively, serve for a term ending on the date of the first, second and
third annual meeting, respectively, following the effective date of the
Certificate of Incorporation.
31
<PAGE>
With a classified Board of Directors, at least two annual meetings of
stockholders, instead of one, are generally required to effect a change in a
majority of the Board of Directors. As a result, a classified Board of
Directors may discourage proxy contests for the election of directors or
purchases of a substantial block of the Common Stock because it limits the
ability to obtain control of the Board of Directors of the Company in a
relatively short period of time. The classification provisions could also have
the effect of discouraging a third party from making a tender offer or
otherwise attempting to obtain control of the Company. In addition, because
under Delaware law a director serving on a classified Board of Directors may
be removed only for cause, a classified Board of Directors would delay
stockholders who do not agree with the policies of the Board of Directors from
replacing a majority of the Board of Directors for two years, unless it could
be demonstrated that the directors should be removed for cause and the
requisite vote of stockholders were obtained. Such a delay may help ensure
that the Board of Directors of the Company, if confronted by a person
conducting a proxy contest or pursuing an extraordinary corporate transaction,
will have sufficient time to review the proposal and appropriate alternatives
to the proposal and to act in what it believes is the best interests of the
Company and its stockholders. Approval of the Board of Directors as well as an
80% stockholder vote is required to amend the director classification
provisions of the Certificate of Incorporation.
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT; ADVANCE NOTICE
PROVISIONS
The Certificate of Incorporation and Bylaws provide that special meetings of
stockholders of the Company may only be called by the Board of Directors or
the Chairman of the Board of the Company. The Certificate of Incorporation
also requires that stockholder action be taken at a meeting of stockholders
and prohibits stockholder action by written consent. The Bylaws provide that
stockholder nominations of directors and stockholder proposals to conduct
business at a stockholders' meeting must be given in advance of the meeting
within the time period and in the manner provided for in the Bylaws. Approval
of the Board of Directors as well as an 80% stockholder vote would be required
to amend any of the foregoing provisions.
LIABILITY OF DIRECTORS; INDEMNIFICATION
The Company's Certificate of Incorporation contains a provision that
eliminates the personal liability of a director to the Company and its
stockholders for breaches of fiduciary duty as a director to the fullest
extent permitted by the DGCL. Under Delaware law, however, this provision does
not eliminate or limit the personal liability of a directors (i) for any
breach of such director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under the DGCL statutory
provision making directors personally liable, under a negligence standard, for
unlawful payment of dividends or unlawful stock repurchase or redemptions, of
(iv) for any transaction from which the director derived an improper personal
benefit. This provision offers persons who serve on the Board of Directors of
the Company protection against awards of monetary damages resulting from
breaches of their duty of care (except as indicated above), including grossly
negligent business decisions made in connection with takeover proposals for
the Company. As a result of this provision, the ability of the Company or a
stockholder thereof to successfully prosecute an action against a director for
a breach of his duty of care has been limited. However, the provision does not
affect the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of his duty of care. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
The Certificate of Incorporation also provides that each person (and the
heirs, executors or administrators of such person) who was or is a party or is
threatened to be made a party to, or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such persons is or was a director
or officer of the Company or is or was serving at the request of the Company
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified and held harmless by the
Company to the fullest extent permitted by the DGCL.
32
<PAGE>
Under the DGCL and the Bylaws, the right to indemnification includes the right
to be paid by the Company the expenses incurred in defending in any such
proceeding in advance of its final disposition to the fullest extent permitted
by the DGCL. The Certificate of Incorporation provides further that, by action
of the Board of Directors, the Company may provide indemnification to such
officers, employees and agents of the Company to the extent that, in the
determination of the Board of Directors, indemnification is appropriate and
authorized under the DGCL.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the Rights Offering, if the Rights Offering is fully
subscribed (other than by Brahman which has agreed not to exercise or transfer
any of the approximately 299,000 Rights it will receive pursuant to the Rights
Offering), the Company will have outstanding an aggregate of approximately
12,607,206 shares of Common Stock (based on the number of shares outstanding as
of February 6, 1997), assuming no exercise of outstanding options. Of the total
outstanding shares of Common Stock, the 2,114,356 shares of Common Stock sold
in the Rights Offering, if it is fully subscribed (other than by Brahman which
has agreed not to exercise or transfer any of the approximately 299,000 Rights
it will receive pursuant to the Rights Offering), will be freely tradable
without restriction or further registration under the Securities Act, unless
purchased by "affiliates" of the Company, as that term is defined in Rule 144
under the Securities Act (which sales would be subject to certain volume
limitations and other restrictions described below). In addition, of the
approximately 6,033,064 shares of Common Stock held by CL Associates and FSNL
after the full exercise by CL Associates and FSNL of their Basic Subscription
Privilege in the Rights Offering, the approximately 1,128,134 shares purchased
by CL Associates and FSNL in the Rights Offering will be immediately eligible
for resale in the public market, subject to certain volume and other
restrictions under Rule 144, 904,930 of the shares of Common Stock held by them
will be eligible for resale in the public market, subject to certain volume and
other restrictions under Rule 144, in December 1997, and the remaining
4,000,000 shares of Common Stock held by them will be eligible for resale in
the public market, subject to certain volume and other restrictions under Rule
144, in August 1998, but the sale of those 4,000,000 shares in the public
market will be not be permitted until August 1999 by the terms of the CL
Associates/FSNL Stock Purchase Agreement. The 1,000,000 shares of Common Stock
purchased by Brahman in the Brahman Private Placement are subject to a "lock
up" agreement with the Company under which those shares will not be permitted
to be sold, transferred or otherwise disposed of by them until August 1, 1997.
The Company is obligated to register all of the shares of Common Stock
purchased by Brahman in the Brahman Private Placement and expects to be
obligated to register all the shares of Common Stock expected to be purchased
by Baron in the Baron Private Placement by May 1, 1997. As a result, at the
conclusion of the Brahman lock-up period and shortly after the close of the
Baron Private Placement, the shares purchased in the Brahman Private Placement
and the Baron Private Placement may be sold in the public market.
In general, under Rule 144 as currently in effect, a person, including a
person who may be deemed an "affiliate" of the Company, who has held restricted
shares for two years may sell such shares, subject to certain volume
limitations and other restrictions, without registering them under the
Securities Act. Rule 144 generally also permits sales of restricted shares,
without any volume limitations, by a person who has not been an "affiliate" of
the Company for at least three months preceding the sale of such shares and who
has held those restricted shares for at least three years. Pursuant to the
terms of a registration rights agreement, each of CL Associates or FSNL (or its
assignee) will be entitled to certain demand registration rights with respect
to shares of Common Stock held by them. In addition to these demand
registration rights, each of CL Associates and FSNL (or its assignees) will be,
subject to certain limitations, entitled to register shares of Common Stock in
connection with future registration statements prepared by the Company to
register its equity securities.
33
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock offered pursuant to the Rights Offering is being offered by
the Company directly to its holders of Common Stock.
The Company will pay the fees and expenses of ChaseMellon Shareholder
Services, L.L.C., as Subscription Agent, and has also agreed to indemnify the
Subscription Agent from any liability which it may incur in connection with
the Rights Offering, including liabilities under the Securities Act. The
Company will pay the fees and expenses of ChaseMellon Stockholder Services,
L.L.C., as Information Agent, and has agreed to indemnify the Information
Agent from certain liabilities which it may incur in connection with the
Rights offering, including liabilities under the Securities Act.
Rights Holders who desire to purchase shares of Common Stock in the Rights
Offering are urged to complete, date and sign the Subscription Certificate
accompanying this Prospectus and return it to the Subscription Agent on or
before the Expiration Date, with payment in full of the aggregate Subscription
Price. See "The Rights Offering--Exercise of Rights." Rights may be
transferred. See "The Rights Offering--Method of Transferring Rights." Any
questions concerning the procedure for subscribing for the purchase of shares
should be directed to the Subscription Agent or the Information Agent.
LEGAL MATTERS
The validity of the Common Stock has been passed upon for the Company by
Battle Fowler LLP, New York, New York. Martin L. Edelman, who is the President
and a Director of the Company, is also of counsel to Battle Fowler LLP.
EXPERTS
The consolidated financial statement of the Company for the years ended
December 31, 1995 and 1994 and the period August 1, 1993 (date of inception)
to December 31, 1993 incorporated by reference in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing therein, and have been so included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing. The consolidated financial statements of Travelodge/Thriftlodge as
of January 23, 1996 and for the period February 1, 1995 to January 23, 1996
incorporated by reference in this Prospectus and the registration statement
have been audited by Deloitte & Touche LLP independent auditors, as stated in
their report appearing therein, and have been so included in reliance upon the
report of such firm given upon their authority as experts in auditing and
accounting. The consolidated financial statements of Travelodge/Thriftlodge as
of January 31, 1995 and for each of the two years in the period ended January
31, 1995 incorporated by reference in this Prospectus have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing. The
consolidated financial statements of Capital Properties Limited Partnership as
of September 30, 1996 and 1995 and each of the three years in the period ended
September 30, 1996 incorporated by reference in this Prospectus and the
related financial statement schedules included therein have been audited by
Deloitte & Touche, independent auditors as stated in their reports appearing
therein, and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
34
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows all expenses of the issuance and distribution of
the securities offered hereby, other than underwriting discounts and
commissions:
<TABLE>
<S> <C>
Securities and Exchange Commission ("SEC") filing fee............ $ 20,583
Nasdaq National Market ("Nasdaq") listing fee.................... 18,500
Printing and engraving expenses.................................. 150,000
Subscription agent's fees and expenses........................... 12,500
Information agent's fees and expenses............................ 7,500
Legal fees and expenses.......................................... 500,000
Accounting fees and expenses..................................... 300,000
Blue Sky filing fees and expenses (including counsel fees)....... 5,000
Miscellaneous expenses........................................... 155,917
----------
Total........................................................ $1,170,000
==========
</TABLE>
All expenses other than the SEC filing fee, NASD filing fee and Nasdaq
listing fee have been estimated for purposes of this filing. All expenses will
be paid by the Company.
15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that such person is or was a director, officer or agent of the corporation or
another enterprise if serving at the request of the corporation. Depending on
the character of the proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding if the person indemnified acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe such persons's conduct was unlawful. In the
case of an action by or in the right of the corporation, no indemnification
may be made with respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such an action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstance of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper. Section 145
further provides that to the extent a director or officer of a corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. The
indemnification provided is not deemed to be exclusive of any other rights to
which a director or officer may be entitled under any corporation's by-law,
agreement, vote or otherwise.
In accordance with Section 145 of the DGCL, Article 10 of the Company's
Restated Certificate of Incorporation (the "Restated Certificate") and Article
VIII of the Company's Amended and Restated Bylaws (the "Bylaws") provide that
the Company shall indemnify to the fullest extent permitted under the DGCL any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director or officer of the Company, or is or was a director or officer
of the Company serving at the request of the Company as director or officer,
employee or agent of another corporation, partnership, joint venture,
trust,
II-1
<PAGE>
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The indemnification provided by the Restated Certificate and the
Bylaws shall not be deemed exclusive of any other rights to which any of those
seeking indemnification or advancement of expenses may be entitled under any
other agreement, vote or otherwise. Expenses incurred in defending a civil or
criminal action, suit or proceeding shall (in the case of any action, suit or
proceeding against a director or officer of the Company) or may (in the case of
any action, suit or proceeding against an employee or agent) be paid by the
Company in advance of the final disposition of such action, suit or proceeding
as authorized by the Board of Directors of the Company upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company. Article 10 of the Restated Certificate provides that neither the
amendment or repeal of the above-referenced provisions of the Restated
Certificate shall eliminate or reduce the effect of such provisions in respect
of any matter occurring before such amendment or repeal.
16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Transfer and Distribution Agreement, dated as of November 22,
1994, between the Company and HFS. (Incorporated by reference to
the Company's Current Report on Form 8-K, dated December 2, 1994,
Exhibit 2.1).
2.2 Agreement and Plan of Merger and Reorganization, dated as of
January 17, 1995, by and among Boomtown, Tweety Sub, Inc. and the
Company. (Incorporated by reference to the Company's Current
Report on Form 8-K, dated February 1, 1995, Exhibit 2.1).
2.3 Agreement and Plan of Merger by and among National Gaming Corp.,
NGC Acquisition Corp. and Par-A-Dice Gaming Corporation, dated
December 28, 1994. (Incorporated by reference to the Company's
annual Report on Form 10-K, dated December 31, 1994, Exhibit 2.3).
2.4 Stock Purchase Agreement, dated as of December 19, 1995, between
Forte USA, Inc. and the Company. (Incorporated by reference to the
Company's Current Report on Form 8-K, dated January 23, 1996,
Exhibit 2.1).
2.5 Amendment No. 1 to Stock Purchase Agreement, dated as of January
1996, between Forte USA, Inc. and the Company. (Incorporated by
reference to the Company's Current Report on Form 8-K, dated
January 23, 1996, Exhibit 2.2).
2.6 Stock Purchase Agreement, dated as of December 20, 1995, by and
between Chartwell Leisure Associates L.P. II and the Company.
(Incorporated by reference to the Company's Annual Report on Form
10-K, dated December 31, 1995, Exhibit 2.6).
2.7 Stock Purchase Agreement, dated as of February 14, 1996, by and
between Chartwell Leisure Associates L.P. II, FSNL LLC and the
Company. (Incorporated by reference to the Company's Annual Report
on Form 10-K, dated December 31, 1995, Exhibit 2.7).
2.8 Form of Amended and Restated Stock Purchase Agreement, dated as of
March 14, 1996, by and among Chartwell Leisure Associates L.P. II,
FSNL LLC and the Company. (Incorporated by reference to the
Company's Annual Report on Form 10-K, dated December 31, 1995,
Exhibit 2.8).
2.9 Securities Purchase Agreement, dated as of January 31, 1997, among
the Company and the Investors listed therein.*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Form of Common Stock Certificate. (Incorporated by reference to
Amendment No. 2 to the Company's Registration Statement on Form
10/A (File No. 0-024794), dated November 2, 1994, Exhibit 4.1).
4.2 Form of Subscription Certificate.*
5.1 Opinion of Battle Fowler LLP regarding the legality of the
securities being registered.*
23.1(a) Consent of Deloitte & Touche LLP.*
23.1(b) Consent of Deloitte & Touche LLP.*
23.1(c) Consent of Deloitte & Touche.*
23.2 Consent of Battle Fowler LLP (included in its opinion filed as
Exhibit 5.1 hereto).*
23.3 Consent of Price Waterhouse LLP.*
24.1 Powers of Attorney (included on the signature pages hereto).+
99.1 Form of Instructions to Record Holder.*
99.2 Form of Notice of Guaranteed Delivery for Subscription
Certificates.*
99.3 Form of Certification and Request for Additional Rights.*
99.4 Nominee Holder Subscription Certification.*
99.5 Special Notice to Foreign Holders.*
99.6 Form of Letter to Common Stockholders who are record holders.*
99.7 Form of Letter to Common Stockholders who are beneficial holders.*
99.8 Form of Letter to Common Stockholders.*
99.9 Form of DTC Participant Oversubscription Exercise Form.*
99.10 Form of Subscription Agent Agreement between the Company and
ChaseMellon Shareholder Services, L.L.C.*
99.11 Form of Information Agent Agreement between the Company and
ChaseMellon Shareholder Services, L.L.C.*
</TABLE>
- --------
*Filed herewith.
+Filed previously.
(b) Financial Statement Schedules:
All other schedules have been omitted because they are not applicable, or are
not required, or the information is shown in the Financial Statements or the
Notes thereto.
17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and
II-3
<PAGE>
contained in a form of Prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1
TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON
FEBRUARY 7, 1997.
Chartwell Leisure Inc.
(Registrant)
/s/ Martin L. Edelman
By: ____________________________
MARTIN L. EDELMAN
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
* Chairman of the February 7,
- ------------------------------------- Board of Directors 1997
and Chief Executive
RICHARD L. FISHER Officer (principal
executive officer)
/s/ Martin L. Edelman Director and February 7,
- ------------------------------------- President 1997
MARTIN L. EDELMAN
* Chief Financial February 7,
- ------------------------------------- Officer (principal 1997
financial and
KENNETH J. WEBER accounting officer)
* Director February 7,
- ------------------------------------- 1997
HENRY R. SILVERMAN
* Director February 7,
- ------------------------------------- 1997
STEPHEN P. HOLMES
II-5
<PAGE>
SIGNATURE TITLE DATE
* Director February 7, 1997
- -------------------------------------
MARC E. LELAND
* Director February 7, 1997
- -------------------------------------
MICHAEL J. KENNEDY
* Director February 7, 1997
- -------------------------------------
DR. GUIDO GOLDMAN
* Director February 7, 1997
- -------------------------------------
RACHEL ROBINSON
/s/ Martin L. Edelman February 7, 1997
*By: ___________________________
MARTIN L. EDELMAN ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Transfer and Distribution Agreement, dated as of November 22, 1994,
between the Company and HFS. (Incorporated by reference to the
Company's Current Report on Form 8-K, dated December 2, 1994, Exhibit
2.1).
2.2 Agreement and Plan of Merger and Reorganization, dated as of January
17, 1995, by and among Boomtown, Tweety Sub, Inc. and the Company.
(Incorporated by reference to the Company's Current Report on Form 8-
K, dated February 1, 1995, Exhibit 2.1).
2.3 Agreement and Plan of Merger by and among National Gaming Corp., NGC
Acquisition Corp. and Par-A-Dice Gaming Corporation, dated December
28, 1994. (Incorporated by reference to the Company's annual Report
on Form 10-K, dated December 31, 1994, Exhibit 2.3).
2.4 Stock Purchase Agreement, dated as of December 19, 1995, between Forte
USA, Inc. and the Company. (Incorporated by reference to the
Company's Current Report on Form 8-K, dated January 23, 1996, Exhibit
2.1).
2.5 Amendment No. 1 to Stock Purchase Agreement, dated as of January 1996,
between Forte USA, Inc. and the Company. (Incorporated by reference
to the Company's Current Report on Form 8-K, dated January 23, 1996,
Exhibit 2.2).
2.6 Stock Purchase Agreement, dated as of December 20, 1995, by and
between Chartwell Leisure Associates L.P. II and the Company.
(Incorporated by reference to the Company's Annual Report on Form 10-
K, dated December 31, 1995, Exhibit 2.6).
2.7 Stock Purchase Agreement, dated as of February 14, 1996, by and
between Chartwell Leisure Associates L.P. II, FSNL LLC and the
Company. (Incorporated by reference to the Company's Annual Report on
Form 10-K, dated December 31, 1995, Exhibit 2.7).
2.8 Form of Amended and Restated Stock Purchase Agreement, dated as of
March 14, 1996, by and among Chartwell Leisure Associates L.P. II,
FSNL LLC and the Company. (Incorporated by reference to the Company's
Annual Report on Form 10-K, dated December 31, 1995, Exhibit 2.8).
2.9 Securities Purchase Agreement, dated as of January 31, 1997, among the
Company and the Investors listed therein.*
4.1 Form of Common Stock Certificate. (Incorporated by reference to
Amendment No. 2 to the Company's Registration Statement on Form 10/A
(File No. 0-024794), dated November 2, 1994, Exhibit 4.1).
4.2 Form of Subscription Certificate.*
5.1 Opinion of Battle Fowler LLP regarding the legality of the securities
being registered.*
23.1(a) Consent of Deloitte & Touche LLP.*
23.1(b) Consent of Deloitte & Touche LLP.*
23.1(c) Consent of Deloitte & Touche.*
23.2 Consent of Battle Fowler LLP (included in its opinion filed as Exhibit
5.1 hereto).*
23.3 Consent of Price Waterhouse LLP.*
24.1 Powers of Attorney (included on the signature pages hereto).+
99.1 Form of Instructions to Record Holder.*
99.2 Form of Notice of Guaranteed Delivery for Subscription Certificates.*
99.3 Form of Certification and Request for Additional Rights.*
99.4 Nominee Holder Subscription Certification.*
99.5 Special Notice to Foreign Holders.*
99.6 Form of Letter to Common Stockholders who are record holders.*
99.7 Form of Letter to Common Stockholders who are beneficial holders.*
99.8 Form of Letter to Common Stockholders.*
99.9 Form of DTC Participant Oversubscription Exercise Form.*
99.10 Form of Subscription Agent Agreement between the Company and Chase
Mellon Shareholder Services, L.L.C.*
99.11 Form of Information Agent Agreement between the Company and Chase
Mellon Shareholder Services, L.L.C*
</TABLE>
- --------
*Filed herewith.
+Filed previously.
<PAGE>
SECURITIES PURCHASE AGREEMENT
among
CHARTWELL LEISURE INC.
and
THE INVESTORS LISTED HEREIN
January 31, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1 AUTHORIZATION OF SECURITIES....................................-1-
SECTION 2 PURCHASE AND SALE OF SECURITIES................................-1-
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................-2-
3.1 Corporate Organization...................................-2-
3.2 Business.................................................-2-
3.3 Financial Statements.....................................-3-
3.4 Capitalization...........................................-4-
3.5 Corporate Proceedings, etc...............................-4-
3.6 Consents and Approvals...................................-5-
3.7 Absence of Defaults, Conflicts, etc......................-5-
3.8 Compliance with Law......................................-6-
3.9 Pending Actions..........................................-6-
3.11 Private Offering.........................................-6-
3.12 Brokerage................................................-7-
3.13 Material Facts...........................................-7-
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..................-7-
SECTION 5 ADDITIONAL COVENANTS OF THE PARTIES............................-8-
5.1 Resale of Securities.....................................-8-
5.2 Covenants Pending Closing................................-9-
5.3 Further Assurance........................................-9-
5.4 Rights Offering..........................................-9-
SECTION 6 INVESTORS' CLOSING CONDITIONS..................................-9-
6.1 No Material Adverse Change...............................-9-
6.2 Representations and Warranties...........................-9-
6.3 Compliance with Agreement...............................-10-
6.4 Officer's Certificate...................................-10-
6.5 Approval of Proceedings.................................-10-
6.6 Injunction..............................................-10-
6.7 Opinion.................................................-10-
SECTION 7 COMPANY'S POST-CLOSING CONDITIONS...............................-10-
7.1 Closing of Related Transactions.........................-10-
7.2 Sale Right..............................................-11-
7.3 Officer's Certificate...................................-11-
SECTION 8 COMPANY'S CLOSING CONDITIONS..................................-11-
8.1 Representations and Warranties..........................-11-
8.2 Compliance with Agreement...............................-11-
8.3 Investor Certificate....................................-12-
8.4 Injunction..............................................-12-
<PAGE>
SECTION 9 COVENANTS......................................................-12-
9.1 Financial and Business Information......................-12-
SECTION 10 REGISTRATION RIGHTS............................................-13-
10.1 Required Registration...................................-13-
10.2 Lock-Up Agreement.......................................-14-
10.3 Registration Procedures.................................-14-
10.4 Further Information.....................................-15-
SECTION 11 INDEMNIFICATION...............................................-16-
11.1 Indemnification Generally...............................-16-
11.2 Indemnification Relating
to Registration Rights..................................-16-
11.3 Indemnification Procedures..............................-18-
SECTION 12 INTERPRETATION OF THIS AGREEMENT...............................-18-
12.1 Terms Defined...........................................-18-
12.2 Directly or Indirectly..................................-19-
12.3 Governing Law...........................................-19-
12.4 Paragraph and Section Headings..........................-20-
SECTION 13 MISCELLANEOUS.................................................-20-
13.1 Notices.................................................-20-
13.2 Expenses................................................-20-
13.3 Survival................................................-20-
13.4 Entire Agreement; Amendment and Waiver..................-21-
13.5 Counterparts............................................-21-
13.6 Successors and Assigns..................................-22-
SCHEDULES
Schedule 2 Investors
Schedule 3.4 Rights
Schedule 3.6 Consents and Approvals
<PAGE>
PURCHASE AGREEMENT
Dear Sirs:
Chartwell Leisure Inc., a Delaware corporation (the "Company"), hereby
agrees with Quota Fund N.V. - "Brahman", Brahman Partners II, L.P., Genesis
Capital Fund - "Brahman", B-Y Partners, L.P., Brahman Institutional Partners,
L.P. and Brahman Partners II Offshore, Ltd. (individually an "Investor" and
collectively the "Investors") as follows:
SECTION 1 AUTHORIZATION OF SECURITIES
---------------------------
(a) The Company has authorized 100,000,000 shares of Common
Stock, $.01 par value (the "Common Stock"), of which 9,492,850 shares were
issued and outstanding as of the close of business on January 30, 1997 and
10,000,000 shares of Preferred Stock, $1.00 par value the ("Preferred Stock")
of which no shares were issued and outstanding as of September 30, 1996.
SECTION 2 PURCHASE AND SALE OF SECURITIES
-------------------------------
(a) Subject to the terms and conditions set forth in this
Agreement and in reliance upon the Company's and the Investors' representations
set forth below, on the Closing Date (as defined below) the Company shall sell
to the Investors, and the Investors shall purchase from the Company, the number
of shares of Common Stock set forth on Schedule 2 at $14.00 per share for
----------
an aggregate cash purchase price (the "Purchase Price") as set forth on
Schedule 2 (such shares, collectively, the "Shares"). Such sale and
- ----------
purchase shall be effected on the Closing Date by the Company executing and
delivering to the Investors, duly registered in each Investor's name, a duly
executed stock certificate evidencing the Shares being purchased by it, against
delivery by each Investor to the Company of the Purchase Price by wire transfer
of immediately available funds to such account as the Company shall designate
on the Closing Date. The Company shall maintain such funds in a segregated
interest-bearing account (the "Segregated Account") for the sole benefit of the
Investors until such time as the conditions set forth in Section 7 of this
Agreement are met or the Investors exercise their rights under Section 7.2, in
which case the funds shall immediately, but in no event more than one Business
Day after exercise of such right, be returned to the Investors against delivery
of such Shares as provided in Section 7.2.
(b) The closing (the "Closing") of such sale and purchase shall
take place at 10:00 A.M., New York City time, on January 31, 1997 or on such
other date as the Investors and the Company agree to in writing (the "Closing
Date"), at the offices of Werbel & Carnelutti, 711 Fifth Avenue, 5th Floor, New
York,
<PAGE>
New York, 10022, or at such other location as the Investors and the Company
shall mutually select and agree to.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Investors that:
3.1 Corporate Organization
----------------------
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) The Company has all requisite power and authority and has all
necessary approvals, licenses, permits and authorization to own and lease its
properties and to carry on its business as now conducted, except where the
failure to have such approvals, licenses, permits or authorizations would not
have a material adverse effect on the business or financial position of the
Company and its subsidiaries, taken as a whole.
(c) The Company has filed all necessary documents to qualify to
do business as a foreign corporation in, and the Company is in good standing
under the laws of, each jurisdiction in which the conduct of the Company's
business or the nature of the property owned require such qualification, except
where the failure to so qualify would not have a material adverse affect on the
business or financial position of the Company and its subsidiaries taken as a
whole.
3.2 Business
--------
The Company has caused to be delivered to the Investors copies of the
following, without exhibits thereto (collectively, including the exhibits
thereto the "SEC Reports and Filings"):
(i) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 (File No. 0-24794) filed with the Commission on
April 1, 1996, as amended by the Company's Annual Report on Form 10-K/A filed
with the Commission on May 24, 1996, as amended by the Company's Annual Report
on Form 10-K/A filed with the Commission on July 3, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996 filed with the Commission on May 15, 1996;
(iii) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1996 filed with the Commission on August 8, 1996,
as amended by the Company's
-2-
<PAGE>
Quarterly Report on Form 10-Q/A filed with the Commission on August 9, 1996;
(iv) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996 filed with the Commission on November
12, 1996;
(v) The Company's Current Report on Form 8-K, dated January
23, 1996, filed with the Commission on February 7, 1996, as amended by the
Company's Current Report on Form 8-K/A filed with the Commission on April 2,
1996, as amended by the Company's Current Report on Form 8-K/A filed with the
Commission on July 3, 1996, as amended by the Company's Current Report on Form
8-K/A filed with the Commission on July 9, 1996;
(vi) The Company's Current Report on Form 8-K, dated October
1, 1996, filed with the Commission on October 15, 1996 as amended by the
Company's Current Report on Form 8-K filed with the Commission on December 12,
1996;
(vii) The Company's registration statement on Form S-3 dated
November 22, 1996.
The SEC Reports and Filings include all filings required to be made by
the Company since January 1, 1996 under the Securities Act of 1933, as amended
(the "Securities Act) and the Exchange Act of 1934 (the "Exchange Act") and any
rules and regulations promulgated thereunder. The SEC Reports and Filings,
when filed, complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder. None of the SEC Reports and Filings, at the time of
filing contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances in which they
were made. The Company has taken all necessary actions to ensure its continued
inclusion in, and the continued eligibility of the Common Stock for trading on
The NASDAQ Stock Market under all currently effective and, to the Company's
knowledge, currently proposed inclusion requirements. Each balance sheet
included in the SEC Reports and Filings (including any related notes and
schedules) fairly presents in all material respects the consolidated financial
position of the Company and its Subsidiaries as of its date, and each of the
other financial statements included in the SEC Reports and Filings (including
any related notes and schedules) fairly presents in all material respects the
consolidated results of operations or other information therein of Company and
its Subsidiaries for the periods or as of the dates therein set forth in
accordance with GAAP consistently applied during the periods involved (except
that the interim reports are subject to adjustments which might
-3-
<PAGE>
be required as a result of year end audit and except as otherwise stated
therein).
-4-
<PAGE>
3.3 Financial Statements
--------------------
The audited consolidated balance sheet of the Company as at December 31,
1995 and the unaudited consolidated balance sheet of the Company as at
September 30, 1996 fairly present in all material respects the consolidated
financial position of the Company as at the dates thereof, and the related
consolidated statements of operations, equity and cash flows for the year ended
December 31, 1995 and the nine months ended September 30, 1996 fairly present
the results of operations of the Company and its subsidiaries for the
respective periods indicated (except that the interim reports are subject to
adjustments which might be required as a result of year end audit and except as
otherwise stated therein). All such financial statements, including the
schedules and notes thereto, were prepared in accordance with generally
accepted accounting principles ("GAAP") applied consistently throughout the
periods involved, except as otherwise stated therein.
3.4 Capitalization
--------------
(a) As of the date hereof, the Company has authorized 100,000,000
shares of Common Stock, $.01 par value (the "Common Stock"), of which 9,492,850
shares were issued and outstanding as of the close of business on January 30,
1997 and 10,000,000 shares of Preferred Stock, $1.00 par value the ("Preferred
Stock") of which no shares were issued and outstanding as of September 30,
1996.
(b) All the outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and non-assessable. Upon
issuance, sale and delivery as contemplated by this Agreement, the Shares will
be duly authorized, validly issued, fully paid and non-assessable shares of the
Company, free of all preemptive or similar rights.
(c) Except as set forth on Schedule 3.4 hereto, on the
------------
Closing Date there will be no shares of Common Stock issuable upon exercise or
conversion of any security of the Company nor will there be any rights, options
or warrants outstanding or other agreements to acquire shares of Common Stock
nor will the Company be contractually obligated to purchase, redeem or
otherwise acquire any of its outstanding shares of Common Stock. No
shareholder of the Company is entitled to any preemptive or similar rights to
subscribe for shares of capital stock of the Company. Except as set forth on
Schedule 3.4, no shareholders have registration rights with respect to their
shares.
3.5 Corporate Proceedings, etc.
--------------------------
The Company has authorized the execution, delivery, and performance of
this Agreement and each of the transactions and agreements contemplated hereby
(the "Related Transactions"). No other corporate action (including shareholder
approval) is necessary to authorize such execution, delivery and performance of
this Agreement or the transactions contemplated hereby (other than various
actions to be taken in connection with the Rights Offering (as defined herein)
-5-
<PAGE>
and the transactions contemplated by Section 10 hereof), and upon such
execution and delivery, this Agreement shall constitute the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights and general principles of equity.
3.6 Consents and Approvals
----------------------
Except for the consents and filings described in Schedule 3.6 hereto,
------------
the execution and delivery by the Company of this Agreement, the performance by
the Company of its obligations hereunder and the consummation by the Company of
the transactions contemplated hereby (other than the Rights Offering (as
defined herein) and the matters contemplated by Section 10 hereof) do not
require the Company to obtain any consent, approval or action of, or make any
filing with or give any notice to, any corporation, person or firm or any
public, governmental or judicial authority.
3.7 Absence of Defaults, Conflicts, etc.
-----------------------------------
The execution and delivery of this Agreement do not, and the fulfillment
of the terms hereof by the Company, and the issuance of the Shares will not,
result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, or permit the acceleration of rights under or
termination of, any indenture, mortgage, deed of trust, credit agreement, note
or other evidence of indebtedness, or other material agreement of the Company
(collectively the "Key Agreements and Instruments"), or the Restated
Certificate of Incorporation or the Amended and Restated By-Laws of the
Company, or any rule or regulation of any court or federal or state regulatory
board or body or administrative agency having jurisdiction over the Company or
over its properties or businesses. No event has occurred and no condition
exists which, upon notice or the passage of time, would constitute a default
under any such Key Agreements and Instruments or in any material license,
permit or authorization to which the Company is a party or by which it may be
bound.
3.8 Compliance with Law
-------------------
(a) The Company is not in violation of any
laws, ordinances, governmental rules or regulations to which it is subject,
including without limitation, laws or regulations relating to the environment
or to occupational health and safety which violation would or might materially
adversely affect the properties, business, prospects, profits or condition
(financial or otherwise) of the Company.
(b) The Company has all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or to
the conduct of its business, which if violated or not obtained would or be
reasonably likely to materially adversely affect the properties, business,
prospects, profits or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole. The Company has not finally been denied any
application for any such
-6-
<PAGE>
licenses, permits, franchises or other governmental authorizations necessary to
its business.
3.9 Pending Actions
---------------
There is no action, suit, investigation or proceeding pending or, to the
Company's knowledge, threatened against the Company or any of its properties or
assets by or before any court, arbitrator or governmental body, department,
commission, board, bureau, agency or instrumentality, which questions the
validity of this Agreement, the Related Transactions, the issuance or validity
of the Shares or any action taken or to be taken pursuant hereto or thereto, or
which is reasonably likely to result in any material adverse change in the
business or financial condition of the Company and its subsidiaries, taken as a
whole, nor has the Company been notified that either it or any of its officers,
directors or affiliates is the subject of any investigation or inquiry,
informal or otherwise, conducted by the SEC or NASDAQ and the Company is not in
default with respect to any judgment, order, writ, injunction, decree, or award
having applicability to it or its business or properties, other than any such
defaults which would not have a material adverse effect on the business or
financial position of the Company and its subsidiaries, taken as a whole.
3.10 Private Offering
----------------
Neither the Company nor anyone acting on its behalf has sold or has
offered any of the Shares for sale to, or solicited offers to buy from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Investor. Neither the Company nor anyone acting on
its behalf shall offer the Shares for issue or sale to, or solicit any offer to
acquire any of the same from, anyone so as to bring the issuance and sale of
such Shares, or any part thereof, within the provisions of Section 5 of the
Securities Act. Based upon the representations of the Investors set forth in
Section 4, the offer, issuance and sale of the Shares are and will be exempt
from the registration and prospectus delivery requirements of the Securities
Act, and have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.
3.11 Brokerage
---------
There are no claims for brokerage commissions or finder's fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement made by or on behalf of the Company.
3.12 Material Facts
--------------
This Agreement, the schedules furnished contemporaneously herewith, and
the other agreements, documents, certificates or written statements furnished
or to be furnished to the Investors, including the SEC Reports and Filings,
through the Closing Date by or on behalf of the Company in connection with the
transactions contemplated
-7-
<PAGE>
hereby, do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained therein or herein,
in light of the circumstances in which they were made, not misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
-----------------------------------------------
Each Investor represents and warrants to the Company as follows:
(a) It is acquiring the Shares for its own account for investment
and not with a view towards the resale, transfer or distribution thereof, nor
with any present intention of distributing the Shares, but subject,
nevertheless, to any requirement of law that the disposition of the Investor's
property shall at all times be within the Investor's control, and without
prejudice to the Investor's right at all times to sell or otherwise dispose of
all or any part of such securities under a registration under the 1933 Act or
under an exemption from said registration available under the 1933 Act.
(b) It has full power and legal right to execute and deliver this
Agreement and to perform its obligations hereunder.
(c) Brahman Partners II, L.P., Brahman Institutional Partners,
L.P. and B-Y Partners, L.P., are limited partnerships, duly organized under the
laws of Delaware; and Quota Fund NV-"Brahman" and Genesis Capital Fund -
"Brahman", are investment accounts managed by Brahman Capital Corp. and Brahman
Partners, respectively; and Brahman Partners II Offshore, Ltd., is a tax-exempt
corporation organized under the laws of the Cayman Islands.
(d) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, and, upon execution and delivery by the Company, this Agreement
shall constitute the valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms, except that such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general principles of equity.
(e) There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement made by or on behalf of the
Investor.
(f) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to
bear the economic risk of such investment for an indefinite period of time. It
has been furnished access to such information and documents as it has requested
and has been afforded an opportunity to ask questions of and receive answers
from representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares contemplated hereby and the business
and financial condition of the Company.
-8-
<PAGE>
(g) It is an "accredited investor" as such term is defined in
Rule 501 under the Securities Act and each, other than Quota Fund N.V. -
"Brahman", Genesis Capital Fund - "Brahman" and Brahman Partners II Offshore,
Ltd. (collectively, the "Non-Brahman QIBs"), is a Qualified Institutional Buyer
as defined under Rule 144A of the Securities Act. The Non-Brahman QIBs are
institutional investors.
(h) Each of the Investors (a) acknowledges that the Shares are
not registered under the Securities Act or under any state securities laws and
that the Shares to be acquired by it must be held indefinitely by it unless
they are subsequently registered under the Securities Act and under any
applicable state securities laws or an exemption from registration is
available, (b) is aware that any routine sales pursuant to Rule 144 promulgated
under the Securities Act of the Shares may be made only in limited amounts and
in accordance with the terms and conditions of that Rule and that in such cases
where the Rule is not applicable, compliance with some other registration
exemption will be required, (c) is aware that Rule 144 is not presently
available for use by any Investor for resale of the Shares and (d) is aware
that, except as provided in Section 10 of this Agreement, the Company is not
obligated to register under the Securities Act any sale, transfer or other
disposition of the Shares.
SECTION 5 ADDITIONAL COVENANTS OF THE PARTIES
-----------------------------------
5.1 Resale of Securities
--------------------
(a) Each Investor covenants that it will not sell or
otherwise transfer the Shares except pursuant to an effective registration
under the Securities Act or unless it delivers to the Company an opinion of
counsel, in form and substance reasonably acceptable to the Company, to the
effect that the sale or transfer qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder.
(b) The certificates evidencing the Shares will bear the
following legend reflecting the foregoing restrictions on the transfer of such
securities:
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
transferred except pursuant to an effective registration under the Act or
in a transaction which, in the opinion of counsel reasonably satisfactory
to the Company, qualifies as an exempt transaction under the Act and the
rules and regulations promulgated thereunder. Prior to August 1, 1997,
the transfer of the shares represented by this certificate is restricted
pursuant to the Securities Purchase Agreement among Chartwell Leisure
Inc. and the investors listed therein, dated January 31, 1997."
5.2 Covenants Pending Closing
-------------------------
-9-
<PAGE>
Until the Closing, the Company will not, without each Investor's prior
written consent, take any action which would result in any of the covenants
contained in this Agreement becoming incapable of performance. The Company
will promptly advise the Investors of any action or event of which it becomes
aware which has the effect of rendering any of such covenants incapable of
performance.
5.3 Further Assurance
-----------------
Each of the parties shall execute such documents and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby. Each such
party shall use its reasonable efforts to fulfill or obtain the fulfillment of
the conditions to the Closing and the Post-Closing Conditions as promptly as
practicable.
5.4 Rights Offering
---------------
Each Investor agrees not to exercise or transfer any of the rights that
it receives in connection with the Rights Offering, and to allow such rights to
expire unexercised.
-10-
<PAGE>
SECTION 6 INVESTORS' CLOSING CONDITIONS
-----------------------------
The obligation of the Investors to purchase and pay for the Shares on the
Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Company of its agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
6.1 No Material Adverse Change
--------------------------
There shall not have occurred any event which in the sole judgment of the
Investors has resulted in or is likely to result in a material adverse change
in the condition (financial or otherwise), business, operations, assets,
properties, financial results, prospects of the Company or market price of the
Common Stock and no facts exist which in the sole judgment of the Investors
make it inadvisable to proceed with the Closing.
6.2 Representations and Warranties
------------------------------
The representations and warranties of the Company contained in this
Agreement shall be true on and as of the Closing Date as though such
representations and warranties were made at and as of such date, except as
otherwise affected by the transactions contemplated hereby.
6.3 Compliance with Agreement
-------------------------
The Company shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by the Company prior to or on the Closing Date.
6.4 Officer's Certificate
---------------------
The Investors shall have received a certificate, dated the Closing Date,
signed by the Chief Financial Officer of the Company, certifying that the
conditions specified in the foregoing Sections 6.1, 6.2 and 6.3 hereof have
been fulfilled.
6.5 Approval of Proceedings
-----------------------
All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to the Investors and their counsel; and the
Investors shall have received copies of all documents or other evidence which
they and such counsel may request in connection with such transactions and
of all records of corporate proceedings in connection therewith in form and
substance satisfactory to the Investors and such counsel.
6.6 Injunction
----------
There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of
-11-
<PAGE>
competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as herein provided.
6.7 Opinion
-------
The Investors shall receive an opinion of counsel to the Company, Battle
Fowler LLP, in form and substance satisfying to Investors and their counsel.
SECTION 7 COMPANY'S POST-CLOSING CONDITIONS
---------------------------------
7.1 Closing of Related Transactions
-------------------------------
The Company shall have: (i) on or before March 15, 1997 commenced the
currently contemplated rights offering at a price of $14.00 per share (the
"Rights Offering"); and (ii) on or before April 15, 1997 consummated the sale
of an aggregate of no less than 1,071,428 shares of Common Stock to Chartwell
Leisure Associates L.P. II and FSNL LLC at a price of no less than $14.00 per
share (collectively, the "Post-Closing Conditions").
7.2 Sale Right
----------
In the event that each of the Post-Closing Conditions are not met on or
before April 15, 1997 (the "Section 7.2 Exercise Date"), the Investors will
have the right to sell the Shares purchased herein to the Company by notifying
the Company in writing (the "Notice") of its intention to sell Shares back to
the Company and the Company shall be required to repurchase such Shares at a
price of $14.00 per share plus interest accrued in the Segregated Account from
the Investors within two (2) Business Days of receipt of such Notice. The
Investors may elect to exercise such right by notifying the Company in writing
of their intention to sell such shares to the Company. The Closing of such
sale and purchase shall take place at 10:00 a.m. at the offices of Werbel &
Carnelutti, at 711 Fifth Avenue, New York, New York 10022, within two (2)
Business Days of receipt of such Notice. The Company shall pay the purchase
price in immediately available funds against delivery of such Shares and such
certificates representing the Shares shall be duly endorsed to the Company or
accompanied by duly executed stock power naming the Company as transferee.
7.3 Officers' Certificate
---------------------
The Investors shall have received a certificate signed by the Chief
Financial Officer of the Company, certifying that the conditions specified in
Section 7.1 hereof have been fulfilled.
SECTION 8 COMPANY'S CLOSING CONDITIONS
----------------------------
The obligation of the Company to issue and deliver the Shares on the
Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Investors of their agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
8.1 Representations and Warranties
------------------------------
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<PAGE>
The representations and warranties of the Investors contained in this
Agreement shall be true on and as of the Closing Date as though such warranties
and representations were made at and as of such date, except as otherwise
affected by the transactions contemplated hereby.
8.2 Compliance with Agreement
-------------------------
The Investors shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by it prior to or on the Closing Date.
8.3 Investor Certificate
--------------------
The Company shall have received a certificate from each Investor, dated
the Closing Date, signed by a duly authorized representative of each Investor,
certifying that the conditions specified in the foregoing Sections 8.1 and 8.2
hereof have been fulfilled.
8.4 Injunction
----------
There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.
SECTION 9 COVENANTS
---------
9.1 Financial and Business Information
----------------------------------
From and after the date hereof, the Company shall deliver to the
Investors so long as the Investors collectively hold beneficially (within the
meaning of Rule 13d-3 under the Exchange Act) at least 25% of the Shares being
purchased by the Investors on the date hereof:
(a) Quarterly Statements - as soon as practical, and in any
--------------------
event within 50 days after the close of each of the first three fiscal quarters
of each fiscal year of the Company, a copy of the Company's Quarterly Report on
Form 10-Q for such quarter or, if the Company is not required to file such a
report with the SEC, an unaudited consolidated balance sheet and statements of
operations, stockholders' equity and cash flows of the Company and any
subsidiaries as at the close of such quarter and covering operations for such
quarter, and the portion of the Company's fiscal year ending on the last day of
such quarter, all in reasonable detail and prepared in accordance with GAAP
consistently applied, subject to audit and year-end adjustments, setting forth
in each case in comparative form the figures for the comparable period of the
previous fiscal year.
(b) Annual Statements - as soon as practical after the end of
-----------------
each fiscal year of the Company, and in any event within 105 days thereafter, a
copy of the Company's Annual Report on Form 10-K for such year or, if the
Company is not required to file such a report with the SEC duplicate copies of:
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<PAGE>
(i) consolidated balance sheets of the Company and any
subsidiaries at the end of such year; and
(ii) consolidated statements of operations, stockholders,
equity and cash flows of the Company and any subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by an opinion thereon of
Deloitte & Touche LLP or such other independent certified public accountants of
recognized national standing selected by the Company, which opinion shall state
that such financial statements fairly present the financial position of the
Company and any subsidiaries on a consolidated basis and have been prepared in
accordance with GAAP consistently applied (except for changes in application in
which such accountants concur) and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances.
(c) Other Reports - promptly upon their becoming available,
-------------
one copy of each financial statement, report, notice or proxy statement sent by
the Company to stockholders generally;
(d) Requested Information - with reasonable promptness, the
---------------------
Company shall furnish the Investors with such other data and information as
from time to time may be reasonably requested.
(e) Access to Data - The Investors shall be allowed
--------------
reasonable access to the Company's records, financial data and facilities and
they shall have the opportunity to discuss the Company's business, management
and financial affairs with the Company's management on a reasonable basis. The
Investors shall also have the right to ask questions of the Company's officers
on a reasonable basis and the Investors shall have the right to receive answers
to their satisfaction. As to so much of the information and other material
furnished pursuant to this subsection as constitutes or contains confidential
business, financial or other information of the Company or any subsidiary and
which is marked "Confidential" or which the Investors are notified is
confidential, each Investor, covenants for itself and its directors, officers
and partners that it will use due care to prevent its officers, directors,
partners, employees, counsel, accountants and other representatives from
disclosing such information to persons other than their respective authorized
employees, counsel, accountants, shareholders, partners, limited partners and
other authorized representatives; provided, however, that each Investor may
disclose or deliver any information or other material disclosed to or received
by it should the Investor be advised by its counsel that such disclosure or
delivery is required by law, regulation or judicial or administrative order.
For purposes of this Section 8.2, "due care" means at least the same level of
care that the Investor would use to protect the confidentiality of its own
sensitive or proprietary information, and this obligation shall survive
termination of this Agreement.
SECTION 10 REGISTRATION RIGHTS
-------------------
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<PAGE>
Investor shall have the following registration rights with respect to the
Shares purchased by it pursuant to this Agreement:
10.1 Required Registration
---------------------
The Company agrees to register the Shares together with the Common Stock
sold pursuant to the Company's Rights Offering (the "Rights Offering
Registration") or, in the alternative, the Company agrees to register all of
the Shares purchased hereunder pursuant to a registration statement on Form
S-3. In the event that the Shares are not registered in the Rights Offering
Registration, the Company undertakes to file a registration statement on Form
S-3 covering resale of the Shares (the "Shelf Registration") and to use its
best efforts to cause such registration statement to become effective within
ninety (90) days of Closing. The Company shall maintain the effectiveness of
the Rights Offering Registration or the Shelf Registration (which ever is
applicable) until such time as the investors have sold all of their Shares or
are able to sell their Shares under Rule 144 of the Securities Act without
limitation.
10.2 Lock-Up Agreement
-----------------
Investors agree not to sell, transfer or otherwise dispose of, directly
or indirectly, any of their Shares without the prior written consent of the
Company, until August 1, 1997, except pursuant to Section 7.2 hereof.
10.3 Registration Procedures
-----------------------
(a) With respect to the registration, qualification or compliance
effected by the Company subject to this Section 10, the Company shall keep
Investor advised in writing as to the initiation of such registration,
qualification and compliance and as to the completion thereof. In addition,
the Company shall at its own expense:
(i) prepare and file with the SEC such amendments and
supplements to such registration statement as may be necessary to keep such
registration, qualification or compliance effective and comply with provisions
of the Securities Act with respect to the disposition of all securities covered
thereby during such period;
(ii) update, correct, amend and supplement such
registration, qualification or compliance as necessary;
(iii) if such offering is to be underwritten, in whole or in
part, enter into a written agreement which is customary in form and substance
and reasonably satisfactory to the managing underwriter and the registering
Investor;
(iv) furnish such number of prospectuses, including
preliminary prospectuses, and other documents incident thereto as Investor may
reasonably request from time to time;
(v) register or qualify such Shares under such other
securities or blue sky laws of such jurisdictions of the United States
-15-
<PAGE>
as Investor may reasonably request to enable it to consummate the disposition
in such jurisdiction of the Shares (provided that Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this provision, or (ii) consent to
general service of process in any such jurisdiction) or otherwise take action
that would subject it to general jurisdiction of the courts of any jurisdiction
in which it is not so subject or (iii) subject itself to taxation in any
jurisdiction where it is not subject.
(vi) notify Investor at any time when a prospectus relating
to the Shares is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statement therein not misleading, and at the
request of Investor, the Company will prepare a supplement or amendment to such
prospectus, so that, as thereafter delivered to purchasers of such shares, such
prospectus will not contain any untrue statements of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(vii) cause all such Shares to be listed on each securities
exchange on which similar securities issued by the Company are then listed and
obtain all necessary approvals from The NASDAQ Stock Market for trading
thereon;
(viii) provide a transfer agent and registrar for all such
Shares not later than the effective date of such registration statement;
(ix) upon the sale of any Shares pursuant to such
registration statement, remove all restrictive legends from all certificates or
other instruments evidencing the Shares; and
(x) At any time when the registration statement effected
pursuant to this Section 10 is effective, upon written notice from the Company
to the Investor that the Company determines in the good faith judgment of the
Board of Directors or a committee of the Board of Directors of the Company,
with the advice of counsel, that the Investor's sale of the Shares pursuant to
the registration statement would require disclosure of non-public material
information the disclosure of which would have a material adverse effect on the
Company (an "Information Blackout"), the Investor shall suspend sales of the
Shares pursuant to such registration statement until the earlier of: (X) the
date upon which such material information is disclosed to the public or cease
to be material, or (Y) such time as the Company notifies the Investor that
sales pursuant to such registration statement be resumed, but in no event, in
either case, later than 5 days after the date of such notice.
(b) Notwithstanding anything herein to the contrary, except as
required by law, all expenses incurred by the Company in complying with this
Section 10, including but not limited to, all registration, qualification and
filing fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, blue sky
-16-
<PAGE>
fees and expenses (including fees and disbursements of counsel related to all
blue sky matters and the fees and expenses of legal counsel to the Investors)
("Registration Expenses") incurred in connection with any registration,
qualification or compliance pursuant to this Section 10 shall be borne by the
Company. All underwriting discounts and selling commissions applicable to a
sale or disposition of the Shares incurred in connection with any registration
of the Shares and all transfer taxes, if any, relating to the sale or
disposition of the Shares by the Investors shall be borne by the Investors.
10.4 Further Information
-------------------
If the Shares owned by a Investor are included in the registration, such
Investor shall furnish the Company such information regarding itself as the
Company may reasonably request and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement and
Investor shall indemnify the Company with respect thereto in accordance with
Section 10 hereof. Investors hereby represent and warrant to the Company that
it has accurately and completely provided the requested information, and
Investors agree and acknowledge that the Company may rely on such information
as being true and correct for purposes of preparing and filing the Shelf
Registration at the time of filing thereof and at the time it is declared
effective, unless Investors have notified the Company in writing to the
contrary prior to such time.
SECTION 11 INDEMNIFICATION
11.1 Indemnification Generally
-------------------------
The Company, on the one hand, and Investors, on the other hand (each an
"Indemnifying Party"), shall indemnify the other from and against any and all
losses, damages, liabilities, claims, charges, actions, proceedings, demands,
judgments, settlement costs and expenses of any nature whatsoever (including,
without limitation, attorneys' fees and expenses) or deficiencies resulting
from any breach of a representation, warranty or covenant by the Indemnifying
Party and all claims, charges, actions or proceedings incident to or arising
out of the foregoing.
11.2 Indemnification Relating to Registration Rights
-----------------------------------------------
(a) With respect to any registration, qualification or compliance
effected or to be effected pursuant to Section 10 of this Agreement, the
Company shall indemnify each Investor whose securities are included or are to
be included therein, each of such Investor's directors and officers, each
underwriter (as defined in the Securities Act) of the securities sold by such
Investor (if any), and each Person who controls (within the meaning of the
Securities Act) any such Investor or underwriter (a "Controlling Person") from
and against all losses, damages, liabilities, claims, charges, actions,
proceedings, demands, judgments, settlement costs and expenses of any nature
whatsoever (including, without limitation, reasonable attorneys' fees and
expenses) or deficiencies of any such Investor or any such underwriter or
Controlling Person concerning:
-17-
<PAGE>
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by the Company of the Securities Act or
any rule or regulation promulgated thereunder applicable to the Company, or of
any blue sky or other state securities laws or any rule or regulation
promulgated thereunder applicable to the Company,
in each case, relating to any action or inaction required of the Company in
connection with any such registration, qualification or compliance, and subject
to Section 11 below will reimburse each such Person entitled to indemnity under
this Section 11 for all legal and other expenses reasonably incurred in
connection with investigating or defending any such loss, damage, liability,
claim, charge, action, proceeding, demand, judgment, settlement or deficiency;
provided, however, that, the foregoing indemnity and reimbursement
- -------- -------
obligation shall not be applicable to the extent that any such matter arises
out of or is based on any untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Investor
or by or on behalf of such an underwriter specifically for use in such
prospectus, offering circular or other document.
(b) With respect to any registration, qualification or compliance
effected or to be effected pursuant to this Agreement, each Investor whose
securities are included or are to be included therein, shall indemnify the
Issuer from and against all losses, damages, liabilities, claims, charges,
actions, proceedings, demands, judgments, settlement costs and expenses of any
nature whatsoever (including, without limitation, reasonable attorneys' fees
and expenses) or deficiencies of the Company concerning:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering, circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by such Investor of the Securities Act
or any rule or regulation promulgated thereunder applicable to the Company or
such Investor or of any blue sky or other
-18-
<PAGE>
state securities laws or any rule or regulation promulgated thereunder
applicable to the Company or such Investor,
in each case, relating to any action or inaction required of such Investor in
connection with any such registration, qualification or compliance, and subject
to Section 11 below will reimburse the Company for all legal and other expenses
reasonably incurred in connection with investigating or defending any such
loss, damage, liability, claim, charge, action, proceeding, demand, judgment,
settlement or deficiency; provided, however, that, the foregoing
-------- ------- ----
indemnity and reimbursement obligation of the Investors shall only be
applicable to the extent that any such matter solely arises out of or is based
on any untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in reliance upon and in conformity with written information
furnished to the Company by the Investor specifically for use in such
prospectus, offering circular or other document; and provided, further,
-------
however, that, the obligation of the Investor hereunder shall be
- ------- ----
limited to an amount equal to the proceeds to the Investor sold as contemplated
hereunder.
11.3 Indemnification Procedures
--------------------------
Each Person entitled to indemnification under this Section (an
"Indemnified Party") shall give notice as promptly as reasonably practicable to
each party required to provide indemnification under this Section (an
"Indemnifying Party") of any action commenced against or by it in respect of
which indemnity may be sought hereunder, but failure to so notify, an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it may have otherwise than on account of this indemnity agreement so long
as such failure shall not have materially prejudiced the position of the
Indemnifying Party. Upon such notification, the Indemnifying Party shall
assume the defense of such action if it is a claim brought by a third party,
and after such assumption the Indemnifying Party shall not be entitled to
reimbursement of any expenses incurred by it in connection with such action
except as described below. In any such action, any Indemnified Party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
contrary or (ii) the named parties in any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing or conflicting interests between them. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent (which shall not be unreasonably withheld
or delayed by such Indemnifying Party), but if settled with such consent or if
there be final judgment for the plaintiff, the Indemnifying Party shall
indemnify the Indemnified Party from and against any loss, damage or liability
by reason of such settlement or judgment.
-19-
<PAGE>
SECTION 12 INTERPRETATION OF THIS AGREEMENT
--------------------------------
12.1 Terms Defined
-------------
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such
term:
Business Day: shall mean a day other than a Saturday, Sunday or
------------
other day on which banks in the State of New York are not required or
authorized to close.
Closing: shall mean the consummation of the purchase and sale of the
-------
Shares described in Section 2(a).
Common Stock: shall have the meaning set forth in Section 1.
------------
Exchange Act: shall mean the Securities Exchange Act of 1934.
------------
GAAP: shall have the meaning set forth in Section 3.3.
----
Governmental Authority: any nation or government, any state or other
----------------------
political subdivision thereof, and any entity or official exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Person: shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, and a government or agency or political
subdivision thereof.
Requirements of Law: means as to any Person, the articles of
-------------------
incorporation, bylaws or other organizational or governing documents of such
person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
property is subject.
SEC: shall mean the Securities and Exchange Commission.
---
Securities Act: shall mean the Securities Act of 1933, as amended.
--------------
Subsidiary: shall mean a corporation of which a Person owns,
----------
directly or indirectly, more than 50% of the Voting Stock.
Voting Stock: shall mean securities of any class or classes of a
------------
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
12.2 Directly or Indirectly
----------------------
Where any provision in this Agreement refers to action to be taken by any
Person, or which such Person is prohibited from taking,
-20-
<PAGE>
such provision shall be applicable whether such action is taken directly or
indirectly by such Person.
12.3 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
12.4 Paragraph and Section Headings
------------------------------
The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
SECTION 13 MISCELLANEOUS
-------------
13.1 Notices
-------
(a) All communications under this Agreement shall be
in writing and shall be mailed by first class mail, postage
prepaid, or by overnight courier:
(i) if to the Investors, c/o Brahman Securities, Inc., 277
Park Avenue, 26th Floor, New York, New York 10017, marked for attention of Mr.
Robert Sobel, or at such other address as the Investor may have furnished the
Company in writing, with a copy to Werbel & Carnelutti, 711 Fifth Avenue, New
York, New York 10022, Attn: Stephen M. Davis, Esq. or
(ii) if to the Company, at 605 Third Avenue, New York, New
York 10158, marked for the attention of the Chairman of the Board, or at such
other address as it may have furnished in writing to the Investor with a copy
to Battle Fowler LLP, 75 East 55th Street, New York, New York 10022, Attn: John
N. Turitzin, Esq.
(b) Any notice so addressed and mailed (i) by registered or
certified mail shall be deemed to be given on the third Business Day after the
date the same is so mailed or (ii) by courier shall be deemed to be given on
the date on which such notice is received.
13.2 Expenses
--------
The Company shall pay the fees and expenses of the Investors, including
the Investors' legal fees and expenses incurred in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby and the enforcement of any of the Investors' rights
hereunder.
13.3 Survival
--------
All warranties, representations, and covenants made by the Investor and
the Company herein or in any certificate or other instrument delivered by the
Investors or the Company under this Agreement shall be considered to have been
relied upon by the Company or the Investors, as the case may be, and shall
survive all deliveries to the Investors of the Shares, or payment to the
Company for such
-21-
<PAGE>
Shares, regardless of any investigation made by the Company or the Investors,
as the case may be, or on the Company's or the Investors' behalf. All
statements in any such certificate or other instrument shall constitute
warranties and representation by the Company or the Investors, as the case may
be, hereunder.
13.4 Entire Agreement; Amendment and Waiver
--------------------------------------
This Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of each of the parties. This Agreement and the
agreements attached as Exhibits hereto constitute the entire understandings of
the parties hereto and supersede all prior agreements or understandings with
respect to the subject matter hereof between such parties. This Agreement may
be amended, and the observance of any term of this Agreement may be waived,
with (and only with) the written consent of the Company and the Investor.
13.5 Counterparts
------------
This Agreement may be executed in one or more counterparts with the same
effect as if the parties executing the counterparts had each executed one
instrument as of the day and year first above written.
-22-
<PAGE>
13.6 Successors and Assigns
----------------------
This Agreement and all of the provisions hereof, including all of rights
of the Investors hereunder, shall inure to the benefit of the parties hereto
and their respective successors and assigns.
-23-
<PAGE>
Very truly yours,
CHARTWELL LEISURE INC.
By:______________________________
Name: Richard L. Fisher
Title: Chief Executive Officer
QUOTA FUND N.V. - "BRAHMAN"
By:__________________________
Name:
Title:
BRAHMAN PARTNERS II, L.P.
By: _________________________
Name:
Title:
GENESIS CAPITAL FUND - "BRAHMAN"
By:__________________________
Name:
Title:
B-Y PARTNERS, L.P.
By: _________________________
Name:
Title:
BRAHMAN INSTITUTIONAL PARTNERS, L.P.
By:__________________________
Name:
Title:
BRAHMAN PARTNERS II OFFSHORE, LTD.
By: _________________________
Name:
Title:
89247
-24-
<PAGE>
Schedule 2
----------
Investors
---------
NUMBER OF PURCHASE
INVESTOR NAME SHARES PRICE
Quota Fund N.V. - "Brahman" 167,900 $ 2,350,600
Brahman Partners II, L.P. 204,500 2,863,000
Genesis Capital Fund - "Brahman" 19,600 274,400
B-Y Partners, L.P. 262,700 3,677,800
Brahman Institutional Partners, L.P. 253,400 3,547,600
Brahman Partners II Offshore, Ltd. 91,900 1,286,600
TOTAL 1,000,000 $14,000,000
--------- -----------
89247
-25-
<PAGE>
Schedule 3.4
------------
Rights
(1) As of January 31, 1995, an aggregate of 3,000,000 shares of Common Stock
reserved for issuance under the Company's 1994 Stock Option Plan,
including 2,107,833 shares as to which options were then outstanding.
(2) As of January 31, 1996, 373,280 shares of Common Stock reserved for
issuance under HFS Incorporated's 1992 Incentive Stock Option Plan, as to
which 373,280 options were then outstanding.
(3) Chartwell Leisure Associates L.P. II ("CL Associates") and FSNL LLC
("FSNL") pursuant to the Registration Rights Agreement, dated as of
August 8, 1996, between CL Associates, FSNL and Chartwell Leisure Inc.
-26-
<PAGE>
Schedule 3.6
------------
Consents and Approvals
None.
-27-
<PAGE>
Exhibit 4.2
SUBSCRIPTION CERTIFICATE
CHARTWELL LEISURE INC.
- ------------- -------------- ------------------ ----------------------
SEQUENCE ACCOUNT KEY SUBSCRIPTION RIGHTS TO PURCHASE
NUMBER CERTIFICATE NO. COMMON STOCK OF
CHARTWELL LEISURE INC.
----------------------
RECORD DATE SHARES
CHARTWELL LEISURE INC.
CUSIP NO. [ ]
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
PROSPECTUS RELATING TO UP TO 2,413,356 SHARES OF COMMON STOCK OF CHARTWELL
LEISURE INC. (THE "COMPANY"), DATED FEBRUARY __, 1997 (THE "PROSPECTUS"), AND
ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE
UPON REQUEST FROM CHASEMELLON SHAREHOLDER SERVICES, L.L.C. (THE "INFORMATION
AGENT"). CAPITALIZED TERMS USED HEREIN WITHOUT DEFINITION SHALL HAVE THE
MEANINGS SET FORTH IN THE PROSPECTUS.
THIS SUBSCRIPTION CERTIFICATE (AS WELL AS A NOMINEE HOLDER CERTIFICATION,
IN THE CASE OF THE EXERCISE OF THE OVERSUBSCRIPTION PRIVILEGE WITH RESPECT TO
RIGHTS HELD THROUGH BANKS, BROKERS OR OTHER NOMINEES) OR A NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY CHASEMELLON SHAREHOLDER SERVICES, L.L.C. (THE
"SUBSCRIPTION AGENT") WITH PAYMENT IN FULL BY 5:00 P.M., NEW YORK CITY TIME, ON
MARCH __, 1997, UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). THE
ABILITY OF THE HOLDER HEREOF TO EXERCISE THE RIGHTS PURSUANT TO THE BASIC
SUBSCRIPTION PRIVILEGE OR THE OVERSUBSCRIPTION PRIVILEGE OR TO SELL RIGHTS WILL
EXPIRE AT THE EXPIRATION DATE. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION
DATE WILL NO LONGER BE EXERCISABLE AND WILL HAVE NO VALUE.
The Rights represented by this Subscription Certificate, in whole or in part,
may be exercised by duly completing Form 1; may be transferred, or exercised or
sold through a bank or broker, by duly completing Form 2; and may be sold
through the Subscription Agent by duly completing Form 3. BEFORE EXERCISING OR
SELLING RIGHTS, RIGHTS HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR
ENTIRETY THE PROSPECTUS AND INSTRUCTIONS, COPIES OF WHICH ARE AVAILABLE FROM
THE INFORMATION AGENT. IMPORTANT: Complete appropriate FORM and, if applicable,
delivery instructions, and SIGN on reverse side. This Subscription Certificate
must be delivered to the Subscription Agent at the following address:
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P.O. Box 798 120 Broadway, 13th Floor
Midtown Station New York, N.Y. 10271
New York, N.Y. 10018
A pre-addressed postage paid envelope is enclosed.
</TABLE>
SUBSCRIPTION PRICE: $14.00 PER SHARE
-----------------------
The registered holder of the Rights whose name is inscribed hereon, or
assigns, is entitled to subscribe for one share of common stock, par value $.01
per share (the "Common Stock"), of Chartwell Leisure Inc., for each whole Right
evidenced hereby upon the terms and subject to the conditions set forth in the
Prospectus and instructions relating thereto.
CHARTWELL LEISURE INC.
By:_______________________________
Richard L. Fisher
Chairman of the Board and Chief
Executive Officer
THIS SUBSCRIPTION CERTIFICATE IS TRANSFERABLE AND MAY BE COMBINED OR
DIVIDED (BUT ONLY INTO SUBSCRIPTION CERTIFICATES EVIDENCING A WHOLE NUMBER OF
RIGHTS) AT THE OFFICE OF THE SUBSCRIPTION AGENT. ANY TRANSFER OF RIGHTS WILL BE
DEEMED A TRANSFER OF BOTH THE BASIC SUBSCRIPTION PRIVILEGE AND THE
OVERSUBSCRIPTION PRIVILEGE.
RIGHTS HOLDERS SHOULD BE AWARE THAT IF THEY CHOOSE TO EXERCISE OR TRANSFER
LESS THAN ALL OF THE RIGHTS EVIDENCED HEREBY, A NEW SUBSCRIPTION CERTIFICATE MAY
NOT BE RECEIVED IN SUFFICIENT TIME TO EXERCISE THE REMAINING RIGHTS EVIDENCED
THEREBY. NEITHER THE COMPANY NOR THE SUBSCRIPTION AGENT SHALL HAVE ANY
LIABILITY TO A TRANSFEREE OR TRANSFEROR OF RIGHTS IF SUBSCRIPTION CERTIFICATES
ARE NOT RECEIVED IN TIME FOR EXERCISE OR SALE PRIOR TO THE EXPIRATION DATE.
EXERCISE OF THE RIGHTS EVIDENCED HEREBY IS IRREVOCABLE.
<TABLE>
<CAPTION>
PAYER'S NAME:
<S> <C> <C>
SUBSTITUTE PART I - Taxpayer Identification No. PART II - For Payees Exempt from
Backup Withholding (see
enclosed Guidelines)
FORM W-9
DEPARTMENT OF THE TREASURY Enter your taxpayer identification number in the
INTERNAL REVENUE SERVICE appropriate box.
For most individuals, this is your social security
Payer's request for number. If you do not have a number, see Obtaining a _ _
Taxpayer Number in the enclosed Guidelines. --- -- ----
Identification Number (TIN) Social Security Number
Note: if the account is in more than one name, see the OR
chart in the enclosed Guidelines to determine what ________________________
number to give. Employer Identification
Number
</TABLE>
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
Certification Guidelines --You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2).
- --------------------------------------------------------------------------------
SIGNATURE Date
----------------------- ----------------
Note: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
-------------------- -----------
Signature Date
<PAGE>
FORM 1--EXERCISE AND SUBSCRIPTION: The undersigned hereby irrevocably exercises
one or more whole Rights to subscribe for shares of Common Stock as indicated
below, on the terms and subject to the conditions specified in the Prospectus,
receipt of which is hereby acknowledged.
(a) Number of shares subscribed for pursuant to the Basic Subscription
Privilege:
(b) Number of shares subscribed for pursuant to the Oversubscription
Privilege:*
(c) Total Subscription Plan (total number of shares on lines (a) and (b)
multiplied by the Subscription Price of $14.00):**$
-------------
------------
* Subject to proration and reduction by the Company under certain circumstances
(as described in the Prospectus), a Rights Holder who elects to exercise the
Basic Subscription title as such. Privilege in full also may subscribe at the
Subscription Price for up to one additional share of Common Stock for each
share of Common Stock purchased by the Rights Holder pursuant to the Basis
Subscription Privilege. The Oversubscription Privilege is transferable.
** If the aggregate Subscription Price enclosed or transmitted is insufficient
to purchase the total number of shares included in lines (a) and (b), or if
the number of shares being subscribed for is not specified, the Rights Holder
exercising this Subscription Certificate shall be deemed to have subscribed
for the maximum amount of shares that could be subscribed for upon payment of
such amount. If the number of shares to be subscribed for pursuant to the
Oversubscription Privilege is not specified and the amount enclosed or
transmitted exceeds the aggregate Subscription Price for all shares
represented by this Subscription Certificate (the "Subscription Excess"), the
Rights Holder exercising this Subscription Certificate shall be deemed to
have exercised the Oversubscription Privilege to purchase, to the extent
available, that number of whole shares of Common Stock equal to the quotient
obtained by dividing the Subscription Excess by the Subscription Price,
subject to the limit on the number of shares a Rights Holder may purchase
pursuant to the Oversubscription Privilege outlined above. To the extent any
portion of the aggregate Subscription Price enclosed or transmitted remains
after the foregoing procedures, such funds shall be mailed to the subscriber
without interest or deduction as soon as practicable.
METHOD OF PAYMENT (CHECK AND COMPLETE APPROPRIATE BOX(ES)):
/ / UNCERTIFIED CHECK IN THE AMOUNT OF $ . PAYABLE TO CHASEMELLON
SHAREHOLDER SERVICES, L.L.C. (Payment by uncertified check will not be
deemed to have been received by the Subscription Agent until such check
has cleared. Holders paying by such means are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such payment
clears by such date.)
/ / CERTIFIED CHECK OR CASHIERS CHECK, BANK DRAFT OR MONEY ORDER IN THE
AMOUNT OF $ , PAYABLE TO CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
/./ name of maker
--------------------------------------------------------
/./ date and number of check, draft or money order
-----------------------
/./ bank on which check is drawn on issuer of money order
----------------
(d) If the number of Rights being exercised pursuant to the Basic Subscription
Privilege is less than all of the Rights represented by this Subscription
Certificate (check only one)
/ / DELIVER TO THE UNDERSIGNED A NEW SUBSCRIPTION CERTIFICATE EVIDENCING THE
REMAINING RIGHTS TO WHICH THE UNDERSIGNED IS ENTITLED.
/ / DELIVER A NEW SUBSCRIPTION CERTIFICATE EVIDENCING THE REMAINING RIGHTS IN
ACCORDANCE WITH THE UNDERSIGNED'S FORM 2 INSTRUCTIONS (which include any
required signature guarantees).
/ / SELL THE REMAINING UNEXERCISED RIGHTS IN ACCORDANCE WITH THE UNDERSIGNED'S
FORM 3 INSTRUCTIONS.
If the instructions of the registered holder hereof are insufficient to
delineate the proper action to be taken with respect to all of the Rights
evidenced hereby, such section as is clearly delineated in such holder's
instructions will be taken and such holder will be delivered a new Subscription
Certificate evidencing the remaining Rights to which such holder is entitled.
(e) / / CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE SUBSCRIPTION AGENT PRIOR TO THE
DATE HEREOF AND COMP LETE THE FOLLOWING:
Name(s) of Registered Holder(s)
---------------------------------------
Window Ticket Number (if any)
-----------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------
Name of Member of Signature Guarantee Medallion Program
---------------
/ / FORM 2--CHECK HERE TO (A) TRANSFER YOUR SUBSCRIPTION CERTIFICATE OR SOME
OR ALL OF YOUR RIGHTS, OR (B) EXERCISE OR SELL RIGHTS THROUGH YOUR BANK
OR BROK ER:
For value received, Rights represented by this Subscription Certificate are
hereby assigned to (please print name and address and Taxpayer Identification or
Social Security Number of transferee in full):
Name:
-------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
/ / FORM 3--CHECK HERE TO SELL SOME OR ALL OF YOUR UNEXERCISED RIGHTS THROUGH
THE SUBSCRIPTION AGENT AND COMPLETE THE FOLLOWING: The undersigned hereby
authorizes the Subscription Agent to sell Rights represented by
------------
this Subscription Certificate but not exercised hereby and to deliver to
the undersigned a check for the proceeds, if any, from the sale thereof,
less any applicable brokerage commissions, taxes or other direct expenses
of sale. The Subscription Agent's obligation to execute orders is subject
to its ability to find buyers for the Rights.
/ / FORM 4--SPECIAL PAYMENT, ISSUANCE OR DELIVERY INSTRUCTIONS: Unless
otherwise indicated below, the Subscription Agent is hereby authorized to
issue and deliver any check, Subscription Certificate and certificates for
Common Stock to the undersigned at the address appearing on the face of
this Subscription Certificate.
Acceptance or rejection by the Company of this Subscription Certificate shall be
effective in accordance with the terms set forth in the Prospectus. Exercise of
the Rights represented hereby shall not be deemed complete, the registered
holder of the Rights whose name is inscribed hereon shall have no binding right
to become the legal or beneficial owner of Common Stock issuable upon exercise
of the Rights evidenced hereby, unless and/or until (i) the Expiration Date
occurs and (ii) the other conditions to exercise described in the Prospectus are
satisfied. All questions concerning the timeliness, validity, form and
eligibility of any exercise of Rights will be determined by the Company, whose
determination shall be final and binding.
Shares of Common Stock will be issued as soon as practicable after the
Expiration Date. Such Shares will be registered in the same manner set forth on
the face of this Subscription Certificate. If your shares are held in joint
ownership, all joint owners must sign. When signing as fiduciary, representative
or corporate officer, give full
IMPORTANT
RIGHTS HOLDERS SIGN HERE
AND, IF RIGHTS ARE BEING SOLD OR EXERCISED,
COMPLETE SUBSTITUTE FORM W-9
- -------------------------------------------------------------------------------
(Signature(s) of registered holder(s))
- -------------------------------------------------------------------------------
Dated: , 1997
-----------------------
(Must be signed by the registered holder(s) exactly as the names(s) appear(s)
on this Subscription Certificate. If signature is by trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a
corporation or another acting in a faculty or representative capacity, please
provide the following information.)
Name(s)
----------------------------------------------------------------------
-----------------------------------------------------------------------------
(Please Print)
Capacity (Full Title)
---------------------------------------------------------
Address
----------------------------------------------------------------------
(Including Zip Code)
Area Code and
Telephone Number
--------------------------------------------------------------
(Home) (Business)
Taxpayer Identification
or Social Security Number
-----------------------------------------------------
THE SIGNATURES SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO
S.E.C. RULE 17ad-15.
GUARANTEE OF SIGNATURES
Authorized Signature
---------------------------------------------------------
Name
--------------------------------------------------------------------------
Title
-------------------------------------------------------------------------
Name of Firm
------------------------------------------------------------------
Address
-----------------------------------------------------------------------
Area Code and Telephone Number
------------------------------------------------
Dated: 1997
---------------------
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF BATTLE FOWLER]
(212) 856-7000
(212) 339-9150
February 7, 1997
Board of Directors
Chartwell Leisure Inc.
605 Third Avenue
New York, NY 10158
Re: Chartwell Leisure Inc.
Rights Offering
Registration Statement on Form S-3 (No. 333-16661)
--------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Chartwell Leisure Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
registration statement on Form S-3 (Registration No. 333-16661), and any
amendments thereto (the "Registration Statement"), as filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), on November 22, 1996, for the registration under the
Securities Act with respect to transferable subscription rights (the "Rights")
and shares of Common Stock, par value $0.01 per share, of the Company (the
"Common Stock") referred to in the Registration Statement. Capitalized terms
used and not defined in this opinion have the meanings ascribed to them in the
Registration Statement.
In rendering this opinion, we have relied upon, among other things,
our examination of such records of the Company, including without limitation,
the Company's Restated Certificate of Incorporation and the Company's Amended
and Restated Bylaws and certificates of its officers and of public officials as
we have deemed necessary for the purpose of the opinion expressed below.
<PAGE>
Board of Directors February 7, 1997
In addition, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals, and the conformity
to original documents of all documents submitted to us as certified or
photostatic copies. As to various questions of fact material to this opinion,
we have relied, to the extent we deem reasonably appropriate, upon
representations or certificates of officers or directors of the Company and upon
documents, records and instruments furnished to us by the Company, without
independently checking or verifying the accuracy of such documents, records and
instruments furnished to us by the Company.
We are not admitted to the practice of law in any jurisdiction but the
State of New York, and we do not express any opinion as to the laws of other
states or jurisdictions other than the laws of the State of New York and the
federal law of the United States. No opinion is expressed as to the effect that
the law of any other jurisdiction may have upon the subject matter of the
opinion expressed herein under conflicts of law principles, rules and
regulations or otherwise.
Based on the foregoing, we are of the opinion that:
(i) the Rights have been duly authorized and, when issued in
accordance with such authorization, will be legal, valid and binding obligations
of the Company, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium and other laws relating to, or affecting, creditors'
rights and remedies generally and general principles of equity (regardless of
whether considered in a proceeding at law or in equity); and
(ii) the shares of Common Stock subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege, when issued,
subscribed for and delivered as contemplated in the Registration Statement, will
be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name under the caption "Legal Matters" in the Prospectus included
therein. In giving this consent, we do not admit that we are within the
category of persons whose consent is required by Section 7 of the Securities Act
of 1933 or the rules and regulations promulgated thereunder by the Securities
and Exchange Commission.
Very truly yours,
<PAGE>
EXHIBIT 23.1(A)
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and
Shareholders of Chartwell Leisure Inc.
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Chartwell Leisure Inc. (formerly National Lodging
Corp.) on Form S-3 of our report dated March 11, 1996 appearing in and
incorporated by reference in the Annual Report on Form 10-K of Chartwell
Leisure Inc. for the year ended December 31, 1995, and to the reference to us
under the heading "Experts" in the Prospectus which is part of this
registration statement.
Deloitte & Touche LLP
Parsippany, New Jersey
February 5, 1997
<PAGE>
EXHIBIT 23.1(B)
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and
Shareholders of Chartwell Leisure Inc.
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Chartwell Leisure Inc. (formerly National Lodging
Corp.) on Form S-3 of our report dated April 19, 1996 appearing in the Report
on Form 8-K/A of Chartwell Leisure Inc. on the financial statements of
Travelodge/Thriftlodge for the period from February 1, 1995 to January 23,
1996 and to the reference to us under the heading "Experts" in the Prospectus
which is part of this registration statement.
Deloitte & Touche LLP
Parsippany, New Jersey
February 5, 1997
<PAGE>
EXHIBIT 23.1(C)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement
of Chartwell Leisure Inc. (formerly National Lodging Corp.) on Amendment No. 1
to Form S-3 of our report dated October 30, 1996 appearing in the report on
Form 8-KA of Chartwell Leisure Inc. on the financial statements of Capital
Properties Limited Partnership for the year ended September 30, 1996 and to
the reference to us under the heading "Experts" in the Prospectus which is
part of this Registration Statement.
Deloitte & Touche LLP
Chartered Accountants
Calgary, Alberta, Canada
February 5, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Chartwell
Leisure Inc. (formerly National Lodging Corp.) of our report dated
February 20, 1996 relating to the financial statements of the Acquired
Business as of and for each of the two years in the period ended January 31,
1995, which appears on page 8 of the Current Report on Form 8-K/A of Chartwell
Leisure Inc. (formerly National Lodging Corp.) dated January 23, 1996, as
amended, filed with the Securities and Exchange Commission on July 9, 1996. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
San Diego, California
February 5, 1997
<PAGE>
CHARTWELL LEISURE INC.
INSTRUCTIONS TO RECORD HOLDER
The undersigned acknowledge(s) receipt of your letter and the
enclosed materials referred to therein relating to the offering of shares of
Common Stock.
This will instruct you whether to exercise or attempt to sell (or
direct the Subscription Agent to attempt to sell) Rights to purchase Common
Stock distributed with respect to the Common Stock held by you for the account
of the undersigned, pursuant to the terms and subject to the conditions set
forth in the Prospectus.
1. [ ] Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
2. [ ] Please EXERCISE RIGHTS for shares of Common Stock as set forth
below:
Basic Subscription Right:_______________ X $14.00 = $______(a)
(no. of shares)
Oversubscription Right:_______________ X $14.00 = $______(b)
(no. of shares)
Total Payment Required =$______(c)
[ ] Payment in the following amount is enclosed: $______(d)
[ ] Please deduct payment from the following account maintained by you
as follows:
Type of Account:_________________ Account No.:_________________
Amount to be deducted: $_________________(e)
3. [ ] Please DIRECT THE SUBSCRIPTION AGENT TO ATTEMPT TO SELL _________
RIGHTS held for my account.
4. [ ] Please attempt to SELL ________ RIGHTS other than through the
Subscription Agent.
_________________________________________
_________________________________________
_________________________________________
Signature(s)
Please type or print name(s) below
_________________________________________ Date:__________________, 1997
_________________________________________
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
SUBSCRIPTION RIGHT CERTIFICATES
issued by
CHARTWELL LEISURE INC.
This form, or one substantially equivalent hereto, must be used to
exercise Rights pursuant to the Rights Offering described in the Prospectus
dated February __, 1997 (the "Prospectus") of Chartwell Leisure Inc., a
Delaware corporation (the "Company"), if a holder of Rights cannot deliver the
Subscription Certificate evidencing such Rights (the "Subscription
Certificate"), to the Subscription Agent listed below (the "Subscription
Agent") at or prior to 5:00 pm., New York City Time, on March __, 1997,
unless extended by the Company (in either case, the "Expiration Date"). This
form must be delivered by hand or sent by facsimile transmission, overnight
courier or mail to the Subscription Agent, and must be received by the
Subscription Agent on or prior to the Expiration Date. A properly completed
and executed Subscription Certificate relating to this Notice of Guaranteed
Delivery must be received by the Subscription Agent within five Nasdaq National
Market trading days following the receipt by the Subscription Agent of this
Notice of Guaranteed Delivery (but in no event after 5:00 p.m., New York City
Time, on March __, 1997). See "The Rights Offering -- Exercise of
------------------------------------
Rights" in the Prospectus. Payment of the Subscription Price of $14.00 per
- ------
share for each share of Common Stock subscribed for pursuant to the Rights
Offering and the Oversubscription Privilege must be received by the
Subscription Agent in the manner specified in "The Rights Offering --
-----------------------
Exercise of Rights" in the Prospectus on or prior to the Expiration Date even
- ------------------
if the Subscription Certificate evidencing such Right is being delivered
pursuant to the procedure for guaranteed delivery thereof. Capitalized terms
not defined herein shall have the meanings set forth in the Prospectus.
The Subscription Agent is:
ChaseMellon Shareholder
Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail General Information By Hand or
ChaseMellon Shareholder Services, L.L.C.(800) 414-2879 Overnight Delivery:
P.O. Box 798 ChaseMellon Shareholder Services, L.L.C.
Midtown Station Facsimile Transmission 120 Broadway, 13th Floor
New York, NY 10018 (201) 329-8936 New York, NY 10271
Attn.: Reorganization Department Confirm: (201) 296-4209 Attn.: Reorganization Department
(201) 296-4381
</TABLE>
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS NOTICE VIA A FACSIMILE NUMBER OTHER THAN THAT SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Certificate(s) representing _________________ Rights and that such
Subscription Certificate(s) cannot be delivered to the Subscription Agent at or
prior to 5:00 p.m., New York City Time, on the Expiration Date. Upon the terms
and subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise:
[ ] Rights to subscribe for one share of Common Stock, par value $0.01
per share, per Right with respect to ______________ Rights
represented by the Subscription Certificate;
[ ] The Oversubscription Privilege, if the Rights are exercised in
full, to the extent shares of Common Stock, par value $0.01 per
share, are available therefrom and subject to the terms and
conditions contained in the Prospectus, to subscribe for an
aggregate of up to __________________ shares.
The undersigned understands that payment of the Subscription Price of
$14.00 per share for each share of Common Stock subscribed for pursuant to the
Rights Offering must be received by the Subscription Agent ON OR BEFORE the
Expiration Date, and represents that such payment, in the aggregate amount of
$_________________, either (check appropriate box(es)):
[ ] is being delivered to the Subscription Agent; or
[ ] has been delivered separately to the Subscription Agent in the
manner set forth below (check appropriate box and complete
information relating thereto):
[ ] Check or money order payable to ChaseMellon Shareholder
Services, L.L.C. (Payment by UNCERTIFIED CHECK will not be
deemed to have been received by the Subscription Agent until such
check has cleared. Rights Holders paying by such means are urged
to make payment sufficiently in advance of the Expiration Date to
ensure that such payment clears by such date.)
<PAGE>
Signature(s) Address
-------------------------- ---------------------------
--------------------------
(include Zip Code)
Name(s)
--------------------------
Please Type or Print
Area Code and Tel. No(s)
--------------
(if signature is by a trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-
fact, agent(s), officer(s), of a corporation or
another acting in a fiduciary or representative
capacity, such capacity must be clearly
indicated above.)
Subscription Right Certificate No.(s)
(if available)______________________
<PAGE>
GUARANTEE OF DELIVERY
(Not to be used for Subscription Certificate Signature Guarantee)
The Undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, guarantees that the undersigned will deliver to the Subscription
Agent the Subscription Certificate(s) representing the Rights being exercised
hereby, with any required signature guarantees and any other required
documents, all within five Nasdaq National Market trading days after the
receipt by the Subscription Agent of this Notice of Guaranteed Delivery (but in
no event after 5:00 p.m., New York City Time, on March __, 1997).
Dated: , 1997
--------------------------- ------------------
(Name of Firm)
Address:
- ------------------------------- -----------------------------
(Authorized Signature)
Name:
-------------------------- --------------------------------------
(Include Zip Code)
Title:
------------------------- --------------------------------------
(Area Code and Telephone Number)
The institution which completes this form must communicate the guarantee to the
Subscription Agent and must deliver the Subscription Certificate(s) to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
<PAGE>
Exhibit 99.3
CERTIFICATION AND REQUEST FOR ADDITIONAL RIGHTS
To the Subscription Agent:
The undersigned securities dealer, commercial bank, broker, trust
company or other nominee holder of Rights (as defined below) hereby certifies
that it is the holder of record of ___________ shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Chartwell Leisure Inc., a
Delaware corporation (the "Company"), on behalf of certain beneficial owners as
of the close of business on February __, 1997, the record date for the offering
(the "Record Date") of up to 2,413,356 shares of Common Stock pursuant to
transferable subscription rights ("Rights"), as described in the Company's
Prospectus dated February __, 1997, a copy of which the undersigned has
received.
The undersigned further certifies that ________________ beneficial
owners on whose behalf it held, as of the close of business on the Record Date,
_______________ shares of Common Stock registered in the name of the
undersigned, are each entitled to one additional Right as the Company has
agreed that, in lieu of fractional Rights, the number of Rights to which a
beneficial owner would otherwise be entitled will be rounded up to the next
whole number and, accordingly, the undersigned requests that a Subscription
Certificate evidencing ______________ additional Rights be issued to it. The
undersigned further certifies that each such beneficial owner is a bona fide
beneficial owner of Common Stock, that such beneficial ownership is reflected
on the undersigned's records and that all shares of Common Stock which, to the
undersigned's knowledge, are beneficially owned by any such beneficial owner
through the undersigned have been aggregated in calculating the foregoing. The
undersigned agrees to provide the Company or its designee with such additional
information as the Company deems necessary to verify the foregoing and
acknowledges that the Subscription Agent must receive this Certification and
Request for Additional Rights, properly completed, no later than 5:00 p.m., New
York City Time, on March __, 1997, after which time no new Subscription
Certificates will be issued.
--------------------------------------
Name of Record Date Holder
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address:
------------------------------
--------------------------------
Telephone Number:
---------------------
DTC Participant Number:
---------------
Dated:_________________, 1997
<PAGE>
Exhibit 99.4
CHARTWELL LEISURE INC.
NOMINEE HOLDER SUBSCRIPTION CERTIFICATION
The undersigned, a bank, broker or other nominee holder of
transferable subscription rights ("Rights") to purchase shares of common stock,
par value $.01 per share ("Common Stock"), of Chartwell Leisure Inc., a
Delaware corporation (the "Company"), pursuant to the Rights offering (the
"Rights Offering") described and provided for in the Company's Prospectus dated
February __, 1997 (the "Prospectus"), hereby certifies to the Company and to
ChaseMellon Shareholder Services, L.L.C. as Subscription Agent for such Rights
Offering, that for each numbered line filled in below the undersigned has
exercised, on behalf of the beneficial owner thereof (which may be the
undersigned), the number of Rights specified on such line pursuant to the Basic
Subscription Privilege (as defined in the Prospectus) and such beneficial owner
wishes to subscribe for the purchase of additional shares of Common Stock
pursuant to the Oversubscription Privilege (as defined in the Prospectus), in
the amount set forth in the second column of such line:
<TABLE>
<CAPTION>
NUMBER OF RIGHTS EXERCISED NUMBER OF SHARES SUBSCRIBED FOR
PURSUANT TO BASIC SUBSCRIPTION PRIVILEGE PURSUANT TO OVERSUBSCRIPTION PRIVILEGE
- ---------------------------------------- --------------------------------------
<S> <C>
1.
--------------------------------------------- ----------------------------------------------
2.
--------------------------------------------- ----------------------------------------------
3.
--------------------------------------------- ----------------------------------------------
4.
--------------------------------------------- ----------------------------------------------
5.
--------------------------------------------- ----------------------------------------------
6.
--------------------------------------------- ----------------------------------------------
7.
--------------------------------------------- ----------------------------------------------
8.
--------------------------------------------- ----------------------------------------------
9.
--------------------------------------------- ----------------------------------------------
10.
--------------------------------------------- ----------------------------------------------
----------------------------------------------
Name of Nominee Holder
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Dated:___________________________________, 1997
Provide the following information, if applicable:
---------------------------------------------------
Depository Trust Company ("DTC") Participant Number
---------------------------------------------------
DTC Basic Subscription Confirmation Number(s)
</TABLE>
<PAGE>
Exhibit 99.5
SPECIAL NOTICE TO HOLDERS OF
CHARTWELL LEISURE INC.
COMMON STOCK (PAR VALUE $.01 PER SHARE)
WHOSE ADDRESSES ARE OUTSIDE
THE UNITED STATES AND CANADA
Dear Shareholder(s):
Enclosed you will find materials relating to the rights offering (the
"Rights Offering") of Chartwell Leisure Inc., a Delaware corporation (the
"Company"). A Subscription Certificate representing Rights to subscribe for
shares of the Company's Common Stock at $14.00 per share is not included in this
mailing, but instead is being held on your behalf by the Subscription Agent,
ChaseMellon Shareholder Services, L.L.C. The number of Rights that are being
held for you is indicated above. If you wish to exercise, transfer or sell any
or all of these Rights, you must so instruct the Subscription Agent in the
manner described in the accompanying Prospectus by 5:00 p.m., New York City
Time, on March __, 1997. If the Subscription Agent does not receive your
instructions by such time, your Rights will no longer be exercisable and will
have no value.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE RIGHTS
OFFERING SHOULD BE DIRECTED TO THE INFORMATION AGENT OF THE RIGHTS OFFERING, AS
FOLLOWS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
1-800-414-2879
<PAGE>
Exhibit 99.6
2,413,356 SHARES (MAXIMUM)
CHARTWELL LEISURE INC.
COMMON STOCK (PAR VALUE $.01 PER SHARE)
INITIALLY OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS
To Securities Dealers, Commercial Banks,
Brokers, Trust Companies and Other Nominee
holders of Common Stock of Chartwell Leisure Inc.:
Enclosed is a Prospectus, dated February __, 1997 (the "Prospectus"),
relating to the offering of up to approximately 2,413,356 shares of common
stock, par value $.01 per share (the "Common Stock"), of Chartwell Leisure Inc.,
a Delaware corporation (the "Company"), at a subscription price of $14.00 per
share in cash, pursuant to transferable subscription rights ("Rights") initially
distributed to holders of record ("Rights Holders") of shares of Common Stock as
of the close of business on February __, 1997 (the "Record Date"). The Rights
are described in the Prospectus and evidenced by a Subscription Certificate (a
"Subscription Certificate") registered in your name or the name of your nominee.
Each beneficial owner of Common Stock registered in your name or the
name of your nominee is entitled to .23 Rights for each share of Common Stock so
owned by such beneficial owner on the Record Date. In lieu of fractional
shares, the aggregate number of Rights issued in respect of each beneficial
owner will be rounded up to the next whole number, upon your timely request on
the enclosed Certification and Request for Additional Rights.
We are asking you to contact your clients for whom you hold shares of
Common Stock registered in your name, or in the name of your nominee to obtain
instructions with respect to the Rights. You will be reimbursed for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A form of letter which may be sent to your clients for whose
accounts you hold shares of Common Stock registered in your name
or the name of your nominee, with space provided for obtaining
such clients' instructions with regard to the Rights;
3. Certification and Request for Additional Rights;
4. A question and answer sheet;
5. A Nominee Holder Oversubscription Certification; and
6. A Notice of Guaranteed Delivery.
Your prompt action is requested. The Rights will expire at 5:00 p.m.
New York City Time on March __, 1997, unless extended by the Company (the
"Expiration Date").
<PAGE>
TO EXERCISE RIGHTS, PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION
CERTIFICATE(S) (UNLESS THE GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH) AND
PAYMENT IN FULL FOR ALL RIGHTS EXERCISED MUST BE DELIVERED TO THE SUBSCRIPTION
AGENT AS INDICATED IN THE PROSPECTUS PRIOR TO THE EXPIRATION DATE. EXERCISE OF
OVERSUBSCRIPTION PRIVILEGES (AS DEFINED IN THE PROSPECTUS) MUST BE ACCOMPANIED
BY A COMPLETED NOMINEE HOLDER SUBSCRIPTION CERTIFICATION.
Additional copies of the enclosed materials may be obtained from
ChaseMellon Shareholder Services, L.L.C. Rights Holders requesting assistance
or information may call the Information Agent, ChaseMellon Shareholder Services,
L.L.C., at 1-800-414-2879.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE COMPANY, THE SUBSCRIPTION AGENT OR ANY OTHER
PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE COMMON STOCK, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE RIGHTS OFFERING, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS OR THE SUBSCRIPTION DOCUMENTS.
<PAGE>
2,413,356 SHARES (MAXIMUM)
CHARTWELL LEISURE INC.
COMMON STOCK (PAR VALUE $.01 PER SHARE)
INITIALLY OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO SHAREHOLDERS
To Our Clients:
Enclosed for your consideration is a Prospectus, dated February __,
1997 ("Prospectus"), relating to the offering (the "Rights Offering") of up to
approximately 2,413,356 shares of common stock, par value $.01 per share (the
"Common Stock"), of Chartwell Leisure Inc., a Delaware corporation (the
"Company"), at a price of $14.00 per share in cash (the "Subscription Price")
pursuant to transferable subscription rights ("Rights") initially distributed
to holders of record ("Rights Holders") of shares of Common Stock at the close
of business on February __, 1997 (the "Record Date"). The Rights are
described in the Prospectus and are evidenced by a Subscription Certificate (a
"Subscription Certificate").
As described in the accompanying Prospectus, you will receive .23
Rights for each share of Common Stock carried by us in your account as of the
Record Date. Each Right will entitle you to subscribe for and purchase from
the Company one share of Common Stock (the "Basic Subscription Privilege") at
the Subscription Price. If you fully exercise the Basic Subscription Privilege
you will also have the right (the "Oversubscription Privilege") to subscribe,
at the Subscription Price, for up to one additional share of Common Stock for
each share purchased pursuant to the Basic Subscription Privilege, subject to
proration and reduction as described in the Prospectus. If the number of
available Shares is not sufficient to satisfy all subscriptions pursuant to the
Oversubscription Privilege, the shares will be allocated pro rata (subject to
the elimination of fractional shares) among those Rights Holders exercising the
Oversubscription Privilege in proportion to the respective number of shares
each such Rights Holder subscribes for pursuant to the Basic Subscription
Privilege.
The Rights are freely transferable and will be quoted on the Nasdaq
National Market under the trading symbol CHRTR. There can be no assurance,
however, that a trading market in the Rights will develop.
The materials enclosed are being forwarded to you as the beneficial
owner of shares of Common Stock carried by us in your account but not
registered in your name. Exercises and sales of Rights may only be made by us
as the registered holder of Rights and pursuant to the instructions attached
hereto (the "Instructions"). Accordingly, please complete the Instructions
indicating whether you wish us to elect to subscribe for any Common Stock or
attempt to sell (or direct the Subscription Agent to attempt to sell) any
Rights to which you are entitled pursuant to the terms and subject to the
conditions set forth in the enclosed Prospectus and Instructions.
Please forward the Instructions to us as promptly as possible to
permit us to exercise or sell Rights on your behalf in accordance with the
provisions of the Rights Offering. The Rights Offering will expire at 5:00
p.m., New York City Time, on March __, 1997, unless extended by the Company (in
either case, the "Expiration Date"). Once a Rights Holder has properly
exercised the Basic Subscription Privilege or the Oversubscription Privilege,
such exercise may not be revoked.
If you wish to have us, on your behalf, exercise Rights to purchase
any Common Stock to which you are entitled or attempt to sell (or direct the
Subscription Agent to attempt to sell) such Rights, please so instruct us by
completing, executing and returning the Instructions to us.
<PAGE>
IF WE DO NOT RECEIVE COMPLETE WRITTEN INSTRUCTIONS IN ACCORDANCE
WITH THE PROCEDURES OUTLINED IN THE PROSPECTUS, WE WILL NOT EXERCISE, TRANSFER
OR SELL YOUR RIGHTS, AND YOUR RIGHTS WILL EXPIRE VALUELESS.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING
SHOULD BE DIRECTED TO THE INFORMATION AGENT FOR THE RIGHTS OFFERING,
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. AT 1-800-414-2879.
Very truly yours,
<PAGE>
Exhibit 99.8
[PLACE ON CHARTWELL LEISURE INC. LETTERHEAD]
February __, 1997
Dear Shareholder(s):
Chartwell Leisure Inc., a Delaware corporation (the "Company"), is
distributing transferable subscription rights ("Rights"), to holders of record
at the close of business on February __, 1997 (the "Record Date") of its shares
of common stock, par value $.01 per share (the "Common Stock"). The Rights
entitle shareholders to subscribe for and purchase an aggregate of up to
2,413,356 shares of Common Stock (the "Rights Offering") at a cash price of
$14.00 per share (the "Subscription Price"). Each shareholder will receive .23
Rights for each share of Common Stock held of record by such shareholder on the
Record Date, and the aggregate number of Rights issued by the Company to each
shareholder will be rounded up to the next whole number.
Each Right will entitle the holder thereof (a "Rights Holder") to
subscribe for and purchase at the Subscription Price one share of Common Stock
(the "Basic Subscription Privilege"). Any Rights Holder who fully exercises the
Basic Subscription Privilege is entitled to subscribe for and purchase
additional shares of Common Stock that are not otherwise subscribed for by other
Rights Holders pursuant to the exercise of the Basic Subscription Privilege,
subject to proration and reduction by the Company under certain circumstances
(the "Oversubscription Privilege"). A Rights Holder who fully exercises the
Basic Subscription Privilege may purchase up to one additional share of Common
Stock for each share purchased pursuant to the Basic Subscription Privilege. The
number of Rights to which you are entitled is printed on the front of your
Subscription Certificate. The Rights are freely transferable and will be quoted
on the Nasdaq National Market under the trading symbol CHRTR. Any transfer of
Rights will be deemed a transfer of both the Basic Subscription Privilege and
the Oversubscription Privilege. If you desire, you may request the Subscription
Agent, ChaseMellon Shareholder Securities, L.L.C., to attempt to sell your
Rights, as more fully discussed in the enclosed Prospectus dated February __,
1997.
Enclosed for your review is the Prospectus, a transferable
Subscription Certificate and related documents concerning the Rights Offering.
The Rights Offering will expire at 5:00 p.m., New York City Time, on March __,
1997, unless extended by the Company. Rights not exercised or sold by such time
will no longer be exercisable and will have no value. Any questions or requests
for assistance should be directed to ChaseMellon Shareholder Services, L.L.C.,
the Information Agent for the Rights Offering, at 1-800-414-2879.
The Rights Offering is being made only pursuant to the Prospectus,
which sets forth detailed information concerning the Company and the Rights
Offering. Please read these enclosed materials carefully.
Sincerely,
Richard L. Fisher
Chairman of the Board and Chief Executive Officer
<PAGE>
Exhibit 99.9
CHARTWELL LEISURE INC.
DTC PARTICIPANT OVERSUBSCRIPTION EXERCISE FORM
This form is to be used only by Depository Trust Company ("DTC")
participants to exercise the Oversubscription Privilege in respect of Rights
with respect to which the Basic Subscription Privilege was exercised and
delivered through the facilities of DTC. All other exercises of the
Oversubscription Privilege must be effected by delivery of the Subscription
Certificate(s).
The terms and conditions of the Rights Offering are set forth in the
Prospectus dated February __, 1997 (the "Prospectus") of Chartwell Leisure Inc.,
a Delaware corporation (the "Company"), and are available upon request from
ChaseMellon Shareholder Services, L.L.C., the Subscription Agent. Terms used
but not defined herein have the meaning ascribed to them in the Prospectus.
VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY
5:00 P.M., NEW YORK CITY TIME, ON MARCH __, 1997, UNLESS EXTENDED BY THE COMPANY
(IN EITHER CASE, THE "EXPIRATION DATE").
---------------
1. The undersigned hereby certifies to the Company and ChaseMellon
Shareholder Services, L.L.C., as the Subscription Agent, that it is a
participant in DTC and that it has either (i) exercised the Basic Subscription
Privilege in respect of _________ Rights and delivered such exercised Rights to
the Subscription Agent by means of transfer to the DTC account of the
Subscription Agent designated in the Prospectus or (ii) delivered to the
Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of
the Basic Subscription Privilege and will deliver the Subscription Certificates
called for in such Notice of Guaranteed Delivery to the Subscription Agent by
means of transfer to such DTC account of the Subscription Agent.
a. The undersigned hereby exercises the Oversubscription Privilege to
purchase, to the extent available, _______ shares of Common Stock and certifies
to the Company and the Subscription Agent that such Oversubscription Privilege
is being exercised for the account or accounts of persons (which may include the
undersigned) on whose behalf Rights have been fully exercised pursuant to the
Basic Subscription Privilege. A true and correct Nominee Holder
Oversubscription Certification is attached as Exhibit A hereto.
b. The undersigned understands that payment of the Subscription Price
of $14.00 per share of Common Stock subscribed for pursuant to the
Oversubscription Privilege must be received by the Subscription Agent before the
Expiration Date and represents that such payment, in the aggregate amount of
$________, either (check appropriate box):
[ ] has been or is being delivered to the Subscription Agent pursuant to
the Notice of Guaranteed Delivery referred to above
or
<PAGE>
[ ] is being delivered to the Subscription Agent herewith
or
[ ] has been delivered separately to the Subscription Agent;
and, in the case of funds not delivered pursuant to a Notice of Guaranteed
Delivery, is or was delivered in the manner set forth below (check appropriate
box and complete information relating thereto):
[ ] By uncertified check payable to ChaseMellon Shareholder Services,
L.L.C. (Payment by uncertified check will not be deemed to have
been received by the Subscription Agent until such check has
cleared. Rights Holders paying by such means are urged to make
payment sufficiently in advance of the Expiration Date to ensure
that such payment clears by such date.)
Name of maker__________________________________________
Date of check__________________________________________
Bank on which check is drawn___________________________
[ ] By certified check or bank draft payable to ChaseMellon
Shareholder Services, L.L.C.
Name of maker__________________________________________
Date of draft__________________________________________
[ ] By money order payable to ChaseMellon Shareholder Services,
L.L.C.
Issuer of money order__________________________________
Date of money order____________________________________
DATE AND SIGN HERE:
By:
--------------------------- -----------------------
DTC Basic Subscription
Name: Confirmation Number
_________________________
Title:
________________________ ________________________
DTC Participant Number
Dated:
-----------------------
Name of DTC Participant
PARTICIPANTS EXERCISING THE OVERSUBSCRIPTION PRIVILEGE PURSUANT HERETO MUST ALSO
SUBMIT THE NOMINEE HOLDER OVERSUBSCRIPTION CERTIFICATION ATTACHED HERETO AS
EXHIBIT A TO THE SUBSCRIPTION AGENT.
-2-
<PAGE>
Exhibit 99.10
SUBSCRIPTION AGENT AGREEMENT
Date: February ___, 1997
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street - 10th Floor
New York, New York 10001
Attn: Reorganization Department
-------------------------
Gentlemen:
Chartwell Leisure Inc., a Delaware corporation (the "Company"), is
making an offer to issue (the "Subscription Offer") to the holders of record of
its outstanding shares of Common Stock, par value $.01 per share (the "Common
Stock"), at the close of business on February ___, 1997 (the "Record Date"), the
right to subscribe for and purchase (each a "Right") shares of Common Stock (the
"Additional Common Stock") at a purchase price of $14.00 per share of Additional
Common Stock (the "Subscription Price"), payable by cashier's or certified
check, upon the terms and conditions set forth herein. Rights will be
distributed at the rate of .23 Rights per share of Common Stock. The term
"Subscribed" shall mean submitted for purchase from the Company by a stockholder
in accordance with the terms of the Subscription Offer, and the term
"Subscription" shall mean any such submission. The Subscription Offer will
expire at 5;00 p.m., New York City Time, on March ___, 1997 (the "Expiration
Time"), unless the Company shall have extended the period of time for which the
Subscription Offer is open, in which event the term "Expiration Time" shall mean
the latest time and date at which the Subscription Offer, as so extended by the
Company from time to time, shall expire.
The Company filed an Amendment No. 1 to the Form S-3 Registration
Statement (the "Registration Statement") relating to the Additional Common Stock
(the "Registration Statement") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, on February ___, 1997. Said
Registration Statement was declared effective on February ___, 1997. The terms
of the Subscription Offer are more fully described in the Prospectus forming
part of the Registration Statement as it was declared effective, and the Letter
of Instructions filed as an Exhibit thereto. Copies of the Prospectus, the
Letter of Instructions and the Notice of Guaranteed Delivery are annexed hereto
as Exhibit 1, Exhibit 2 and Exhibit 3, respectively. All terms used and not
defined herein shall have the same meaning as in the Prospectus. Promptly after
the Record Date, the Company will provide you
<PAGE>
with a list of holders of Common Stock as of the Record Date (the "Record
Stockholders List").
The Rights are evidenced by shareholder rights subscription
certificates (the "Certificates"), a copy of the form of which is annexed hereto
as Exhibit 4. The Rights entitle the holders to subscribe, upon payment of the
Subscription Price, for shares of Additional Common Stock at the rate of 1 share
for each Right (the "Basic Subscription Privilege"). No fractional shares will
be issued, but the Subscription Offer includes a step-up privilege entitling the
holder of Rights or a combination of Rights evidencing fewer than 1 Right, or a
total number of Rights not evenly divisible by 1, if said holder fully exercises
the Right or Rights accompanying the Subscription Offer, to subscribe and pay
the Subscription Price for one full share of Additional Common Stock in lieu of
a fractional share without furnishing any additional Rights (the "Step-up
Privilege"). Rights which are sold will not retain Step-up Privileges.
Reference is made to the Prospectus for a complete description of the Basic
Subscription Privilege and the Step-up Privilege.
The Company hereby appoints you as Subscription Agent (the
"Subscription Agent") for the Subscription Offer and agrees with you as follows:
1) As Subscription Agent, you are authorized and directed to:
(A) Issue the Certificates in accordance with this Agreement in the
names of the holders of the Common Stock of record on the Record Date, keep such
records as are necessary for the purpose of recording such issuance, and furnish
a copy of such records to the Company. The Certificates may be signed on behalf
of the Subscription Agent by the manual or facsimile signature of a Vice
President or Assistant Vice President of the Subscription Agent, or by the
manual signature of any of its other authorized officers.
(B) Promptly after you receive the Record Stockholders List:
(a) mail or cause to be mailed, by first class mail, to each holder of
Common Stock of record on the Record Date whose address of record is
within the United States and Canada, (i) a Certificate evidencing the
Rights to which such stockholder is entitled under the Subscription
Offer, (ii) a copy of the Prospectus, (iii) a Letter of Instructions,
(iv) a Notice of Guaranteed Delivery and (v) a return envelope
addressed to the Subscription Agent; and
(b) mail or cause to be mailed, by air mail, to each holder of Common
Stock of record on the Record Date whose address of record is outside
the United States and Canada, or is an A.P.O. or F.P.O. address (i) a
copy of the Prospectus, (ii) a Notice of Guaranteed Delivery and (iii)
a Letter of Instructions (different from the Letter of Instruction
sent to stockholders whose address of record is within the United
States and Canada). You shall refrain from mailing Certificates
issuable to any holder of Common Stock of record on
-2-
<PAGE>
the Record Date whose address of record is outside the United States
and Canada, or is an A.P.O. or F.P.O. address, and hold such
Certificates for the account of such stockholder subject to such
stockholder making satisfactory arrangements with the Subscription
Agent for the exercise or other disposition of the Rights evidenced
thereby, and follow the instructions of such stockholder for the
exercise, sale or other disposition of such Rights if such
instructions are received at or before 5:00 p.m., New York City Time,
on March ___, 1997.
(C) Mail or deliver a copy of the Prospectus (i) to each assignee or
transferee of Rights upon your receiving appropriate documents to register the
assignment or transfer thereof and (ii) with certificates for shares of
Additional Common Stock when such are issued to persons other than the
registered holder of the Rights.
(D) Accept Subscriptions upon the due exercise (including payment of
the Subscription Price) on or prior to the Expiration Time of Rights in
accordance with the terms of the Certificates and the Prospectus.
(E) Subject to the next sentence, accept Subscriptions from
stockholders whose Certificates are alleged to have been lost, stolen or
destroyed upon receipt by you of an affidavit of theft, loss or destruction and
a bond of indemnity in form and substance satisfactory to you, accompanied by
payment of the Subscription Price for the total number of shares of Additional
Common Stock Subscribed for. Upon receipt of such affidavit and bond of
indemnity and compliance with any other applicable requirements, stop orders
shall be placed on said Certificates and you shall withhold delivery of the
shares of Additional Common Stock Subscribed for until after the Rights
evidenced by such Certificates have expired and it has been determined that the
Rights evidenced by such Certificates have not otherwise been purported to have
been exercised or otherwise surrendered.
(F) Accept Subscriptions, without further authorization or direction
from the Company, without procuring supporting legal papers or other proof of
authority to sign (including without limitation proof of appointment of a
fiduciary or other person acting in a representative capacity), and without
signatures of co-fiduciaries, co-representatives or any other person:
(a) if the Right(s) is/are registered in the name of a fiduciary and
is executed by and the Additional Common Stock is to be issued in the
name of such fiduciary;
(b) if the Right(s) is/are registered in the name of joint tenants and
is executed by one of the joint tenants, provided the certificate
representing the Additional Common Stock is issued in the names of,
and is to be delivered to, such joint tenants;
-3-
<PAGE>
(c) if the Right(s) is/are registered in the name of a corporation and
is executed by a person in a manner which appears or purports to be
done in the capacity of an officer, or agent thereof, provided the
Additional Common Stock is to be issued in the name of such
corporation; or
(d) if the Right(s) is/are registered in the name of an individual and
is executed by a person purporting to act as such individual's
executor, administrator or personal representative, provided, the
Additional Common Stock is to be registered in the name of the
subscriber as executor or administrator of the estate of the deceased
registered holder and there is no evidence indicating the subscriber
is not the duly authorized representative that he purports to be.
(G) Accept Subscriptions not accompanied by Certificates if submitted
by a firm having membership in the New York Stock Exchange or another national
securities exchange or by a commercial bank or trust company having an office in
the United States together with the Notice of Guaranteed Delivery and
accompanied by proper payment for the total number of shares of Additional
Common Stock Subscribed for.
(H) Accept Subscriptions even though unaccompanied by Certificates,
under the circumstances and in compliance with the terms and conditions set
forth in the Prospectus.
(I) Refer to the Company for specific instructions as to acceptance or
rejection of (i), Subscriptions received after the Expiration Time, (ii)
Subscriptions not authorized to be accepted pursuant to this Section 1 and (iii)
Subscriptions otherwise failing to comply with the requirements of the
Prospectus and the terms and conditions of the Certificates.
(J) Upon acceptance of a Subscription:
(a) hold all monies received in a special account for the benefit of
the Company. Promptly following the Expiration Time you shall
distribute to the Company the funds in such account and issue
certificates for shares of Additional Common Stock issuable with
respect to Subscriptions which have been accepted.
(b) advise the Company daily by telecopy and confirm by letter to the
Company to the attention of Douglas H. Verner, Esq. (the "Company
Representative"), with copies to John N. Turitzin, Esq. at Battle
Fowler LLP, 75 E. 55th Street, New York NY 10022 as to the total
number of shares of Additional Common Stock Subscribed for, total
number of Rights sold, total number of Rights partially Subscribed
for and the amount of funds received, with cumulative totals for each;
and in addition advise the Company Representative, by telephone at
212-692-1400, confirmed by telecopy, of the
-4-
<PAGE>
amount of funds received identified in accordance with (a) above,
deposited, available or transferred in accordance with (a) above, with
cumulative totals; and
(c) as promptly as possible but in any event on or before 3:30 p.m.,
New York City Time, on the first full business day following the
Expiration Time, advise the Company Representative in accordance with
(b) above of the number of shares Subscribed for, the number of
Subscription guarantees received and the number of shares of
Additional Common Stock unsubscribed for.
(K) Upon completion of the Subscription Offer, you shall requisition
certificates from the Transfer Agent for the Common Stock for shares of
Additional Common Stock Subscribed for.
2) (a) The Rights shall be issued in registered form only. The
Company shall appoint and have in office at all times a transfer agent (the
"Transfer Agent") and registrar (the "Register") for the Rights, satisfactory to
you, which shall keep books and records of the registration and transfers and
exchanges of Rights (such books and records are hereinafter called the "Rights
Register"). The Company shall promptly notify the Transfer Agent and Registrar
of the exercise of any Rights. The Company shall promptly notify you of any
change in the Transfer Agent and Registrar of the Rights.
(b) All Rights issued upon any registration of transfer or exchange of
Rights shall be the valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Rights surrendered for such registration of transfer or exchange.
(c) Any Certificate when duly endorsed in blank shall be deemed
negotiable, and when a Certificate shall have been so endorsed the holder
thereof may be treated by the Company, you and all other persons dealing
therewith as the absolute owner for any purpose of the Rights represented
thereby, any notice to the contrary notwithstanding, but until such transfer is
registered in the Rights Register, the Company and you may treat the registered
holder thereof as the owner for all purposes.
3) You will follow your regular procedures to attempt to reconcile
any discrepancies between the number of shares of Additional Common Stock that
any Certificate may indicate are to be issued to a stockholder and the number
that the Record Stockholders List indicates may be issued to such stockholder.
In any instance where you cannot reconcile such discrepancies by following such
procedures, you will consult with the Company for instructions as to the number
of shares of Additional Common Stock, if any, you are authorized to issue. In
the absence of such instructions, you are authorized not to issue any shares of
Additional Common Stock to such stockholder.
-5-
<PAGE>
4) You will examine the Certificates received by you as Subscription
Agent to ascertain whether they appear to you to have been completed and
executed in accordance with the applicable Letter of Instructions. In the event
you determine that any Certificate does not appear to you to have been properly
completed or executed, or where any Certificate does not appear to you to be in
proper form for Subscription, or any other irregularity in connection with the
Subscription appears to you to exist, you will follow, where possible, your
regular procedures to attempt to cause such irregularity to be corrected. You
are not authorized to waive any irregularity in connection with the
Subscription, unless you shall have received from the Company the Certificate
which was delivered, duly dated and signed by an authorized officer of the
Company, indicating that any irregularity in such Certificate has been cured or
waived and that such Certificate has been accepted by the Company. If any such
irregularity is neither corrected nor waived, you will return to the subscribing
stockholder (at your option by either first class mail under a blanket surety
bond or insurance protecting you and the Company from losses or liabilities
arising out of the non-receipt or nondelivery of Certificates or by registered
mail insured separately for the value of such Certificates), to such
stockholder's address of record, any Certificates surrendered in connection
therewith and any other documents received with such Certificates, and a letter
of notice to be furnished by the Company explaining the reasons for the return
of the Certificates and other documents.
5) Each document received by you relating to your duties hereunder
shall be dated and time stamped when received.
6) (a) For so long as this Agreement shall be in effect, the
Company will reserve for issuance and keep available free from preemptive rights
a sufficient number of shares of Additional Common Stock to permit the exercise
in full of all Rights issued pursuant to the Subscription Offer. Subject to
the terms and conditions of this Agreement, you will request the Transfer Agent
for the Common Stock to issue certificates evidencing the appropriate number of
shares of Additional Common Stock as required from time to time in order to
effectuate the Subscriptions.
(b) The Company shall take any and all action, including without
limitation obtaining the authorization, consent, lack of objection, registration
or approval of any governmental authority, or the taking of any other action
under the laws of the United States of America or any political subdivision
thereof, to insure that all shares of Additional Common Stock issuable upon the
exercise of the Rights at the time of delivery of the Certificates therefor
(subject to payment of the Subscription Price) will be duly and validly issued
and fully paid and nonassessable shares of Common Stock, free from all
preemptive rights and taxes, liens, charges and security interests created by or
imposed upon the Company with respect thereto.
(c) The Company shall from time to time take all action necessary or
appropriate to obtain and keep effective all registrations, permits, consents
and approvals of the Securities and Exchange Commission and any other
governmental agency or authority and
-6-
<PAGE>
make such filings under Federal and state laws which may be necessary or
appropriate in connection with the issuance, sale, transfer and delivery of
Rights or Additional Common Stock issued upon exercise of Rights.
7) If certificates representing shares of Additional Common Stock
are to be delivered by you to a person other than the person in whose name a
surrendered Certificate is registered, you will issue no certificate for
Additional Common Stock until the Certificate so surrendered has been properly
endorsed (or otherwise put in proper form for transfer) and the person
requesting such exchange has paid any transfer or other taxes or governmental
charges required by reason of the issuance of a certificate for Additional
Common Stock in a name other than that of the registered holder of the Rights
evidenced by such surrendered Certificate, or has established to your
satisfaction that any such tax or charge either has been paid or is not payable.
8) Should any issue arise regarding federal income tax reporting or
withholding, you will take such action as the Company instructs you in writing.
9) The Company may terminate this Agreement at any time by so
notifying you in writing. You may terminate this Agreement upon 30 days' prior
notice to the Company. Upon any such termination, you shall be relieved and
discharged of any further responsibilities with respect to your duties
hereunder. Upon payment of all your outstanding fees and expenses, you will
forward to the Company or its designee promptly any Certificate or other
document relating to your duties hereunder that you may receive after your
appointment has so terminated. Sections 10, 12, and 13 of this Agreement shall
survive any termination of this Agreement.
10) As agent for the Company hereunder you:
(a) shall have no duties or obligations other than those specifically
set forth herein or as may subsequently be agreed to in writing
by you and the Company;
(b) shall have no obligation to issue any shares of Additional Common
Stock unless the Company shall have provided a sufficient number
of certificates for such Additional Common Stock;
(c) shall be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value, or
genuineness of any Certificates surrendered to you hereunder or
shares of Additional Common Stock issued in exchange therefor,
and will not be required to or be responsible for and will make
no representations as to, the validity, sufficiency, value or
genuineness of the Subscription Offer;
-7-
<PAGE>
(d) shall not be obligated to take any legal action hereunder; if,
however, you determine to take any legal action hereunder, and
where the taking of such action might, in your judgment, subject
or expose you to any expense or liability you shall not be
required to act unless you shall have been furnished with an
indemnity satisfactory to you;
(e) may rely on and shall be fully authorized and protected in acting
or failing to act upon any certificate, instrument, opinion,
notice, letter, telegram, telex, facsimile transmission or other
document or security delivered to you and believed by you to be
genuine and to have been signed by the proper party or parties;
(f) shall not be liable or responsible for any recital or statement
contained in the Prospectus or any other documents relating
thereto;
(g) shall not be liable or responsible for any failure on the part of
the Company to comply with any of its covenants and obligations
relating to the Subscription Offer, including without limitation
obligations under applicable securities laws;
(h) may rely on and shall be fully authorized and protected in acting
or failing to act upon the written, telephonic or oral
instructions with respect to any matter relating to you acting as
Subscription Agent covered by this Agreement (or supplementing or
qualifying any such actions) of officers of the Company;
(i) may consult with counsel satisfactory to you, including
____________________________________________, and the advice of
such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered, or omitted
by you hereunder in good faith and in accordance with the advice
of such counsel;
(j) may perform any of your duties hereunder either directly or by or
through agents or attorneys and you shall not be liable or
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with reasonable care by you
hereunder; and
(k) are not authorized, and shall have no obligation, to pay any
brokers, dealers, or soliciting fees to any person.
11) In the event any question or dispute arises with respect to the
proper interpretation of the Subscription Offer or your duties hereunder or the
rights of the Company or of any stockholders surrendering Certificates pursuant
to the Subscription Offer, you shall not be required to act and shall not be
held liable or responsible for your refusal to act until
-8-
<PAGE>
the question or dispute has been judicially settled (and, if appropriate, you
may file a suit in interpleader or for a declaratory judgment for such purpose)
by final judgment rendered by a court of competent jurisdiction, binding on all
parties interested in the matter which is no longer subject to review or appeal,
or settled by a written document in form and substance satisfactory to you and
executed by the Company and each such stockholder and party. In addition, you
may require for such purpose, but shall not be obligated to require, the
execution of such written settlement by all the stockholders and all other
parties that may have an interest in the settlement.
12) Any instructions given to you orally, as permitted by any
provision of this Agreement, shall be confirmed in writing by the Company as
soon as practicable. You shall not be liable or responsible and shall be fully
authorized and protected for acting, or failing to act, in accordance with any
oral instructions which do not conform with the written confirmation received in
accordance with this Section.
13) Whether or not any Certificates are surrendered to you, for your
services as Subscription Agent hereunder, the Company shall pay to you
compensation in accordance with the fee schedule attached as Exhibit A hereto,
together with reimbursement for out-of-pocket expenses, including reasonable
fees and disbursements of counsel.
14) The Company covenants to indemnify and hold you and your
officers, directors, employees, agents, contractors, subsidiaries and affiliates
harmless from and against any loss, liability, damage or expense (including
without limitation any loss, liability, damage or expense incurred for accepting
Certificates tendered without a signature guarantee and the fees and expenses of
counsel) incurred (a) without gross negligence or bad faith or (b) as a result
of your acting or failing to act upon the Company's instructions, arising out of
or in connection with the Subscription Offer, this Agreement or the
administration of your duties hereunder, including without limitation the costs
and expenses of defending and appealing against any action, proceeding, suit or
claim in the premises. In no case shall the Company be liable under this
indemnity with respect to any action, proceeding, suit or claim against you
unless the Company shall be notified by you, by letter or by telex or facsimile
transmission confirmed by letter, of the written assertion of any action,
proceeding, suit or claim made or commenced against you promptly after you shall
have been served with the summons or other first legal process or have received
the first written assertion giving information as to the nature and basis of the
action, proceeding, suit or claim, but failure so to notify the Company shall
not release the Company of any liability which it may otherwise have on account
of this Agreement. The Company shall be entitled to participate at its own
expense in the defense of any such action, proceeding, suit or claim. Anything
in this Agreement to the contrary notwithstanding, in no event shall you be
liable for special, indirect or consequential loss or damages of any kind
whatsoever (including but not limited to lost profits), even if you have been
advised of the likelihood of such loss or damage and regardless of the form of
action.
-9-
<PAGE>
15) If any provision of this Agreement shall be held illegal,
invalid, or unenforceable by any court, this Agreement shall be construed and
enforced as if such provision had not been contained herein and shall be deemed
an Agreement among us to the full extent permitted by applicable law.
16) The Company represents and warrants that (a) it is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) the making and consummation of the
Subscription Offer and the execution, delivery and performance of all
transactions contemplated thereby (including without limitation this Agreement)
have been duly authorized by all necessary corporate action and will not result
in a breach of or constitute a default under the certificate of incorporation or
bylaws of the Company or any indenture, agreement or instrument to which it is a
party or is bound, (c) this Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid, binding and enforceable obligation
of it, (d) the Subscription Offer will comply in all material respects with all
applicable requirements of law and (e) to the best of its knowledge, there is no
litigation pending or threatened as of the date hereof in connection with the
Subscription Offer.
17) In the event that any claim of inconsistency between this
Agreement and the terms of the Subscription Offer (as contained in the
Prospectus) arise, as they may from time to time be amended, the terms of the
Subscription Offer shall control, except with respect to the duties, liabilities
and rights, including compensation and indemnification of you as Subscription
Agent, which shall be controlled by the terms of this Agreement.
18) Set forth in Exhibit B hereto is a list of the names and specimen
signatures of the persons authorized to act for the Company under this
Agreement. The Secretary of the Company shall, from time to time, certify to
you the names and signatures of any other persons authorized to act for the
Company under this Agreement.
19) Except as expressly set forth elsewhere in this Agreement, all
notices, instructions and communications under this Agreement shall be in
writing, shall be effective upon receipt and shall be addressed, if to the
Company, to its address set forth above, Attention: Douglas H. Verner, Esq.,
with a copy to John N. Turitzin, Esq. at Battle Fowler LLP, 75 E. 55th Street,
New York, NY 10001 or, if to the Subscription Agent, to ChaseMellon Shareholder
Services, L.L.C., 450 West 33rd Street, New York, New York 10001, Attention:
Reorganization Department, or to such other address as a party hereto shall
notify the other parties.
20) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to conflict of
laws rules or principles, and shall inure to the benefit of and be binding upon
the successors and assigns of the parties hereto; provided that this Agreement
may not be assigned by any party without the prior written consent of all other
parties.
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<PAGE>
21) No provision of this Agreement may be amended, modified or
waived, except in a written document signed by both parties.
Please acknowledge receipt of this letter and confirm your agreement
concerning your appointment as Subscription Agent, and the arrangements herein
provided, by signing and returning the enclosed copy hereof, whereupon this
Agreement and your acceptance of the terms and conditions herein provided shall
constitute a binding Agreement between us.
Very truly yours,
CHARTWELL LEISURE INC.
By: _______________________________
Martin L. Edelman, President
Title:
Address for notices:
Accepted as of the date
above first written:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
AS SUBSCRIPTION AGENT
By:___________________________
Name:
Title:
-11-
<PAGE>
Exhibit 1 Prospectus
Exhibit 2 Letter of Instructions
Exhibit 3 Notice of Guaranteed Delivery
Exhibit 4 Form of Certificate
Exhibit 5 Fee Schedule
Exhibit 6 Incumbency Certificate
-12-
<PAGE>
EXHIBIT A
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Schedule of Fees
as
Subscription Agent
for
I. Set Up and Administrative Fee $ 2,500
II. Processing Basic subscriptions, each $ 10.00
III. Transferring subscription certificates, split-ups,
reissuing new certificates, round-ups, each $ 7.50
IV. Issuing subscription certificates to record date
holders, each and follow-up mailings $ 7.50
V. Processing oversubscriptions, including proration and
refunds, each $ 3.00
VI. Sale of Rights for holders, each $ 7.00
VII. Subscriptions requiring additional handling
(window items, defective presentations, correspondence
items, legal items,and items not providing a taxpayer
identification number), each $ 10.00
VIII.Processing Guarantee of Delivery items, each $ 10.00
IX. Handling Selected Dealer payments, each $ 10.00
X. Broker fees for selling Rights, per Right By Appraisal
XI. Special Services By Appraisal
XII. Out-of-pocket Expenses (including but not limited to
postage, stationery, telephones, overnight couriers,
messengers, overtime, dinners, transportation, shipping
and trucking Additional
XIII.Minimum Fee $10,000
-13-
<PAGE>
EXHIBIT B
INCUMBENCY CERTIFICATE
OF
CHARTWELL LEISURE INC.
The undersigned, Douglas H. Verner, does hereby certify that he is the
duly elected Executive Vice President, General Counsel and Secretary of
CHARTWELL LEISURE INC., a Delaware corporation (the "Company"), and that the
following persons are duly elected, qualified and acting officers of the
Company, holding the offices set forth opposite their names, and that the
signatures set forth opposite their names are genuine signatures of such
persons:
Name Office Signature
Richard L. Fisher Chairman of the Board of
Directors and Chief Executive
Officer ----------
Martin L. Edelman Director and President
----------
Ronald E. Jackson Chief Operating Officer
----------
Kenneth J. Weber Chief Financial Officer
----------
Douglas H. Verner Executive Vice President,
General Counsel and Secretary
----------
IN WITNESS WHEREOF, the undersigned has hereto signed his name on this
____ day of February, 1997.
-----------------------------------
Douglas H. Verner, Executive
Vice President, General Counsel and
Secretary
The undersigned, Martin L. Edelman, President of CHARTWELL LEISURE
INC., a Delaware corporation, does hereby certify that DOUGLAS H. VERNER is the
duly elected Executive Vice President, General Counsel and Secretary of the
Company and that the signature set forth immediately above is his genuine
signature.
---------------------------------
Martin L. Edelman, President
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<PAGE>
Exhibit 99.11
January 28, 1997
Mr. Douglas H. Verner
Chartwell Leisure Inc.
605 Third Avenue
New York, NY 10158
Gentlemen:
This letter of agreement sets forth the terms and conditions by which
ChaseMellon Shareholder Services, L.L.C. ("we, "our", "us") shall provide to
Chartwell Leisure Inc. ("you", "your") our information agent services (the
"services") with respect to your proposed Subscription Rights Offering.
Services
- --------
(i) Assisting in the coordination of all printing activities.
(ii) Establishing contacts with brokers, dealers, banks and other
nominees on your behalf.
(iii) Assisting with drafting and reviewing documents.
(iv) Facilitate the distribution of materials to the registered and
beneficial owners of Chartwell Leisure Common Stock and to other
interested parties.
(v) Building a file of eligible participants, including registered
holders and beneficial holders identified through our research.
(vi) Establishing a toll-free phone number and managing the
communications group for incoming phone calls.
(vii) Status reporting to management.
(viii) Paying of all broker forwarding invoices, subject to
collection from you of monies for this purpose.
Fee for Services
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The fee for acting as information agent is $7,500.00 plus all out-of pocket
expenses incurred by us, including, without limitation, documentation
preparation, telephone, Bank/Broker listings, and postage costs. Such fees shall
be payable upon the execution of this agreement. Invoices for out-of-pocket
expenses shall be rendered monthly as incurred and shall be payable upon
receipt. Our services shall commence upon receipt of a signed copy of this
contract and expire thirty days after the expiration of the Subscription Rights
Offering.
<PAGE>
Responsibility
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You shall indemnify and hold us, our directors, officers, employees, agents
harmless from and against any and all claims, liabilities, losses, damages
and/or expenses, including reasonable attorneys' fees, which any of them shall
or may incur or sustain in connection with the performance of the services or
this agreement, except to the extent caused directly by our gross negligence or
willful misconduct. This indemnification obligation shall survive the
termination of this Agreement.
Any liability to you we may incur in connection with our provision of services
hereunder (including any additional services mutually agreed to by you and us)
shall be limited to and not exceed the fees actually paid to us for the
provision of the services described above. Anything in this agreement to the
contrary notwithstanding, in no event shall we be liable for special, indirect
or consequential loss or damage of any kind whatsoever, even if we have been
advised of the likelihood of such loss or damage and regardless of the form of
action.
Miscellaneous
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This agreement shall be made in, governed by, and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
law.
All information shall be sent to your address as above written or such other
address as you may advise us in writing, or orally and confirmed in writing.
This agreement represents the entire understanding of the parties with respect
to the subject matter hereof, and supersedes any and all prior understandings,
oral or written, relating hereto and may not be changed orally. Any waiver or
change of any of the provisions hereof must be in writing and signed by the
parties hereto. The failure of either party hereto at any time to require
performance by the other party of any provision hereof shall not affect the
right of such party to require performance at any time thereafter.
If the foregoing terms and conditions are acceptable to you, please sign and
return to us the counterpart of this letter of agreement.
Very truly yours,
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:_____________________________________
Title: _______ Vice President__________
Date:___________________________________
ACCEPTED:
CHARTWELL LEISURE INC.
By: ________________________
Title:______________________
Date:_______________________
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