1
EXHIBIT 2.4
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AGREEMENT AND PLAN OF MERGER
BETWEEN
BRISTOL HOTEL COMPANY
AND
FELCOR SUITE HOTELS, INC.
DATED MARCH 23, 1998
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2
TABLE OF CONTENTS
(Not a part of the Agreement)
PAGE
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I. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Pre-Merger Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. Articles of Amendment and Restatement of Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6. Bylaws of Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7. Directors and Officers of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8. Effect of the Merger on the Capital Stock of FelCor and Bristol. . . . . . . . . . . . . . . . 4
1.9. Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10. Bristol Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
II. REPRESENTATIONS AND WARRANTIES OF FELCOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Organization, Standing and Power of FelCor . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. FelCor Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3. Capital Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4. Authority; Noncontravention; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5. SEC Documents; Financial Statements; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.8. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.9. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.10. Absence of Changes in Benefit Plans; ERISA
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.12. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.13. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.14. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.15. Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.16. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.17. State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.18. Proxy and Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.19. Definition of Knowledge of FelCor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
III. REPRESENTATIONS AND WARRANTIES OF BRISTOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.1. Organization, Standing and Power of Bristol . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2. Bristol Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.3. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.4. Authority; Noncontravention; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.5. SEC Documents; Financial Statements; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.6. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.8. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.9. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.10. Absence of Changes in Benefit Plans; ERISA
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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TABLE OF CONTENTS
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3.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.12. No Payments to Employees, Officers or Directors . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.13. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.14. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.15. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.16. Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.17. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.18. State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.19. Proxy and Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.20. Definition of Knowledge of Bristol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
IV. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.1. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.2. Conduct of FelCor's and Bristol's Business Pending Merger . . . . . . . . . . . . . . . . . . . . 38
4.3. Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
V. ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1. Preparation of the Registration Statements and
the Proxy Statement; FelCor Stockholders Meeting
and Bristol Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.2. Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.3. Consents; Notifications; Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.4. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.5. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.6. Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.7. Transfer and Gains Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9. Spin-Off Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.10. Declaration of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.11. Affiliates; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.12. Bristol's Accumulated and Current Earnings and
Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.13. REIT-Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.14 Interim Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
VI. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1. Conditions To Each Party's Obligation To Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.2. Conditions To Obligations of FelCor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.3. Conditions To Obligations of Bristol. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.4. Frustration of Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
VII. TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.2. Certain Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.4. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.5. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
VIII. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.1. Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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TABLE OF CONTENTS
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8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.3. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.4. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.6. Entire Agreement; No Third-party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
LIST OF EXHIBITS
(Not a part of the Agreement)
-----------------------------
EXHIBIT
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Form of Affiliate's Agreement . . . . . . . . . . . . . . . . . . . . . A
Form of Tax Letters . . . . . . . . . . . . . . . . . . . . . . . . . . B
Form of REIT Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . C
LIST OF SCHEDULES
(Not a part of the Agreement)
-----------------------------
SCHEDULE
--------
Modifications to Articles of Amendment and
Restatement of FelCor . . . . . . . . . . . . . . . . . . . . . 1.5
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Joint Operating Committee . . . . . . . . . . . . . . . . . . . . . . . 4.2
Form of Bristol E&P Statement . . . . . . . . . . . . . . . . . . . . . 5.12
iii
5
LIST OF SCHEDULES TO FELCOR DISCLOSURE LETTER
(Not a part of the Agreement)
SCHEDULE
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Name, Formation Jurisdiction and
Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . 2.2
Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Conflicts with Laws or Agreements and
Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . 2.4
SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Material Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 2.7
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
Changes in Benefit Plans and Compliance
with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Tax Liabilities; Qualified REIT Subsidiaries . . . . . . . . . . . . . . 2.11
Union Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
Defaults in Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 2.15
Individuals Having "Knowledge" . . . . . . . . . . . . . . . . . . . . . 2.19
Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Exceptions to Pre-Closing Covenants . . . . . . . . . . . . . . . . . . 4.2
LIST OF SCHEDULES TO BRISTOL DISCLOSURE LETTER
(Not a part of the Agreement)
SCHEDULE
--------
Bristol Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
Authority; Noncontravention; Consents . . . . . . . . . . . . . . . . . 3.4
SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . 3.6
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8
Absence of Changes in Benefit Plans;
Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
No Payments to Employees, Officers
or Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12
Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15
Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . 3.16
Definition of Knowledge of Bristol . . . . . . . . . . . . . . . . . . . 3.20
Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Conduct of Bristol's Business Pending Merger . . . . . . . . . . . . . . 4.2
iv
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INDEX OF DEFINED TERMS
(Not a part of the Agreement)
PAGE
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Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Amended Bristol Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Amended Bristol Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
BHMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BHR Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BHR Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Break-Up Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Break-Up Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Break-Up Fee Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Bristol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bristol Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Bristol Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bristol Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bristol Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bristol Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bristol Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bristol Corporate Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bristol Director Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Bristol Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bristol Filed SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Bristol Financial Statement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Bristol Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Bristol Hotel Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Bristol Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Bristol Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Bristol Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bristol Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Bristol Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Bristol SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Bristol Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Bristol Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Bristol Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Cash Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Drop Dead Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
E&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
v
7
INDEX OF DEFINED TERMS
(Not a part of the Agreement)
PAGE
----
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Expense Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Federal Legislative or Regulatory Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Felcor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FelCor 1994 Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FelCor 1995 Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FelCor 1998 Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FelCor Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FelCor Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Felcor Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FelCor Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FelCor Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FelCor Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FelCor Filed SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
FelCor Financial Statement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Felcor Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
FelCor Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
FelCor OP Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FelCor Operating Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FelCor Operating Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FelCor Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FelCor Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
FelCor SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FelCor Series A Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FelCor Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FelCor Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
FelCor Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
First Dividend Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Joint Operating Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Knowledge of Bristol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Knowledge of Felcor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Leasing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Measurement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
MGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
vi
8
INDEX OF DEFINED TERMS
(Not a part of the Agreement)
PAGE
----
Non-Corporate Bristol Hotel Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Original Bristol Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Payor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Preliminary E&P Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Property Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Qualifying Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
REA Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Registration Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
REIT Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Spin-Off Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Spin-Off Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Superior Proposal Transaction Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Surviving Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Surviving Corporation Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Transaction Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Transfer and Gains Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Valuation Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Volume Weighted Average Trading Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
vii
9
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated March 23,
1998, is by and between Bristol Hotel Company, a Delaware corporation
("Bristol"), and FelCor Suite Hotels, Inc., a Maryland corporation ("FelCor").
RECITALS:
A. The Board of Directors of Bristol (the "Bristol Board") and
the Board of Directors of FelCor (the "FelCor Board") deem it advisable and in
the best interests of their respective companies that, subject to the
conditions and other provisions contained herein, Bristol merge with and into
FelCor (the "Merger"), with FelCor as the surviving corporation in the Merger
(as such, the "Surviving Corporation");
B. For federal income tax purposes, it is intended that the
Merger qualify as a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code");
C. FelCor has advised Bristol that, in order for FelCor to
maintain its status as a real estate investment trust following the Merger,
FelCor must not acquire certain assets and liabilities of the hotel management
and operation business of Bristol and the Bristol Subsidiaries as a result of
the Merger. Accordingly, prior to and as a condition precedent to the Merger,
(i) Bristol will, or will cause the Bristol Subsidiaries to, (a) reorganize
internally and contribute to Bristol Hotel Management Corporation ("BHMC"), or
another subsidiary of BHR certain of the assets and liabilities of Bristol and
the Bristol Subsidiaries and contribute to Bristol Hotels & Resorts, Inc., a
Delaware corporation ("BHR"), all the capital stock of BHMC, and (b) distribute
to the holders of common stock, par value of $0.01 per share, of Bristol
("Bristol Common Shares") all of the outstanding shares of common stock, par
value of $0.01 per share, of BHR (the "BHR Common Shares") in a transaction
expected to be treated for federal income tax purposes as a taxable dividend of
Bristol's earnings and profits, (ii) Bristol and/or the Bristol Hotel
Subsidiaries, as the case may be, will enter into leases with one or more
wholly owned subsidiaries of BHR and will cancel certain existing management
contracts (the "Leasing Transactions"), and (iii) Bristol will cause those
Bristol Hotel Subsidiaries that are taxable as corporations under the Code
("Bristol Corporate Subsidiaries") to merge with and into one or more
Non-Corporate Bristol Hotel Subsidiaries, all as provided in the Spin-Off
Agreement entered into by Bristol, BHMC and BHR contemporaneously with this
Agreement (the "Spin-Off Agreement");
D. Contemporaneously with the execution of this Agreement,
Bristol, FelCor and certain other Persons (such other Persons, collectively,
the "Principal Stockholders") have entered into a Voting and Cooperation
Agreement (the "Voting Agreement")
10
pursuant to which the Principal Stockholders have agreed to vote their capital
stock holdings for adoption of the Merger Agreement and to refrain from taking
certain actions; and
E. In connection with the transactions contemplated hereby, (i)
the Bristol Board has approved the Voting Agreement and other transactions
contemplated hereby so as to render inapplicable the special stockholder voting
requirements of Section 203 of the DGCL and (ii) the FelCor Board has adopted
resolutions relating to ownership of FelCor Common Shares by the Principal
Stockholders.
Now, therefore, in consideration of the foregoing and the
representations, warranties and covenants contained herein, the parties hereto
hereby agree as follows:
I. THE MERGER AND CERTAIN RELATED TRANSACTIONS
1.1. The Merger. (a) On the terms and subject to the conditions
of this Agreement, and in accordance with the Maryland General Corporation Law
(the "MGCL") and the Delaware General Corporation Law (the "DGCL"), at the
Effective Time, Bristol will be merged with and into FelCor, whereupon the
separate corporate existence of Bristol will cease and FelCor will be the
Surviving Corporation.
(b) From and after the Effective Time, the Surviving Corporation
will possess all the rights, privileges and powers and will assume all of the
liabilities, obligations and duties of Bristol and FelCor, all as provided
under the MGCL and the DGCL.
1.2. Pre-Merger Transactions. Prior to the Effective Time, Bristol
will cause BHMC, BHR and the Bristol Subsidiaries to consummate the
transactions contemplated by the Spin-Off Agreement and take such actions as
are required under the Spin-Off Agreement to be taken by it, in each case on
the terms and subject to the conditions thereof.
1.3. Closing. The closing of the Merger (the "Closing") will take
place at a date and time to be specified by the parties, which (subject to
satisfaction or waiver of the conditions set forth in Article VI) will be no
later than the third Business Day after satisfaction or waiver of the
conditions set forth in Article VI (the "Closing Date") at the offices of
Xxxxx, Day, Xxxxxx & Xxxxx, 2300 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx,
Xxxxxx, Xxxxx, unless another time, date or place is agreed to in writing by
the parties.
1.4. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, (i) the
parties will execute and file articles of merger (the "Articles of Merger")
with the State Department of Assessments and Taxation of the State of Maryland
(the "Department") in accordance with the MGCL, (ii) the Surviving Corporation
will
2
11
execute and file a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in accordance with the DGCL, and
(iii) the parties will make any other filings and recordings required under the
MGCL and the DGCL. The Merger will become effective (the "Effective Time") at
9:00 a.m., New York City time, on the Trading Day immediately following the
Closing Date or, if later, such date and time as the Department accepts the
Articles of Merger for recording and the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such other time as
Bristol and FelCor agree should be specified in the Articles of Merger and
Certificate of Merger (not to exceed 30 calendar days after the Articles of
Merger are accepted for recording by the Department and the Certificate of
Merger is accepted for filing by the Secretary of State of the State of
Delaware). Unless otherwise agreed, the parties will cause the Effective Time
to occur at 9:00 a.m., New York City time, on the Trading Day immediately
following the Closing Date.
1.5. Articles of Amendment and Restatement of Surviving
Corporation. The Articles of Amendment and Restatement of FelCor will be
amended and restated at the Effective Time in the manner specified in Schedule
1.5 or as otherwise agreed between FelCor and Bristol, and will be the Articles
of Amendment and Restatement of the Surviving Corporation from and after the
Effective Time until further amended or restated in accordance therewith and
the MGCL.
1.6. Bylaws of Surviving Corporation. From and after the Effective
Time, the Bylaws of the Surviving Corporation will be the Bylaws of FelCor as
in effect immediately prior to the Effective Time, until further amended or
restated in accordance therewith and the MGCL.
1.7. Directors and Officers of Surviving Corporation. From and
after the Effective Time, the individuals identified on or determined in
accordance with Schedule 1.7 will serve as directors of the Surviving
Corporation and will be divided into "Class I", "Class II" and "Class III"
directors as specified on Schedule 1.7 until the earlier of the resignation or
removal of any such individual or until their respective successors are duly
elected and qualified, as the case may be. In the event that any such person
is unable or unwilling to serve as a director at the Effective Time, the party
that designated such individual will have the right to designate a replacement
for such individual, which right of replacement will terminate at the Effective
Time and is subject to approval of the other party hereto, which approval may
not be unreasonably withheld or delayed. Upon such replacement, Schedule 1.7
will be, without further action, deemed to have been amended to reflect such
selection. The officers of FelCor immediately prior to the Effective Time will
be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
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1.8. Effect of the Merger on the Capital Stock of FelCor and
Bristol. At the Effective Time, by virtue of the Merger and without any action
by the holder of any Bristol Common Shares, FelCor Common Shares or FelCor
Series A Preferred Shares:
(a) Each FelCor Common Share and FelCor Series A
Preferred Share outstanding immediately prior to the Effective Time
will remain outstanding, and each certificate representing outstanding
FelCor Common Shares and FelCor Series A Preferred Shares will
thereafter represent an equal number of Surviving Corporation Common
Shares and Surviving Corporation Series A Preferred Shares, as the
case may be;
(b) Subject to the provisions of Sections 1.8(c) and
1.8(d), each Bristol Common Share outstanding immediately prior to the
Effective Time will be converted into the right to receive 0.685 (the
"Exchange Ratio") of a validly issued, fully paid and nonassessable
share of common stock, par value of $0.01 per share, of the Surviving
Corporation ("Surviving Corporation Common Shares"), and each Bristol
Common Share theretofore outstanding will cease to be outstanding and
will cease to exist, and each holder of a Bristol Certificate will
thereafter cease to have any rights with respect to such shares,
except the right to receive, without interest, the Surviving
Corporation Common Shares as calculated pursuant to this Section
1.8(b) and cash in lieu of fractional Surviving Corporation Common
Shares in accordance with Section 1.8(c) or Section 1.8(d), upon the
surrender of such Bristol Certificate in accordance with Section 1.9;
(c) Notwithstanding any other provision hereof, no
fractional Surviving Corporation Common Shares will be issued in
connection with the Merger. No such holder will be entitled to
dividends, voting rights or any other stockholder rights in respect of
any fractional share. Instead, as soon as practicable after the
Effective Time, the Exchange Agent will determine the excess of (i)
the number of whole Surviving Corporation Common Shares delivered to
the Exchange Agent by FelCor pursuant to Section 1.9(a) over (ii) the
aggregate number of whole Surviving Corporation Common Shares to be
distributed to holders of Bristol Common Shares pursuant to Section
1.8(b) (such excess, the "Excess Shares"). FelCor will instruct the
Exchange Agent (i) to sell the Excess Shares at then-prevailing prices
on the New York Stock Exchange (the "NYSE") through one or more member
firms of the NYSE and (ii) to use reasonable efforts to complete the
sale of the Excess Shares as promptly following the Effective Time as,
in the Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions, and in any event, within 90 calendar days following
the Effective Time. The Exchange Agent will hold such proceeds in
trust for the
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holders of Bristol Common Shares who would otherwise be entitled to
receive a fraction of a Surviving Corporation Common Share, and will
determine the portion of the proceeds to which each such holder is
entitled, if any, by multiplying the amount of the aggregate net
proceeds of such sale by a fraction, the numerator of which is the
amount of the fractional share interest to which such holder is
entitled, and the denominator of which is the aggregate amount of
fractional share interests to which all such holders of Bristol Common
Shares are entitled. The Surviving Corporation will pay all
commissions, transfer taxes, Exchange Agent's fees and other
out-of-pocket transaction costs incurred in connection with the sale
of such Excess Shares;
(d) Notwithstanding the provisions of Section 1.8(c),
FelCor may elect at its option, exercised prior to the Effective Time,
in lieu of the issuance and sale of Excess Shares and the making of
payments pursuant to Section 1.8(c), to pay each holder of Bristol
Common Shares who would otherwise be entitled to receive a fraction of
a Surviving Corporation Common Share, an amount in cash equal to the
Closing Price immediately preceding the Effective Time multiplied by
the fraction of a Surviving Corporation Common Share to which such
holder would otherwise be entitled. For purposes of this Agreement,
"Closing Price" means the closing price of the FelCor Common Shares
(as reported in the New York Stock Exchange, Inc. Composite Tape) on
the Closing Date and "Trading Day" means any day on which the NYSE is
open for trading; and
(e) Each Bristol Common Share issued and held in
Bristol's treasury or by FelCor or any wholly owned FelCor Subsidiary
at the Effective Time, if any, will cease to be outstanding and will
be canceled and retired and will cease to exist without payment of any
consideration therefor.
1.9. Exchange of Certificates. (a) As of the Effective Time,
FelCor will deposit with FelCor's transfer agent (the "Exchange Agent"), for
the benefit of the holders of certificates (the "Bristol Certificates")
representing Bristol Common Shares for exchange in accordance with this Section
1.9, certificates (the "Surviving Certificates") representing Surviving
Corporation Common Shares to be issued pursuant to Article I.
(b) Promptly after the Effective Time, the Surviving Corporation
will cause the Exchange Agent to mail to each holder of record of Bristol
Common Shares as of the Effective Time a letter of transmittal which will
specify (i) that delivery will be effected, and risk of loss and title to
Bristol Certificates will pass, only upon delivery of such Bristol Certificates
to the Exchange Agent, and will be in such form and have such other provisions
as the Surviving Corporation may reasonably specify, and (ii) instructions for
use in effecting the surrender of such
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Bristol Certificates in exchange for Surviving Certificates and cash in lieu of
fractional shares. In addition, the Surviving Corporation will enter into such
other arrangements as Bristol may reasonably request prior to the Effective
Time to permit hand delivery of Bristol Certificates in exchange for Surviving
Certificates at the office of the Exchange Agent maintained for such purposes
in New York City commencing promptly after the Effective Time. Upon surrender
of a Bristol Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such Bristol Certificate will be entitled
to receive in exchange therefor (A) a Surviving Certificate representing the
number of whole Surviving Corporation Common Shares, (B) a check representing
the amount of unpaid dividends and distributions, if any, which such holder has
the right to receive pursuant to the provisions of Section 1.9(c) in respect of
the Bristol Certificate surrendered, and (C) a check or the right to receive a
check representing the amount of cash in lieu of a fractional Surviving
Corporation Common Share, if any, which such holder has the right to receive
pursuant to the provisions of Section 1.8 in respect of the Bristol Certificate
surrendered, in each case, after giving effect to any required withholding Tax,
and the Bristol Certificates so surrendered will forthwith be canceled. No
interest will be paid or accrued on the cash in lieu of fractional Surviving
Corporation Common Shares and unpaid dividends and distributions, if any,
payable to holders of Bristol Certificates. In the event of a transfer of
rights to receive the consideration provided herein with respect to Bristol
Common Shares which is not registered in the transfer records of Bristol, a
Surviving Certificate representing the proper number of Surviving Corporation
Common Shares, together with a check for the cash to be paid in lieu of any
fractional Surviving Corporation Common Shares, if any, and unpaid dividends
and distributions, if any, which such holder has the right to receive pursuant
to the provisions of Section 1.8 and Section 1.9(c), respectively, in respect
of the Bristol Certificate so surrendered, after giving effect to any required
withholding Tax, may be issued to such transferee if the Bristol Certificate is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer Taxes have been paid. All Bristol Certificates so surrendered will be
canceled forthwith.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Surviving Corporation Common Shares will be
paid with respect to any Bristol Common Shares represented by a Bristol
Certificate until the Bristol Certificate is surrendered for exchange as
provided herein. Subject to the effect of applicable escheat and other Laws,
following surrender of any Bristol Certificate, there will be paid to the
holder of the Surviving Certificate issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a
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record date after July 15, 1998 (the "First Dividend Date") theretofore payable
with respect to such whole Surviving Corporation Common Shares and not paid,
less the amount of withholding Taxes, if any, which may be required thereon,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the First Dividend Date but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Surviving Corporation Common Shares, less the amount of withholding
Taxes, if any, which may be required thereon.
(d) From and after the Effective Time, there will be no transfers
on the stock transfer books of Bristol of the Bristol Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Bristol Certificates are presented to the Surviving Corporation, they
will be canceled and exchanged for certificates for Surviving Corporation
Common Shares and cash in lieu of fractional Surviving Corporation Common
Shares, if any, and unpaid dividends and distributions deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in Section 1.8 and this Section 1.9. Bristol Certificates surrendered for
exchange by any Person constituting an "affiliate" of Bristol for purposes of
Rule 145(c) under the Securities Act of 1933, as amended (the "Securities
Act"), will not be exchanged until the Surviving Corporation has received a
written agreement from such Person as contemplated by Section 5.11.
(e) Any portion of the Surviving Certificates made available to
the Exchange Agent pursuant to Section 1.9(a) which remains unclaimed by the
holders of Bristol Common Shares for 180 calendar days after the Effective Time
will be delivered to the Surviving Corporation, upon demand of the Surviving
Corporation, and any former Bristol stockholders who have not theretofore
complied with this Section 1.9 may look only to the Surviving Corporation for
payment of their Surviving Corporation Common Shares, cash in lieu of
fractional shares and unpaid dividends and distributions on the Surviving
Corporation Common Shares deliverable in respect of each Bristol Common Share
such stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
(f) None of FelCor, Bristol, the Exchange Agent or any other
Person will be liable to any former holder of Bristol Common Shares for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
(g) In the event any Bristol Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
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reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent or the Surviving Corporation will issue in exchange for such
lost, stolen or destroyed Bristol Certificate the Surviving Corporation Common
Shares and cash in lieu of fractional Surviving Corporation Common Shares, and
unpaid dividends and distributions on Surviving Corporation Common Shares as
provided in Section 1.8 and Section 1.9(c), respectively, deliverable in
respect thereof pursuant to this Agreement.
1.10. Bristol Stock Options. (a) At the Spin-Off Time (as defined
in the Spin-Off Agreement), each outstanding option (each, an "Original Bristol
Option") to purchase Bristol Common Shares under Bristol's Amended and Restated
1995 Equity Incentive Plan (the "Bristol Incentive Plan") or Stock Option Plan
for Non-Employee Directors (the "Bristol Director Plan"), whether or not then
exercisable or vested, all of which Original Bristol Options that are
outstanding as of the Measurement Date are listed in Schedule 3.3 to the
Bristol Disclosure Letter, will continue to have, and be subject to, the same
terms and conditions as set forth in the Bristol Incentive Plan or the Bristol
Director Plan (as the case may be) and related option agreements pursuant to
which the Original Bristol Options were granted, provided that each Original
Bristol Option will be redenominated into two options which will be
continuations of the Original Bristol Options, effected through amendment of
Original Bristol Options to an "Amended Bristol Option" and a "BHR Option,"
each having identical terms and conditions to the Original Bristol Options
except: (i) the BHR Option will be an option to purchase that number of BHR
Common Shares equal to the product of the number of Bristol Common Shares
covered by such Original Bristol Option immediately prior to the Spin-Off Time
and the Spin-Off Conversion Ratio (as defined in the Spin-Off Agreement),
rounded to the nearest whole number of BHR Common Shares, (ii) service with
either Bristol, BHR or their respective Subsidiaries following the Effective
Time will satisfy the vesting requirements and termination terms thereof, (iii)
the per share exercise price for each BHR Option will be an amount equal to the
quotient of (A) the product of (x) 0.11385, subject to adjustment if and to the
extent necessary to ensure that no additional compensation expense results as
specified in accordance with Emerging Issues Task Force 90-9 (the "Valuation
Ratio"), and (y) the exercise price for the Original Bristol Options, divided
by (B) the Spin-Off Conversion Ratio, (iv) the per share exercise price for the
Amended Bristol Options will be the product of (x) 1 minus the Valuation Ratio
and (y) the exercise price for the Original Bristol Options (the "Amended
Bristol Exercise Price"), and (v) all references to the Bristol Board or
Bristol will, with respect to the BHR Options, be deemed to be references to
the Board of Directors of BHR and BHR, respectively. Effective as of the
Spin-Off Time, (A) BHR will assume all obligations with respect to each BHR
Option, (B) BHR will reserve for issuance the number of BHR Common Shares that
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become issuable upon the exercise of such BHR Options, and (C) Bristol will
have no obligations with respect to any BHR Options. Not later than the
Spin-Off Time, Bristol and BHR will amend (and each may restate) the Bristol
Incentive Plan and the Bristol Director Plan to effect the foregoing changes to
such Plans.
(b) At the Effective Time, the Surviving Corporation will
expressly assume the Bristol Incentive Plan and the Bristol Director Plan and
Bristol's obligations under the Amended Bristol Options on and after the
Effective Time. Each Amended Bristol Option will continue to have, and be
subject to, the same terms and conditions as set forth in the Bristol Incentive
Plan or the Bristol Director Plan (as the case may be) and related option
agreements as modified by Section 1.10(a), provided that the Amended Bristol
Options will be further amended to provide that, (i) all references to Bristol
Common Shares will be deemed to be references to Surviving Corporation Common
Shares, (ii) service with either BHR, the Surviving Corporation or their
respective Subsidiaries following the Effective Time will satisfy the vesting
requirements and termination terms thereof, (iii) each Amended Bristol Option
will be exercisable for that number of whole Surviving Corporation Common
Shares equal to the product of the number of Bristol Common Shares covered by
the Amended Bristol Option immediately prior to the Effective Time and the
Exchange Ratio, rounded to the nearest whole number of Surviving Corporation
Common Shares, (iv) the exercise price per Surviving Corporation Common Share
under each Amended Bristol Option will be equal to the Amended Bristol Exercise
Price divided by the Exchange Ratio, rounded to the nearest cent, and (v) all
references to the Bristol Board or Bristol will be deemed to be references to
the Board of Directors of the Surviving Corporation and the Surviving
Corporation, respectively; provided, however that all decisions relating to the
interpretation or amendment of the Amended Bristol Options will require the
approval of the Compensation Committee of BHR, except for adjustments to the
exercise price or nature of securities to be awarded upon exercise of an
Amended Bristol Option in connection with a transaction in which the Amended
Bristol Options are treated in the same manner as options under other FelCor
Option Plans. The Surviving Corporation will reserve for issuance the number
of Surviving Corporation Common Shares that become issuable upon the exercise
of such Amended Bristol Options. As soon as practicable, the Surviving
Corporation will (i) amend (and each may restate) the Bristol Incentive Plan
and the Bristol Director Plan to effect the foregoing changes to such Plans,
effective as of the Effective Time and (ii) file with the SEC a registration
statement on Form S-8 or other appropriate form with respect to the Surviving
Corporation Common Shares issuable pursuant to the Amended Bristol Options.
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II. REPRESENTATIONS AND WARRANTIES OF FELCOR
Except as set forth in the letter of even date herewith signed by the
President or Vice President of FelCor in his capacity as such and delivered to
Bristol simultaneously with the execution and delivery of this Agreement (the
"FelCor Disclosure Letter"), FelCor represents and warrants to Bristol as
follows:
2.1. Organization, Standing and Power of FelCor. FelCor is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Maryland and has the requisite corporate power and
authority to carry on its business as now being conducted. FelCor is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the business,
financial condition or results of operations of FelCor and the FelCor
Subsidiaries, taken as a whole (a "FelCor Material Adverse Effect"). FelCor
has delivered to Bristol complete and correct copies of its Articles of
Amendment and Restatement, its Bylaws and the Amended and Restated Agreement of
Limited Partnership of FelCor Suites Limited Partnership, a Delaware limited
partnership (the "FelCor Operating Partnership"), in each case as amended or
supplemented to the date of this Agreement and currently in force and effect
(respectively, the "FelCor Articles", the "FelCor Bylaws" and the "FelCor
Operating Partnership Agreement").
2.2. FelCor Subsidiaries. (a) Schedule 2.2 to the FelCor
Disclosure Letter sets forth (i) the name and jurisdiction of incorporation or
formation of each Subsidiary of FelCor and of each other Person in which FelCor
owns, directly or indirectly, an equity or ownership interest (collectively,
the "FelCor Subsidiaries"), (ii) the name of the FelCor Hotel, if any, in which
any FelCor Subsidiary owns or holds an interest and the nature of that
ownership or other interest, and (iii) if such FelCor Subsidiary is not wholly
owned (directly or indirectly) by FelCor, (A) the percentage of capital stock
or other equity interests held by FelCor, and (B) the record owners (or class
of owners with respect to the FelCor Operating Partnership) of outstanding
shares of its capital stock or other equity interests.
(b) All the outstanding shares of capital stock of each FelCor
Subsidiary that is a corporation have been validly issued and are fully paid
and nonassessable. Except as set forth in Schedule 2.2 to the FelCor
Disclosure Letter, (i) all the outstanding shares of capital stock of each
FelCor Subsidiary that is a corporation are owned by FelCor or by another
FelCor Subsidiary free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature
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whatsoever (collectively, "Liens"), and (ii) all equity interests of each
FelCor Subsidiary that is a partnership, joint venture, limited liability
company or trust are owned by FelCor or by another FelCor Subsidiary free and
clear of all Liens. Each FelCor Subsidiary that is a corporation is duly
incorporated, validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted, and each FelCor
Subsidiary that is a partnership, limited liability company or trust is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has the requisite partnership, limited
liability company or trust power and authority to carry on its business as now
being conducted. Each FelCor Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed, individually or in the aggregate,
could not reasonably be expected to have a FelCor Material Adverse Effect.
FelCor has delivered or made available to Bristol complete and correct copies
of the articles or certificate of incorporation, bylaws, partnership, joint
venture and operating agreements and other organizational documents of each
FelCor Subsidiary, in each case, as amended or supplemented to the date of this
Agreement and currently in force and effect.
2.3. Capital Structures. (a) The authorized capital stock of
FelCor consists of 110,000,000 shares of capital stock, of which 100,000,000
are shares of Common Stock, par value $0.01 per share ("FelCor Common Shares"),
and 10,000,000 are FelCor Preferred Shares, 6,050,000 of which have been
designated as $1.95 Series A Cumulative Convertible Preferred Stock, par value
of $0.01 per share (the "FelCor Series A Preferred Shares"). As of the close
of business on March 20, 1998 (the "Measurement Date"), (i) 36,591,080 FelCor
Common Shares and 6,050,000 FelCor Series A Preferred Shares were issued and
outstanding, (ii) 1,212,500 FelCor Common Shares and no FelCor Series A
Preferred Shares were held in the treasury of FelCor, (iii) no more than
400,000 FelCor Common Shares were reserved for issuance pursuant to FelCor's
1994 Restricted Stock and Stock Option Plan (the "FelCor 1994 Option Plan"),
(iv) no more than 1,400,000 FelCor Common Shares were reserved for issuance
pursuant to FelCor's 1995 Restricted Stock and Stock Option Plan (the "FelCor
1995 Option Plan"), (v) no more than 1,000,000 FelCor Common Shares were
reserved for issuance pursuant to FelCor's 1998 Restricted Stock and Stock
Option Plan (the "FelCor 1998 Option Plan", and together with the FelCor 1995
Option Plan and the FelCor 1994 Option Plan, the "FelCor Option Plans"), (vi)
since December 31, 1997, FelCor has not granted options to purchase more than
400,000 FelCor Common Shares pursuant to the FelCor Option Plans and (vii) a
sufficient number of FelCor Common Shares were reserved for issuance to permit
the conversion of the then-outstanding FelCor Series A Preferred Shares and the
redemption
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of the then-outstanding units of limited partner interest ("FelCor OP Units")
of the FelCor Operating Partnership. As of the Measurement Date, except as set
forth in this Section 2.3, no shares of capital stock or other voting
securities of FelCor were issued, reserved for issuance or outstanding and
during the period from and following the Measurement Date to the Effective
Time, there will be no change in the issued and outstanding FelCor Common
Shares and FelCor Series A Preferred Shares other than pursuant to (A) the
exercise of options to purchase FelCor Common Shares issued pursuant to the
FelCor Option Plans and referred to in this Section 2.3, (B) the exercise of
conversion or redemption rights with respect to the FelCor Series A Preferred
Shares and the FelCor OP Units referred to in this Section 2.3, or (C) the
issuance of FelCor OP Units in connection with transactions referred to on
Schedule 4.2 to the FelCor Disclosure Letter. Without limiting the generality
or effect of any other provision hereof, neither the Merger nor any other
transaction contemplated hereby will accelerate the vesting of or have any
other effect under any options or other rights relating to the acquisition of
equity or other securities of FelCor or the FelCor Operating Partnership.
(b) All of the issued and outstanding shares of capital stock of
FelCor are duly authorized, validly issued, fully paid and nonassessable and
are not subject to preemptive rights. Except as set forth in this Section 2.3
or in Schedule 2.3 to the FelCor Disclosure Letter, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which FelCor or any FelCor Subsidiary is a party or by which such entity is
bound obligating FelCor or any FelCor Subsidiary to issue, deliver, sell,
repurchase, redeem or otherwise acquire, or cause to be issued, delivered,
sold, repurchased, redeemed or acquired, additional shares of capital stock,
voting securities or other ownership interests of FelCor or any FelCor
Subsidiary (or securities convertible into or exchangeable for such ownership
interests) or obligating FelCor or any FelCor Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking (other than to FelCor or a
FelCor Subsidiary). There are no bonds, debentures, notes or other
Indebtedness of FelCor having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of FelCor may vote.
(c) As of the Measurement Date, the partnership interests in the
FelCor Operating Partnership consist of (i) the 36,591,080 units of general
partner interest and (ii) 2,897,019 FelCor OP Units. All of the units of
general partner interest in FelCor Operating Partnership are owned by FelCor,
free and clear of all Liens.
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2.4. Authority; Noncontravention; Consents. (a) FelCor has
the requisite corporate power and authority (i) to enter into this Agreement and
each Transaction Document to which FelCor is a party, (ii) to perform its
obligations hereunder and thereunder, and (iii) subject to the requisite
approval of the Merger by the holders of a majority of the FelCor Common Shares
outstanding as of the Record Date (the "FelCor Stockholder Approval"), to
consummate the transactions contemplated hereunder and thereunder. The
execution and delivery by FelCor of this Agreement and each Transaction Document
to which FelCor is a party and the consummation by FelCor of the transactions
contemplated hereunder and thereunder have been duly authorized by the FelCor
Board, the FelCor Board has recommended adoption of this Agreement by its
stockholders and directed that this Agreement be submitted to a meeting of its
stockholders for their consideration, and no other corporate proceedings on the
part of FelCor or its stockholders are necessary to authorize any of the
foregoing, other than the FelCor Stockholder Approval. This Agreement and each
Transaction Document to which FelCor is a party have been duly executed and
delivered by FelCor and constitute valid and binding obligations of FelCor,
enforceable against FelCor in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws relating to the enforcement of
creditors' rights and by general principles of equity (the foregoing exception,
the "Bankruptcy Exception").
(b) Except as set forth in Schedule 2.4 to the FelCor Disclosure
Letter, the execution and delivery by FelCor of this Agreement and each
Transaction Document to which FelCor is a party do not, and the consummation of
the transactions contemplated hereunder and thereunder and compliance by FelCor
with the provisions hereof and thereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of FelCor or any
FelCor Subsidiary under (i) the FelCor Articles or the FelCor Bylaws or the
comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any FelCor Subsidiary, including without
limitation the FelCor Operating Partnership, each as amended or supplemented,
(ii) any loan or credit agreement, note, bond, mortgage, indenture or any other
agreement evidencing, Indebtedness, reciprocal easement agreement, lease,
management or other agreement, instrument or Permit applicable to FelCor or any
FelCor Subsidiary or their respective properties or assets, or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation (collectively, "Laws") applicable to FelCor or any FelCor Subsidiary
or their respective properties or assets, other than, in the case of clause
(ii) or (iii), any such conflicts, violations, defaults, rights, loss or Liens
that, individually or
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in the aggregate, could not reasonably be expected to (A) have a FelCor
Material Adverse Effect or (B) prevent or delay in any material respect the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents or otherwise prevent FelCor from performing its
obligations hereunder or thereunder in any material respect. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any federal, state or local government or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect
to FelCor or any FelCor Subsidiary, including without limitation the FelCor
Operating Partnership, in connection with the execution and delivery by FelCor
of this Agreement or any of the Transaction Documents to which FelCor is a
party or the consummation by FelCor of the transactions contemplated hereunder
or thereunder, except for (i) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a joint proxy statement relating to the approval
by FelCor's stockholders and Bristol's stockholders of the transactions
contemplated by this Agreement (as amended or supplemented from time to time,
the "Proxy Statement"), (B) registration statements on appropriate forms under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (as amended or supplemented from time to time, the
"Registration Statements"), and (C) such reports under the Exchange Act as may
be required in connection with this Agreement and the Transaction Documents and
the transactions contemplated hereunder and thereunder, (ii) the filing of
listing applications with the NYSE with respect to the Surviving Corporation
Common Shares to be issued in the Merger, (iii) the filing of the Articles of
Merger with the Department, the Certificate of Merger with the Secretary of
State of the State of Delaware and other appropriate merger documents and
filings with any local recording office or authorities of other states in which
FelCor or Bristol is qualified to do business, and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations and filings (A)
as are set forth in Schedule 2.4 to the FelCor Disclosure Letter or (B) which,
if not obtained or made, could not reasonably be expected to prevent or delay
in any material respect the consummation of any of the transactions
contemplated by this Agreement or any of the Transaction Documents or otherwise
prevent FelCor from performing its obligations hereunder or thereunder in any
material respect or have, individually or in the aggregate, a FelCor Material
Adverse Effect or a Bristol Material Adverse Effect.
2.5. SEC Documents; Financial Statements; Undisclosed Liabilities.
(a) FelCor and the FelCor Subsidiaries have filed all required reports,
schedules, forms, statements and other documents with the SEC from July 28,
1994 through the date hereof (the "FelCor SEC Documents"). Schedule 2.5 to the
FelCor Disclosure Letter contains a complete list of all FelCor SEC Documents
filed by FelCor and the FelCor Subsidiaries with the SEC since January 1, 1996
and on or prior to the date of this
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Agreement (the "FelCor Filed SEC Documents"). All of the FelCor SEC Documents
(other than preliminary material), as of their respective filing dates,
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and, in each case, the rules and
regulations promulgated thereunder applicable to such FelCor SEC Documents.
None of the FelCor SEC Documents at the time of filing contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
to the extent such statements have been modified or superseded by later FelCor
Filed SEC Documents.
(b) The consolidated financial statements of FelCor and the FelCor
Subsidiaries included in the FelCor SEC Documents (i) complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") (except, in the case of unaudited statements, as permitted by the
applicable rules and regulations of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
included in or incorporated into any FelCor Filed SEC Documents), and (iii)
present fairly, in all material respects, the consolidated financial position
of FelCor and the FelCor Subsidiaries as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and immaterial
year-end audit adjustments). Except as set forth in Schedule 2.5 to the FelCor
Disclosure Letter, FelCor has no Subsidiaries which are not consolidated for
accounting purposes.
(c) Except for liabilities and obligations set forth in the FelCor
Filed SEC Documents or in Schedule 2.5 to the FelCor Disclosure Letter or for
liabilities and obligations specifically contemplated to be incurred in
connection with this Agreement, neither FelCor nor any of the FelCor
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of FelCor or in the notes thereto and which,
individually or in the aggregate, could be reasonably expected to have a FelCor
Material Adverse Effect.
(d) Each of the operating statements for the FelCor Hotels
provided or to be provided by FelCor to Bristol or its advisors was prepared in
the ordinary course of business consistent with past practice and was derived
from the books and records for the applicable FelCor Hotel.
2.6. Absence of Certain Changes or Events. Except as disclosed in (i)
the FelCor Filed SEC Documents or (ii) Schedule 2.6 to the FelCor Disclosure
Letter, since
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December 31, 1997 (the "FelCor Financial Statement Date"), FelCor and the
FelCor Subsidiaries have conducted their business only in the ordinary course
thereof, and there has not been (a) any material adverse change, event or
development in the business, financial condition or results of operations of
FelCor and the FelCor Subsidiaries, taken as a whole (a "FelCor Material
Adverse Change"), nor has there been any occurrence or circumstance that with
the passage of time could reasonably be expected to result in a FelCor Material
Adverse Change, (b) except for regular quarterly distributions (in the case of
FelCor) not in excess of $0.55 per FelCor Common Share, $0.55 per FelCor OP
Unit and $.4875 per FelCor Series A Preferred Share, in each case with
customary record and payment dates, any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of FelCor's capital stock, (c) any split, combination or
reclassification of any of FelCor's capital stock, (d) any damage, destruction
or loss, whether or not covered by insurance, that, individually or in the
aggregate, could be reasonably expected to have a FelCor Material Adverse
Effect, or (e) any change in accounting methods, principles or practices by
FelCor or any FelCor Subsidiary materially affecting its assets, liabilities or
business, except insofar as may have been disclosed in the FelCor Filed SEC
Documents or required by a change in GAAP. There are no accrued and unpaid
dividends on the FelCor Series A Preferred Shares that have not been paid on
the date such payment is due.
2.7. Litigation. Except as disclosed in the FelCor Filed SEC
Documents or in Schedule 2.7 to the FelCor Disclosure Letter, and other than
personal injury and other routine personal injury litigation arising from the
ordinary course of operations of FelCor and the FelCor Subsidiaries and which
are covered by adequate insurance, there is no suit, action, proceeding or
investigation pending or, to the Knowledge of FelCor, threatened against or
affecting FelCor or any FelCor Subsidiary that, individually or in the
aggregate, if decided adversely to FelCor, could be reasonably expected to (i)
have a FelCor Material Adverse Effect or (ii) prevent or delay in any material
respect the consummation of any of the transactions contemplated by this
Agreement or any of the Transaction Documents or otherwise prevent FelCor from
performing its obligations hereunder or thereunder in any material respect, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against FelCor or any FelCor Subsidiary which,
individually or in the aggregate, could reasonably be expected to have any such
effect.
2.8. Properties. (a) All of the real estate properties owned or
leased by FelCor and the FelCor Subsidiaries are listed on Schedule 2.8 to the
FelCor Disclosure Letter (the "FelCor Properties"). FelCor has no direct or
indirect ownership interest in any real property as of the date hereof other
than the FelCor Properties.
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(b) Except as disclosed on Schedule 2.8 to the FelCor Disclosure
Letter, FelCor or one of the FelCor Subsidiaries owns fee simple title to, or a
valid leasehold or joint venture interest in, each of the FelCor Properties,
free and clear of all Liens, security interests or other encumbrances on title
("Encumbrances"), except for such Encumbrances which, individually and in the
aggregate, could not be reasonably expected to have a FelCor Material Adverse
Effect. Except as disclosed on Schedule 2.8 to the FelCor Disclosure Letter,
the FelCor Properties are not subject to any easements, rights of way,
covenants, conditions, restrictions or other written agreements or Laws
affecting building use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions") or Encumbrances, except for (i)
Property Restrictions imposed or promulgated by Law or any Governmental Entity
with respect to real property, including zoning regulations, that do not
adversely affect the current use of the property, materially detract from the
value of or materially interfere with the present use of the property, (ii)
Encumbrances and Property Restrictions disclosed on existing title policies,
commitments (and the documents listed as exceptions therein) or surveys (in
each case copies of which title policies, commitments (and the documents listed
as exceptions therein) and surveys have been delivered or made available to
Bristol), (iii) leases between FelCor and DJONT Operations, L.L.C., a Delaware
limited liability company and its subsidiaries, which are described on Schedule
2.8 to the FelCor Disclosure Letter, (iv) retail leases, including restaurant,
gift shop and roof top leases, and (v) mechanics', carriers', supplier's,
workmen's or repairmen's Liens and other Encumbrances, Property Restrictions
and other limitations of any kind, if any, which, individually and in the
aggregate, could not be reasonably expected to have a FelCor Material Adverse
Effect.
(c) Except for such matters as, individually and in the aggregate,
could not be reasonably expected to have a FelCor Material Adverse Effect,
valid policies of title insurance have been issued insuring FelCor's or the
applicable FelCor Subsidiary's title to or interest in each of the FelCor
Properties, and such policies are, at the date hereof, in full force and effect
and no claim has been made against any such policy and FelCor has no Knowledge
of any facts or circumstances which would constitute the valid basis for such a
claim.
(d) Except for such of the following as, individually and in the
aggregate, could not be reasonably expected to have a FelCor Material Adverse
Effect, to the Knowledge of FelCor, (i) no certificate, Permit or license from
any Governmental Entity having jurisdiction over any of the FelCor Properties
or any agreement, easement or other right which is necessary to permit the
lawful use and operation of the buildings and improvements on any of the FelCor
Properties as currently operated or which is necessary to permit the lawful use
and operation of all driveways, roads and other means of egress and
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ingress to and from any of the FelCor Properties (an "REA Agreement") has not
been obtained and is not in full force and effect, and there is no pending
threat of modification or cancellation of any of the same, nor is FelCor or any
of the FelCor Subsidiaries currently in default under any REA Agreement and the
FelCor Properties are in full compliance with all Permits; (ii) no written
notice of any violation of any Law affecting any portion of any of the FelCor
Properties has been issued by any Governmental Entity; (iii) there are no
material structural defects relating to any of the FelCor Properties; (iv)
there is no FelCor Property whose building systems are not in working order;
and (v) there is no physical damage to any FelCor Property in excess of
$500,000 for which there is no insurance in effect (other than reasonable and
customary deductibles) covering the full cost of the restoration. Except for
such of the following as, individually and in the aggregate, could not be
reasonably expected to have a FelCor Material Adverse Effect, the use and
occupancy of each of the FelCor Properties complies in all material respects
with all applicable Laws, and FelCor has no Knowledge of any pending or
threatened proceeding or action that will in any manner affect the size of, use
of, improvements on, construction on, or access to any of the FelCor
Properties, with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such FelCor Properties. Except for
such of the following as, individually and in the aggregate, could not be
reasonably expected to have a FelCor Material Adverse Effect, neither FelCor
nor any of the FelCor Subsidiaries has received any written notice to the
effect that (x) any betterment assessments have been levied against, or any
condemnation or rezoning proceedings are pending or threatened with respect to
any of the FelCor Properties or (y) any zoning, building or similar Law is or
will be violated by the continued maintenance, operation or use of any
buildings or other improvements on any of the FelCor Properties or by the
continued maintenance, operation or use of the parking areas. Except for such
of the following as, individually and in the aggregate, could not be reasonably
expected to have a FelCor Material Adverse Effect, following a casualty, each
of the FelCor Properties could be reconstructed and used for hotel purposes
under applicable zoning laws and regulations, except that in certain
circumstances such reconstruction would have to comply with the dimensional
requirements of applicable zoning Laws and regulations in effect at the time of
reconstruction.
(e) Except as otherwise could not be reasonably expected to have a
FelCor Material Adverse Effect, there are no outstanding abatement proceedings
or appeals with respect to the assessment of any FelCor Property for the
purpose of real property Taxes, and there are no agreements with any
Governmental Entity with respect to such assessments or Tax rates on any FelCor
Property.
2.9. Environmental Matters. None of FelCor, any of the FelCor
Subsidiaries or, to FelCor's Knowledge, any other Person has caused or
permitted (a) the unlawful presence of any
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Hazardous Materials on any of the FelCor Properties or (b) any unlawful spills,
releases, discharges or disposal of Hazardous Materials to have occurred or be
presently occurring on or from the FelCor Properties, which presence or
occurrence, individually or in the aggregate, could reasonably be expected to
have a FelCor Material Adverse Effect; and, in connection with the construction
on or operation and use of the FelCor Properties, FelCor and the FelCor
Subsidiaries have not failed to comply in any material respect with all
applicable Environmental Laws, except to the extent such failure to comply,
individually or in the aggregate, could not be reasonably expected to have a
FelCor Material Adverse Effect. No notice, notification, demand, request for
information, citation, summons, complaint or order has been received by or is
pending, or to the Knowledge of FelCor, is threatened by, any Person against
FelCor or any FelCor Subsidiary, other than where such notice, notification,
demand, request for information, citation, summons, complaint or order has been
fully resolved, or where such resolution, individually and in the aggregate,
could not be reasonably expected to result in a FelCor Material Adverse Effect.
FelCor has previously delivered or made available to Bristol or its counsel
true and complete copies of all internally prepared or commissioned
environmental studies, assessments and reports in the possession or under the
control of FelCor that relate to the FelCor Properties and/or FelCor's
compliance with Environmental Laws.
2.10. Absence of Changes in Benefit Plans; ERISA Compliance. (a)
Except as disclosed in the FelCor Filed SEC Documents or in Schedule 2.10 to
the FelCor Disclosure Letter and except as specifically contemplated by this
Agreement, since the FelCor Financial Statement Date, there has not been any
adoption or amendment in any material respect by FelCor or any FelCor
Subsidiary of any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other employee benefit plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of FelCor, any FelCor
Subsidiary or any Person Affiliated with FelCor under Section 414 (b), (c), (m)
or (o) of the Code (collectively, "FelCor Benefit Plans").
(b) Except as described in the FelCor Filed SEC Documents or in
Schedule 2.10 to the FelCor Disclosure Letter, (i) all FelCor Benefit Plans,
including any such plan that is an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), are in compliance in all material respects with all applicable
requirements of Law, including without limitation ERISA and the Code, and (ii)
neither FelCor nor any FelCor Subsidiary has any material liabilities or
obligations with respect to any such FelCor Benefit Plan, whether accrued,
contingent or otherwise, except for any such noncompliance or
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liabilities that could not be reasonably expected to have a FelCor Material
Adverse Effect. Except as set forth in Schedule 2.10 to the FelCor Disclosure
Letter, the execution of, and performance of the transactions contemplated in,
this Agreement and the Transaction Documents to which FelCor is a party will
not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any FelCor Benefit Plan, policy, arrangement
or agreement or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee, officer or director of FelCor or any
FelCor Subsidiary. The only severance agreements or severance policies
applicable to officers or directors of FelCor or any of the FelCor Subsidiaries
are the agreements and policies specifically referred to in Schedule 2.10 to
the FelCor Disclosure Letter.
2.11. Taxes. (a) Each of FelCor and the FelCor Subsidiaries has
timely filed all Tax returns and reports required to be filed by it and for any
partnerships for which any of them is a general partner (after giving effect to
any filing extension properly granted by a Governmental Entity having authority
to do so) and has paid (or FelCor has paid on its behalf) all Taxes shown on
such returns and reports as required to be paid by it and all such Tax returns
and reports are complete and accurate in all material respects, except where
the failure to file such Tax returns or reports, the failure to pay such Taxes
and the failure to be complete and accurate in all material respects could not
be reasonably expected to have a FelCor Material Adverse Effect. The most
recent audited financial statements contained in the FelCor Filed SEC Documents
reflect in accordance with GAAP an adequate accrual for Taxes and for all
deferred Taxes payable by FelCor and the FelCor Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
Since the FelCor Financial Statement Date, FelCor has incurred no liability for
Taxes under Sections 857(b), 860(c) or 4981 of the Code, including without
limitation any Tax arising from a prohibited transaction described in Section
857(b)(6) of the Code, and neither FelCor nor any FelCor Subsidiary has
incurred any liability for Taxes other than in the ordinary course of business.
No event has occurred, and no condition or circumstance exists, which presents
a material risk that any material Tax described in the preceding sentence will
be imposed upon FelCor. To the Knowledge of FelCor, (i) no deficiencies for
any Taxes have been proposed, asserted or assessed against FelCor or any of the
FelCor Subsidiaries, (ii) no requests for waivers of the time to assess any
such Taxes are pending, and (iii) no Tax returns of FelCor or any of the FelCor
Subsidiaries are currently being audited by any applicable taxing authority or
threatened with any such audit. There are no Tax Liens on any assets of FelCor
or the FelCor Subsidiaries other than Liens for current Taxes not past due.
All payments for withholding Taxes,
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unemployment insurance and other amounts required to be withheld and deposited
or paid to all taxing authorities have been so deposited or paid by FelCor and
the FelCor Subsidiaries.
(b) FelCor (and its predecessors) (i) for all taxable years
commencing with its taxable year beginning July 28, 1994 and ended December 31,
1994, and through the most recent December 31, has been subject to taxation as
a real estate investment trust (a "REIT") within the meaning of Section 856 of
the Code and has satisfied all requirements to qualify as a REIT for such
years, (ii) has operated, and will continue to operate, in such a manner as to
qualify as a REIT for the taxable year ending December 31, 1998, and (iii) to
FelCor's Knowledge, no action, proceeding or investigation that could
reasonably be expected to result in the termination of FelCor's status as a
REIT is pending or threatened. No FelCor Subsidiary has since its formation
owned any assets (including without limitation securities) that would cause
FelCor to incur tax under Section 857(b)(4) of the Code. Except as set forth
in Schedule 2.11 to the FelCor Disclosure Letter, each FelCor Subsidiary which
is a corporation has been since its formation a qualified REIT subsidiary under
Section 856(i) of the Code.
(c) Neither FelCor nor any of its Subsidiaries has taken any
action that would create a material risk that the Merger would not qualify as a
tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code.
2.12. Brokers. No broker, investment banker, financial advisor or
other Person, other than XX Xxxxxxxxxx, the fees and expenses of which will be
paid by FelCor, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of FelCor or
any FelCor Subsidiary. FelCor has furnished to Bristol true and complete
copies of all agreements under which any such fees or expenses are payable and
all indemnification and other agreements related to the engagement of XX
Xxxxxxxxxx.
2.13. Compliance with Laws. Except as disclosed in the FelCor Filed
SEC Documents, neither FelCor nor any of the FelCor Subsidiaries has violated
or failed to comply with any Law, Permit, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except to the extent that such violation or failure could not be reasonably
expected to have a FelCor Material Adverse Effect. Each of FelCor and each
FelCor Subsidiary has all licenses, franchises, permits, concessions, orders,
approvals or registrations from, of or with any applicable Governmental Entity
(collectively, "Permits") that are required in order to permit it to carry on
its business as it is presently conducted, except those Permits which the
failure to have could not, individually or in the aggregate, reasonably be
expected to have a FelCor Material Adverse Effect. All such Permits are in
full force and effect,
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except for any such Permit as to which the failure so to be in full force and
effect could not, individually or in the aggregate, reasonably be expected to
have a FelCor Material Adverse Effect.
2.14. Labor Matters. Schedule 2.14 to the FelCor Disclosure Letter
sets forth a true and complete list as of the Measurement Date of each labor
union or collective bargaining agreement to which FelCor or any of the FelCor
Subsidiaries is a party or which governs the terms of employment of any of
their respective employees. There is no labor strike or work stoppage pending
or, to the Knowledge of FelCor, threatened against FelCor, any FelCor
Subsidiary or any of the FelCor Properties, except as could not reasonably be
expected to have a FelCor Material Adverse Effect.
2.15. Compliance with Agreements. Neither FelCor nor any FelCor
Subsidiary has received a written notice that FelCor or any FelCor Subsidiary
is in violation of or in default under (nor to the Knowledge of FelCor does
there exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under) any material
loan or credit agreement, note, bond, mortgage, indenture or other agreement
evidencing Indebtedness, lease, Permit, concession, franchise, management,
license or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties
or assets is bound, except to the extent that such violation or default,
individually or in the aggregate, could not reasonably be expected to have a
FelCor Material Adverse Effect or as set forth in Schedule 2.15 to the FelCor
Disclosure Letter.
2.16. Opinion of Financial Advisor. FelCor has received the opinion
of XX Xxxxxxxxxx, dated as of the date hereof, a copy of which has been
provided to Bristol, to the effect that, as of the date hereof, the
consideration to be paid by FelCor pursuant to the Merger is fair, from a
financial point of view, to FelCor.
2.17. State Takeover Statutes. FelCor has taken all action necessary
to exempt the transactions contemplated by this Agreement from the operation of
any "fair price," "moratorium," "control share acquisition" or any other anti-
takeover requirement existing under the Laws of the State of Maryland.
2.18. Proxy and Registration Statements. None of the information
supplied or to be supplied by FelCor or any of its representatives for
inclusion or incorporation by reference in the Proxy Statement or the
Registration Statements will at the time such Proxy Statement or Registration
Statements are filed with the SEC and at the time of the mailing of the Proxy
Statement or Registration Statements to the stockholders of FelCor and Bristol
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of
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the circumstances under which they were made, not misleading. No
representation is made by FelCor with respect to statements made in the Proxy
Statement or Registration Statements based on information supplied by Bristol
or any of its Affiliates for inclusion therein, or with respect to information
concerning Bristol or any of its Subsidiaries incorporated by reference
therein.
2.19. Definition of Knowledge of FelCor. As used in this Agreement,
the phrase to the "Knowledge of FelCor" (or words of similar import) means the
actual knowledge of those individuals identified in Schedule 2.19 to the FelCor
Disclosure Letter.
III. REPRESENTATIONS AND WARRANTIES OF BRISTOL
Except as set forth in the letter of even date herewith signed by the
President of Bristol in his capacity as such and delivered to FelCor
simultaneously with the execution and delivery of this Agreement (the "Bristol
Disclosure Letter"), Bristol represents and warrants to FelCor as follows:
3.1. Organization, Standing and Power of Bristol. Bristol is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. Bristol is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed, individually or in the aggregate, could not reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of Bristol and the Bristol Subsidiaries,
taken as a whole; provided, however, that any determination of whether any
state of facts, event, change or event would have a Bristol Material Adverse
Effect will be made after giving pro-forma effect to the Spin-Off (a "Bristol
Material Adverse Effect"). Bristol has delivered to FelCor complete and
correct copies of its Fourth Amended and Restated Certificate of Incorporation
and its Amended and Restated Bylaws, in each case as amended or supplemented to
the date of this Agreement and currently in force and effect (respectively, the
"Bristol Certificate" and the "Bristol Bylaws").
3.2. Bristol Subsidiaries. (a) Schedule 3.2 to the Bristol
Disclosure Letter sets forth (i) the name and jurisdiction of incorporation or
formation of each Subsidiary of Bristol and of each other Person in which
Bristol owns, directly or indirectly, an equity or ownership interest
(collectively, the "Bristol Subsidiaries"), (ii) the name of the Bristol Hotel,
if any, in which any Bristol Subsidiary owns or holds an interest and the
nature of that ownership or other interest, and (iii) if
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such Bristol Subsidiary is not wholly owned (directly or indirectly) by
Bristol, (A) its authorized capital stock or other equity interests, (B) the
number of issued and outstanding shares of its capital stock or other equity
interests, and (C) the record owners of outstanding shares of its capital stock
or other equity interests.
(b) All the outstanding shares of capital stock of each Bristol
Subsidiary that is a corporation have been validly issued and are fully paid
and nonassessable. Except as set forth in Schedule 3.2 to the Bristol
Disclosure Letter, (i) all the outstanding shares of capital stock of each
Bristol Subsidiary that is a corporation are owned by Bristol or by another
Bristol Subsidiary free and clear of all Liens, and (ii) all equity interests
of each Bristol Subsidiary that is a partnership, joint venture, limited
liability company or trust are owned by Bristol or by another Bristol
Subsidiary free and clear of all Liens. Each Bristol Subsidiary that is a
corporation is duly incorporated, validly existing and in good standing under
the Laws of its jurisdiction of incorporation and has the requisite corporate
power and authority to carry on its business as now being conducted, and each
Bristol Subsidiary that is a partnership, limited liability company or trust is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has the requisite partnership, limited
liability company or trust power and authority to carry on its business as now
being conducted. Each Bristol Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed, individually or in the aggregate,
could not reasonably be expected to have a Bristol Material Adverse Effect.
Bristol has delivered to FelCor complete and correct copies of the articles or
certificate of incorporation, bylaws, partnership, joint venture and operating
agreements and other organizational documents of each Bristol Subsidiary, in
each case, as amended or supplemented to the date of this Agreement and
currently in force and effect.
(c) Following completion of the Spin-Off Transactions and
immediately prior to the Effective Time, except for interests in the
Non-Corporate Bristol Hotel Subsidiaries, Bristol will not own, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, trust or other entity.
3.3. Capital Structure. (a) The authorized capital stock of
Bristol consists of 200,000,000 shares of capital stock, of which 150,000,000
are Bristol Common Shares and 50,000,000 are preferred shares, par value of
$0.01 per share ("Bristol Preferred Shares"). As of the Measurement Date, (i)
43,800,401 Bristol Common Shares and no Bristol Preferred Shares were issued
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and outstanding, (ii) no Bristol Common Shares were held in the treasury of
Bristol, (iii) 1,950,000 Bristol Common Shares were reserved for issuance
pursuant to the Bristol Incentive Plan, (iv) 150,000 Bristol Common Shares were
reserved for issuance pursuant to the Bristol Director Plan, and (v) 1,869,941
Bristol Common Shares were issuable upon the exercise of outstanding Bristol
Options. As of the Measurement Date, except as set forth in this Section 3.3,
no shares of capital stock or other voting securities of Bristol were issued,
reserved for issuance or outstanding, and during the period from and following
the Measurement Date to the Effective Time, there will be no change in the
issued and outstanding Bristol Common Shares and Bristol Preferred Shares other
than pursuant to the exercise of outstanding Bristol Options referred to in
this Section 3.3 or Schedule 3.3 to the Bristol Disclosure Letter. Without
limiting the generality or effect of any other provision hereof, except as
described in this Section 3.3 or Schedule 3.3 to the Bristol Disclosure Letter,
neither the Merger nor any other transaction contemplated hereby will
accelerate the vesting of or have any other effect under any options or other
rights relating to the acquisition of equity or other securities of Bristol.
(b) All of the issued and outstanding shares of capital stock of
Bristol are duly authorized, validly issued, fully paid and nonassessable and
are not subject to preemptive rights. Except as set forth in this Section 3.3
or in Schedule 3.3 to the Bristol Disclosure Letter, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Bristol or any Bristol Subsidiary is a party or by which such entity is
bound obligating Bristol or any Bristol Subsidiary to issue, deliver, sell,
repurchase, redeem or otherwise acquire, or cause to be issued, delivered,
sold, repurchased, redeemed or acquired, additional shares of capital stock,
voting securities or other ownership interests of Bristol or of any Bristol
Subsidiary (or securities convertible into or exchangeable for such ownership
interests) or obligating Bristol or any Bristol Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking (other than to Bristol or a
Bristol Subsidiary). There are no bonds, debentures, notes or other
Indebtedness of Bristol having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Bristol may vote.
3.4. Authority; Noncontravention; Consents. (a) Bristol has
the requisite corporate power and authority (i) to enter into this Agreement
and each Transaction Document to which Bristol is a party, (ii) to perform its
obligations hereunder and thereunder, and (iii) subject to the adoption of the
Merger Agreement by the holders of a majority of the Bristol Common Shares
outstanding as of the Record Date (the "Bristol Stockholder Approval" and,
together with the FelCor Stockholder
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Approval, the "Stockholder Approvals"), to consummate the transactions
contemplated hereunder and thereunder. The execution and delivery by Bristol
of this Agreement and each Transaction Document to which Bristol is a party and
the consummation by Bristol of the transactions contemplated hereunder and
thereunder have been duly authorized by the Bristol Board, the Bristol Board
has recommended adoption of this Agreement by its stockholders and directed
that this Agreement be submitted to a meeting of its stockholders for their
consideration, and no other corporate proceedings on the part of Bristol or its
stockholders are necessary to authorize any of the foregoing, other than the
Bristol Stockholder Approval. This Agreement and each Transaction Document to
which Bristol is a party have been duly executed and delivered by Bristol and
constitute valid and binding obligations of Bristol, enforceable against
Bristol in accordance with their respective terms, except as enforceability may
be limited by the Bankruptcy Exception.
(b) Except as set forth in Schedule 3.4 to the Bristol Disclosure
Letter, the execution and delivery by Bristol of this Agreement and each
Transaction Document to which Bristol is a party do not, and the consummation
of the transactions contemplated hereunder and thereunder and compliance by
Bristol with the provisions hereof and thereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets of
Bristol or any Bristol Subsidiary under (i) the Bristol Certificate or the
Bristol Bylaws or the comparable charter or organizational documents or
partnership or similar agreement (as the case may be) of any Bristol
Subsidiary, each as amended or supplemented to the date of this Agreement, (ii)
any loan or credit agreement, note, bond, mortgage, indenture or any other
agreement evidencing, Indebtedness, reciprocal easement agreement, lease,
management or other agreement, instrument or Permit applicable to Bristol or
any Bristol Subsidiary or their respective properties or assets, or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any Laws applicable to Bristol or any Bristol Subsidiary or
their respective properties or assets, other than, in the case of clause (ii)
or (iii), any such conflicts, violations, defaults, rights, loss or Liens that,
individually or in the aggregate, could not reasonably be expected to (A) have
a Bristol Material Adverse Effect or (B) prevent or delay in any material
respect the consummation of the transactions contemplated by this Agreement and
the Transaction Documents or otherwise prevent Bristol from performing its
obligations hereunder or thereunder in any material respect. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Bristol or any
Bristol Subsidiary in connection with the execution and delivery by Bristol of
this Agreement or any of
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the Transaction Documents to which Bristol is a party or the consummation by
Bristol of any of the transactions contemplated hereunder or thereunder, except
for (i) the filing with the SEC of (A) the Proxy Statement, (B) the
Registration Statements, and (C) such reports under the Exchange Act as may be
required in connection with this Agreement and the Transaction Documents and
the transactions contemplated hereunder and thereunder, (ii) the filing of
listing applications with the NYSE with respect to the BHR Common Shares to be
distributed in the Spin-Off, (iii) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and other appropriate merger
documents and filings with any local recording office or authorities of other
states in which FelCor or Bristol is qualified to do business, (iv) the filing
of a premerger notification and report form under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act") with respect to
the Spin-Off, and (v) such other consents, approvals, orders, authorizations,
registrations, declarations and filings (A) as are set forth in Schedule 3.4 to
the Bristol Disclosure Letter or (B) which, if not obtained or made, could not
reasonably be expected to prevent or delay in any material respect the
consummation of any of the transactions contemplated by this Agreement or any
of the Transaction Documents or otherwise prevent Bristol from performing its
obligations hereunder or thereunder in any material respect or have,
individually or in the aggregate, a Bristol Material Adverse Effect or a FelCor
Material Adverse Effect.
(c) Each of the Bristol Corporate Subsidiaries will, at the time
of its merger with and into one of the Non-Corporate Bristol Hotel
Subsidiaries, be duly authorized and empowered to enter into such merger, and
except as set forth on Schedule 3.4 to the Bristol Disclosure Letter, none of
such mergers will conflict with or violate the terms of (i) any charter or
bylaws of such Bristol Corporate Subsidiary or (ii) any material agreement,
mortgage, note, material contract, deed of trust or security interest by which
the Bristol Corporate Subsidiary or its assets or properties are bound.
3.5. SEC Documents; Financial Statements; Undisclosed Liabilities.
(a) Bristol and the Bristol Subsidiaries have filed all required reports,
schedules, forms, statements and other documents with the SEC from December 13,
1995 through the date hereof (the "Bristol SEC Documents"). Schedule 3.5 to
the Bristol Disclosure Letter contains a complete list of all Bristol SEC
Documents filed by Bristol and the Bristol Subsidiaries with the SEC since
January 1, 1996 and on or prior to the date of this Agreement (the "Bristol
Filed SEC Documents"). All of the Bristol SEC Documents (other than
preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act and, in each case, the rules and regulations promulgated
thereunder applicable to such Bristol SEC Documents. None of the Bristol SEC
Documents at the time of filing contained
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any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later Bristol Filed SEC Documents.
(b) The consolidated financial statements of Bristol and the
Bristol Subsidiaries included in the Bristol SEC Documents (i) complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, (ii) have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by the applicable rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto included in or incorporated into any Bristol Filed SEC
Documents), and (iii) present fairly, in all material respects, the
consolidated financial position of Bristol and the Bristol Subsidiaries as of
the dates thereof and the consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
and immaterial year-end audit adjustments). Bristol has no Subsidiaries which
are not consolidated for accounting purposes.
(c) Except for liabilities and obligations set forth in (i) the
Bristol Filed SEC Documents, (ii) the draft copy of Bristol's Annual Report on
Form 10-K for the year ended December 31, 1997 provided to FelCor on the date
of this Agreement, or (iii) in Schedule 3.5 to the Bristol Disclosure Letter or
for liabilities and obligations specifically contemplated to be incurred in
connection with this Agreement, neither Bristol nor any Bristol Subsidiary has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of Bristol or in the notes thereto and which, individually or in
the aggregate, could be reasonably expected to have a Bristol Material Adverse
Effect.
(d) Each of the operating statements for the Bristol Hotels
provided or to be provided by Bristol to FelCor or its advisors was prepared in
the ordinary course of business consistent with past practice and was derived
from the books and records for the applicable Bristol Hotel.
3.6. Absence of Certain Changes or Events. Except as disclosed in
(i) the Bristol Filed SEC Documents, (ii) Schedule 3.6 to the Bristol
Disclosure Letter, or (iii) the draft copy of Bristol's Annual Report on Form
10-K for the year ended December 31, 1997 provided to FelCor on the date of
this Agreement, since December 31, 1997 (the "Bristol Financial Statement
Date"), Bristol and the Bristol Subsidiaries have conducted their business only
in the ordinary course thereof and there has not been (a) any material adverse
change, event or
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development in the business, financial condition or results of operations of
Bristol and the Bristol Subsidiaries, taken as a whole (a "Bristol Material
Adverse Change"), nor has there been any occurrence or circumstance that with
the passage of time could reasonably be expected to result in a Bristol
Material Adverse Change, (b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of Bristol's capital stock, (c) any split, combination or
reclassification of any of Bristol's capital stock, (d) any damage, destruction
or loss, whether or not covered by insurance, that, individually or in the
aggregate, could be reasonably expected to have a Bristol Material Adverse
Effect, or (e) any change in accounting methods, principles or practices by
Bristol or any Bristol Subsidiary materially affecting its assets, liabilities
or business, except insofar as may have been disclosed in the Bristol Filed SEC
Documents or required by a change in GAAP.
3.7. Litigation. Except as disclosed in (i) the Bristol Filed SEC
Documents, (ii) the draft copy of Bristol's Annual Report on Form 10-K for the
year ended December 31, 1997 provided to FelCor on the date of this Agreement,
or (iii) in Schedule 3.7 to the Bristol Disclosure Letter, and other than
personal injury and other routine personal injury litigation arising from the
ordinary course of operations of Bristol and the Bristol Subsidiaries and which
are covered by adequate insurance, there is no suit, action, proceeding or
investigation pending or, to the Knowledge of Bristol, threatened against or
affecting Bristol or any Bristol Subsidiary that, individually or in the
aggregate, if determined adversely to Bristol, could be reasonably expected to
(i) have a Bristol Material Adverse Effect or (ii) prevent or delay in any
material respect the consummation of any of the transactions contemplated by
this Agreement or any of the Transaction Documents or otherwise prevent Bristol
from performing its obligations hereunder or thereunder in any material
respect, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Bristol or any Bristol
Subsidiary which, individually or in the aggregate, could reasonably be
expected to have any such effect.
3.8. Properties. (a) All of the real estate properties owned or
leased by Bristol and the Bristol Subsidiaries are listed on Schedule 3.8 to
the Bristol Disclosure Letter (the "Bristol Properties"). Bristol has no
direct or indirect ownership interest in any real property as of the date
hereof other than the Bristol Properties.
(b) Except as disclosed on Schedule 3.8 to the Bristol Disclosure
Letter, Bristol or one of the Bristol Subsidiaries owns fee simple title to, or
a valid leasehold interest or joint venture interest in, each of the Bristol
Properties, free and clear of all Encumbrances, except for such Encumbrances
which, individually and in the aggregate, could not be reasonably
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expected to have a Bristol Material Adverse Effect. Except as disclosed on
Schedule 3.8 to the Bristol Disclosure Letter, the Bristol Properties are not
subject to any Encumbrances or Property Restrictions, except for (i) Property
Restrictions imposed or promulgated by Law or any Governmental Entity with
respect to real property, including zoning regulations, that do not adversely
affect the current use of the property, materially detract from the value of or
materially interfere with the present use of the property, (ii) Encumbrances
and Property Restrictions disclosed on existing title policies, commitments
(and the documents listed as exceptions therein) or surveys (in each case
copies of which title policies, commitments (and the documents listed as
exceptions therein) and surveys have been delivered or made available to
FelCor), (iii) retail leases, including restaurant, gift shop and roof top
leases, and (iv) mechanics', carriers', supplier's, workmen's or repairmen's
Liens and other Encumbrances, Property Restrictions and other limitations of
any kind, if any, which, individually and in the aggregate, could not be
reasonably expected to have a Bristol Material Adverse Effect.
(c) Except for such matters as, individually and in the aggregate,
could not be reasonably expected to have a Bristol Material Adverse Effect,
valid policies of title insurance have been issued insuring Bristol's or the
applicable Bristol Subsidiary's title to or interest in each of the Bristol
Properties, and such policies are, at the date hereof, in full force and effect
and no claim has been made against any such policy and Bristol has no Knowledge
of any facts or circumstances which would constitute the valid basis for such a
claim.
(d) Except for such of the following as, individually and in the
aggregate, could not be reasonably expected to have a Bristol Material Adverse
Effect, to the Knowledge of Bristol, (i) no REA Agreement has not been obtained
and is not in full force and effect, and there is no pending threat of
modification or cancellation of any of the same, nor is Bristol or any of the
Bristol Subsidiaries currently in default under any REA Agreement and the
Bristol Properties are in full compliance with all Permits; (ii) no written
notice of any violation of any Law affecting any portion of any of the Bristol
Properties has been issued by any Governmental Entity; (iii) there are no
material structural defects relating to any of the Bristol Properties; (iv)
except as set forth on Schedule 3.8 to the Bristol Disclosure Letter, there is
no Bristol Property whose building systems are not in working order; and (v)
there is no physical damage to any Bristol Property in excess of $500,000 for
which there is no insurance in effect (other than reasonable and customary
deductibles) covering the full cost of the restoration. Except for such of the
following as, individually and in the aggregate, could not be reasonably
expected to have a Bristol Material Adverse Effect, the use and occupancy of
each of the Bristol Properties complies in all material respects with all
applicable Laws, and Bristol has no Knowledge of any pending or
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threatened proceeding or action that will in any manner affect the size of, use
of, improvements on, construction on, or access to any of the Bristol
Properties, with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such Bristol Properties. Except for
such of the following as, individually and in the aggregate, could not be
reasonably expected to have a Bristol Material Adverse Effect, neither Bristol
nor any of the Bristol Subsidiaries has received any written notice to the
effect that (x) any betterment assessments have been levied against, or any
condemnation or rezoning proceedings are pending or threatened with respect to
any of the Bristol Properties or (y) any zoning, building or similar Law is or
will be violated by the continued maintenance, operation or use of any
buildings or other improvements on any of the Bristol Properties or by the
continued maintenance, operation or use of the parking areas. Except for such
of the following as, individually and in the aggregate, could not be reasonably
expected to have a Bristol Material Adverse Effect, following a casualty, each
of the Bristol Properties could be reconstructed and used for hotel purposes
under applicable zoning laws and regulations, except that in certain
circumstances such reconstruction would have to comply with the dimensional
requirements of applicable zoning Laws and regulations in effect at the time of
reconstruction.
(e) Except as otherwise could not be reasonably expected to have a
Bristol Material Adverse Effect, there are no outstanding abatement proceedings
or appeals with respect to the assessment of any Bristol Property for the
purpose of real property Taxes, and there are no agreements with any
Governmental Entity with respect to such assessments or Tax rates on any
Bristol Property.
3.9. Environmental Matters. Except as disclosed in Schedule 3.9 to
the Bristol Disclosure Letter, none of Bristol, any of the Bristol Subsidiaries
or, to Bristol's Knowledge, any other Person has caused or permitted (a) the
unlawful presence of any Hazardous Materials on any of the Bristol Properties
or (b) any unlawful spills, releases, discharges or disposal of Hazardous
Materials to have occurred or be presently occurring on or from the Bristol
Properties, which presence or occurrence could, individually or in the
aggregate, be reasonably expected to have a Bristol Material Adverse Effect;
and, in connection with the construction on or operation and use of the Bristol
Properties, Bristol and the Bristol Subsidiaries have not failed to comply in
any material respect with all applicable Environmental Laws, except to the
extent such failure to comply, individually or in the aggregate, could not be
reasonably expected to have a Bristol Material Adverse Effect. No notice,
notification, demand, request for information, citation, summons, complaint or
order has been received by or is pending, or to the Knowledge of Bristol, is
threatened by, any Person against Bristol or any Bristol Subsidiary, other than
where such notice, notification, demand, request for information, citation,
summons, complaint or order has been fully resolved, or where such
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resolution, individually and in the aggregate, could not be reasonably expected
to result in a Bristol Material Adverse Effect. Bristol has previously
delivered or made available to FelCor or its counsel true and complete copies
of all internally prepared or commissioned environmental studies, assessments
and reports in the possession or under the control of Bristol that relate to
the Bristol Properties and/or Bristol's compliance with Environmental Laws.
3.10. Absence of Changes in Benefit Plans; ERISA Compliance. (a)
Except as disclosed in the Bristol Filed SEC Documents or in Schedule 3.10 to
the Bristol Disclosure Letter and except as specifically contemplated by this
Agreement, since the Bristol Financial Statement Date, there has not been any
adoption or amendment in any material respect by Bristol or any Bristol
Subsidiary of any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other employee benefit plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of Bristol, any Bristol
Subsidiary or any Person Affiliated with Bristol under Section 414 (b), (c),
(m) or (o) of the Code (collectively, "Bristol Benefit Plans").
(b) Except as described in the Bristol Filed SEC Documents or in
Schedule 3.10 to the Bristol Disclosure Letter, (i) all Bristol Benefit Plans,
including any such plan that is an "employee benefit plan" as defined in
Section 3(3) of the ERISA, are in compliance in all material respects with all
applicable requirements of Law, including without limitation ERISA and the
Code, and (ii) neither Bristol nor any Bristol Subsidiary has any material
liabilities or obligations with respect to any such Bristol Benefit Plan,
whether accrued, contingent or otherwise, except for any such noncompliance or
liabilities that could not be reasonably expected to have a Bristol Material
Adverse Effect. Except as set forth in Schedule 3.10 to the Bristol Disclosure
Letter, the execution of, and performance of the transactions contemplated in,
this Agreement and the Transaction Documents to which Bristol is a party will
not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Bristol Benefit Plan, policy, arrangement
or agreement or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee, officer or director of Bristol or any
Bristol Subsidiary. The only severance agreements or severance policies
applicable to officers or directors of Bristol or any of the Bristol
Subsidiaries are the agreements and policies specifically referred to in
Schedule 3.10 to the Bristol Disclosure Letter.
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3.11. Taxes. (a) Each of Bristol and the Bristol Subsidiaries has
timely filed all Tax returns and reports required to be filed by it and for any
partnerships for which any of them is a general partner (after giving effect to
any filing extension properly granted by a Governmental Entity having authority
to do so) and has paid (or Bristol has paid on its behalf) all Taxes shown on
such returns and reports as required to be paid by it and all such Tax returns
and reports are complete and accurate in all material respects, except where
the failure to file such Tax returns or reports, the failure to pay such Taxes
and the failure to be complete and accurate in all material respects could not
be reasonably expected to have a Bristol Material Adverse Effect. The most
recent audited financial statements contained in the Bristol Filed SEC
Documents reflect in accordance with GAAP an adequate accrual for Taxes and for
all deferred Taxes payable by Bristol and the Bristol Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements. To the Knowledge of Bristol, (i) no deficiencies for any Taxes
have been proposed, asserted or assessed against Bristol or any of the Bristol
Subsidiaries, (ii) no requests for waivers of the time to assess any such Taxes
are pending, and (iii) no Tax returns of Bristol or any of the Bristol
Subsidiaries are currently being audited by any applicable taxing authority or
threatened with any such audit. There are no Tax Liens on any assets of
Bristol or the Bristol Subsidiaries other than Liens for current Taxes not past
due. All payments for withholding Taxes, unemployment insurance and other
amounts required to be withheld and deposited or paid to all taxing authorities
have been so deposited or paid by Bristol and the Bristol Subsidiaries.
(b) Bristol (i) has not made or entered into, and does not own any
asset subject to, a consent filed pursuant to Section 341(f) of the Code or a
"safe harbor lease" subject to Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended before the Tax Reform Act of 1984, (ii) is not required to
include in income any amount for an adjustment pursuant to Section 481 of the
Code, and (iii) is neither a party to nor obligated under any agreement or
other arrangement providing for the payment of any amount that would be an
"excess parachute payment" under Section 280G of the Code.
(c) Neither Bristol nor any of its Subsidiaries has taken any
action that would create a material risk that the Merger would not qualify as a
tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code.
(d) Assuming that the Spin-Off had been completed prior to the
date hereof and the Effective Time occurred on the date hereof, Bristol's E&P
would not be materially in excess of $125.0 million.
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3.12. No Payments to Employees, Officers or Directors. Schedule 3.12
to the Bristol Disclosure Letter sets forth a true
and complete list of all cash and non-cash payments which will become payable to
each employee, officer or director of Bristol or any Bristol Subsidiary as a
result of the Merger, other than the distribution of BHR Common Shares in the
Spin-Off. Except as described in Schedule 3.12 to the Bristol Disclosure
Letter, or as otherwise provided for in this Agreement, there is no employment
or severance contract, or other agreement requiring payments, cancellation of
indebtedness or other obligation to be made on a change of control or otherwise
as a result of the consummation of any of the transactions contemplated by this
Agreement and the Transaction Documents, with respect to any employee, officer
or director of Bristol or any Bristol Subsidiary.
3.13. Brokers. No broker, investment banker, financial advisor or
other Person, other xxxx Xxxxxxx, Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Merrill"), the fees and expenses of which will be paid by Bristol, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Bristol or any Bristol Subsidiary.
Bristol has furnished to FelCor true and complete copies of all agreements
under which any such fees or expenses are payable and all indemnification and
other agreements related to the engagement of Merrill.
3.14. Compliance with Laws. Except as disclosed in the Bristol Filed
SEC Documents, neither Bristol nor any of the Bristol Subsidiaries has violated
or failed to comply with any Law, Permit, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except to the extent that such violation or failure could not be reasonably
expected to have a Bristol Material Adverse Effect. Each of Bristol and each
Bristol Subsidiary has all Permits that are required in order to permit it to
carry on its business as it is presently conducted, except those Permits which
the failure to have could not, individually or in the aggregate, reasonably be
expected to have a Bristol Material Adverse Effect. All such Permits are in
full force and effect, except for any such Permit as to which the failure so to
be in full force and effect could not, individually or in the aggregate,
reasonably be expected to have a Bristol Material Adverse Effect.
3.15. Labor Matters. Schedule 3.15 to the Bristol Disclosure Letter
sets forth a true and complete list as of the Measurement Date of each labor
union or collective bargaining agreement to which Bristol or any of the Bristol
Subsidiaries is a party or which governs the terms of employment of any of
their respective employees. There is no labor strike or work stoppage pending
or, to the Knowledge of Bristol, threatened against Bristol, any Bristol
Subsidiary or any of the Bristol Properties, except as could not reasonably be
expected to have a Bristol Material Adverse Effect.
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3.16. Compliance with Agreements. Neither Bristol nor any Bristol
Subsidiary has received a written notice that Bristol or any Bristol Subsidiary
is in violation of or in default under (nor to the Knowledge of Bristol does
there exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under) any material
loan or credit agreement, note, bond, mortgage, indenture or other agreement
evidencing Indebtedness, lease, Permit, concession, franchise, management,
license or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties
or assets is bound, except to the extent such violation or default,
individually or in the aggregate, could not be reasonably expected to have a
Bristol Material Adverse Effect or as set forth in Schedule 3.16 to the Bristol
Disclosure Letter.
3.17. Opinion of Financial Advisor. Bristol has received the opinion
of Merrill, dated the date hereof, a copy of which has been provided to FelCor,
to the effect that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the holders of Bristol Common Shares.
3.18. State Takeover Statutes. Bristol has taken all action
necessary to exempt the transactions contemplated by this Agreement from the
operation of any "fair price," "moratorium," "control share acquisition" or any
other anti- takeover requirement existing under the Laws of the State of
Delaware.
3.19. Proxy and Registration Statements. None of the information
supplied or to be supplied by Bristol or any of its representatives for
inclusion or incorporation by reference in the Proxy Statement or the
Registration Statements will at the time such Proxy Statement or Registration
Statements are filed with the SEC and at the time of the mailing of the Proxy
Statement or Registration Statements to the stockholders of FelCor and Bristol
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of its circumstances under which they were made, not misleading. No
representation is made by Bristol with respect to statements made in the Proxy
Statement or Registration Statements based on information supplied by FelCor or
any of its Affiliates for inclusion therein, or with respect to information
concerning FelCor or any of its Subsidiaries incorporated by reference therein.
3.20. Definition of Knowledge of Bristol. As used in this Agreement,
the phrase to the "Knowledge of Bristol" (or words of similar import) means the
actual knowledge of those individuals identified in Schedule 3.20 to the
Bristol Disclosure Letter.
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IV. COVENANTS
4.1. Acquisition Proposals. (a) Prior to the Effective Time,
each of FelCor and Bristol agrees that:
(i) Neither it nor any of its Subsidiaries will (A) initiate
or solicit, directly or indirectly by furnishing any information or
the making of any proposal or offer (including without limitation any
proposal or offer to its stockholders), any Acquisition Proposal or
(B) engage in any negotiations concerning, provide any confidential
information in connection with or have any discussions with any Person
relating to an Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any proposal or offer from any Person
(other than the transactions contemplated by this Agreement or
described in Schedule 4.1 to the FelCor Disclosure Letter or Schedule
4.1 to the Bristol Disclosure Letter) relating to a merger,
acquisition, tender offer, exchange offer, business combination,
consolidation, sale of assets or similar transaction involving more
than 10% of the equity securities of Bristol or FelCor or a
substantial portion of the assets or equity securities of Bristol and
the Bristol Subsidiaries or FelCor and the FelCor Subsidiaries
(provided that, as to any sale or exchange of assets, the transaction
involves a total value including assumed debt in excess of $100
million);
(ii) It will cause each of its officers, directors,
employees, financial advisors, attorneys, accountants and other
representatives retained by it or any of its Subsidiaries not to
engage in any of the activities described in Section 4.1(a)(i);
(iii) It will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any Acquisition Proposal and will
take the necessary steps to inform the Persons referred to in Section
4.1(a)(ii) of the obligations undertaken in this Section 4.1; and
(iv) It will notify the other immediately if it receives any
such proposals or offers relating to an Acquisition Proposal, or any
requests for such information, which notice will describe the terms of
any such proposal, offer or request in reasonable detail, or if any
such negotiations or discussions relating to an Acquisition Proposal
are sought to be initiated or continued with it.
(b) Except as otherwise provided in Section 4.1(c), and in
accordance with Section 7.2, if applicable, neither the Bristol Board, the
FelCor Board nor any committee thereof may (i) withdraw or modify, or propose
publicly to withdraw or modify, in
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a manner adverse to the other party the approval or recommendation by the
Bristol Board or the FelCor Board or such committee thereof of the Merger or
this Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (iii) authorize or otherwise cause
Bristol or FelCor, as applicable, to enter into any letter of intent, agreement
in principle, acquisition agreement or other similar agreement related to any
Acquisition Proposal (each, an "Acquisition Agreement").
(c) Notwithstanding the foregoing, if, in response to an
unsolicited Acquisition Proposal, the Bristol Board, the FelCor Board or a
committee thereof, as applicable, determines after consultation with its
financial advisors that such Acquisition Proposal is reasonably capable of
being completed on the terms proposed and would, if consummated, result in a
transaction more favorable to such company's stockholders than the Merger and
the other transactions contemplated by this Agreement (taking into account the
nature of the proposed transaction, the nature and amount of the consideration,
the likelihood of completion and any other factors deemed appropriate by such
Board) (a "Superior Proposal"), such Board or committee may, or cause its
representatives to, engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any Person relating
to the Superior Proposal or otherwise facilitate any effort or attempt to make
or implement the Superior Proposal; provided further, however, that, upon
either party's engaging in such negotiations or discussions, providing such
information or otherwise facilitating any effort or attempt to make or
implement a Superior Proposal, such party gives notice to the other party of
its engagement in such activities (a "Superior Proposal Transaction Notice").
Prior to furnishing confidential information to, or entering into discussions
or negotiations with, any other Persons with respect to a Superior Proposal,
such party must obtain from such other Persons an executed confidentiality
agreement with terms no more favorable, taken as a whole, to such Person than
those contained in the applicable Confidentiality Agreements, but which
confidentiality agreement may not include any provision calling for an
exclusive right to negotiate with such Persons, and such party must advise the
other party of the nature of such confidential information delivered to such
other Person reasonably promptly following its delivery to the requesting
party. With respect to any Superior Proposal, the Bristol Board or the FelCor
Board, as applicable, may, subject to compliance with Section 7.2, on or after
the fifth Trading Day following its giving of a Superior Proposal Transaction
Notice, (i) withdraw or modify its approval or recommendation of the Merger or
this Agreement, (ii) approve or recommend such Superior Proposal, (iii)
authorize or otherwise cause the company of which it is the Board to enter into
an Acquisition Agreement, and/or (iv) terminate this Agreement pursuant to
Section 7.1(h) or Section 7.1(i), as applicable.
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(d) Nothing contained in this Section 4.1 will prohibit Bristol or
FelCor from taking and disclosing to its stockholders a position contemplated
by Rule 14e-1 under the Exchange Act or from making any disclosure to its
stockholders if such Board determines that such disclosure is necessary in
order to comply with such Board's fiduciary duties under applicable Law;
provided, however, that neither Bristol nor FelCor nor either of their
respective Boards nor any committee thereof may, except in accordance with
Section 4.1(c), withdraw or modify, or propose publicly to withdraw or modify,
its position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, an Acquisition
Proposal.
4.2. Conduct of FelCor's and Bristol's Business Pending Merger.
Prior to the Effective Time, except as (i) contemplated by this Agreement, (ii)
necessary to accomplish the Spin-Off Transactions, (iii) set forth on Schedule
4.2 to the Bristol Disclosure Letter or Schedule 4.2 to the FelCor Disclosure
Letter, or (iv) consented to in writing by a majority of the individuals
identified on Schedule 4.2 or if either such individual is unable to serve in
such capacity, a replacement identified by the party that designated such
individual (the "Joint Operating Committee"), each of FelCor and Bristol will,
and will cause each of their respective Subsidiaries to:
(a) Conduct its business only in the usual, regular and
ordinary course and in substantially the same manner as heretofore;
(b) Use reasonable efforts to preserve intact its
business organization and goodwill and keep available the services of
its officers and key employees;
(c) Confer on a regular basis with one or more
representatives of the other party to report operational matters of
materiality and, subject to Section 4.1, any proposals to engage in
material transactions;
(d) Promptly notify the other party of any material
emergency or other material change in its business, financial
condition, results of operations or prospects;
(e) Promptly deliver to the other party true and correct
copies of any report, statement or schedule filed with the SEC by such
party subsequent to the date of this Agreement;
(f) Maintain its books and records in accordance with
GAAP, consistently applied, and not change in any material manner any
of its methods, principles or practices of accounting in effect at the
applicable Financial Statement Date, except as may be required by
applicable Law or GAAP;
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(g) Duly and timely file all reports, Tax returns and
other documents required to be filed with federal, state, local and
other authorities, subject to extensions permitted by Law, provided
such extensions do not adversely affect FelCor's status as a qualified
REIT under the Code;
(h) Not make or rescind any express or deemed election
relative to Taxes (unless required by Law or necessary to preserve
FelCor's status as a REIT or the status of any Subsidiary as a
partnership for federal income Tax purposes or as a qualified REIT
subsidiary under Section 856(i) of the Code, as the case may be);
(i) Not (i) acquire (other than pursuant to an existing
agreement), sell, lease, enter into any option to acquire, sell or
lease, or exercise an option or contract to acquire, sell or lease,
additional real property, (ii) make any loans, or advances to any
other Person, except loans or advances to employees in the ordinary
course of business and except as contemplated by Section 5.14, (iii)
incur additional Indebtedness for borrowed money other than under
existing agreements or as permitted or contemplated by this Agreement,
(iv) encumber or subject to any Lien any of its properties or assets,
or (v) enter into any new agreement or commitment, or amend any
existing agreement or commitment, to improve, develop or construct
real estate projects or to make any other capital expenditure after
the date of this Agreement other than (A) with respect to FelCor,
expenditures that are within FelCor's 1998 budget attached to Schedule
4.2 to the FelCor Disclosure Letter and (B) with respect to Bristol,
(1) in respect of transactions, projects or other capital expenditures
relating to the improvement, development or construction of real
estate projects, expenditures that are within Bristol's 1998 budget
attached to Schedule 4.2 to the Bristol Disclosure Letter as to which
Bristol or any of its Subsidiaries have either commenced the
expenditure of money to third parties or entered into agreements or
obligations to do so, (2) in respect of transactions, projects or
other capital expenditures approved by the Joint Operating Committee,
which approval may not be unreasonably withheld or delayed, and (3)
amounts not otherwise covered by subclauses (1) or (2) involving
capital expenditures for purposes other than the improvement,
development or construction of real estate projects of, in the
aggregate, less than $1.0 million;
(j) Use reasonable efforts to enter into agreements to
sell assets of Bristol and the Bristol Subsidiaries as agreed from
time to time by the Joint Operating Committee on terms authorized by
it, and to permit FelCor and its financial and legal advisors a
reasonable opportunity to participate in such process; provided
however, that (i) such agreements may provide at Bristol's election
that any such sale or disposition will not be consummated until the
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Effective Time and that Bristol may terminate such agreement if this
Agreement is terminated for any reason and (ii) in no event will any
party bind Bristol or its Subsidiaries to any liability or obligation
with respect to a sale of any assets in respect of any transaction not
approved by the Joint Operating Committee in the sole discretion of
the members thereof;
(k) Except as contemplated by Section 1.5, not amend its
articles or certificate of incorporation, bylaws or comparable charter
or organizational document or the certificate or articles of
incorporation, bylaws, partnership agreement, operating agreement,
joint venture agreement or comparable charter or organizational
document of any FelCor Subsidiary or Bristol Hotel Subsidiary without
the other party's prior written consent, which consent will not be
unreasonably withheld or delayed;
(l) Not amend any material terms of any contract of such
party in a manner adverse to the Surviving Corporation in order to
obtain the consent of the other party or parties to such contract to
any of the transactions contemplated by this Agreement or the Spin-Off
Agreement without obtaining the prior written consent of the other
party hereto, which consent may not be unreasonably withheld or
delayed;
(m) Make no change in the number of shares of capital
stock, membership interests or units of limited partnership interest
issued and outstanding, other than pursuant to (i) the exercise of
options disclosed in the FelCor Filed SEC Documents, the Bristol Filed
SEC Documents, Schedule 3.3 to the Bristol Disclosure Letter or
Schedule 2.3 to the FelCor Disclosure Letter, (ii) the conversion of
FelCor Series A Preferred Shares pursuant to the terms of the FelCor
Series A Preferred Shares, and (iii) the redemption of FelCor OP Units
for FelCor Common Shares pursuant to the terms of the FelCor OP Units;
(n) Grant no options or other right or commitment
relating to its capital stock, membership interests or units of
limited partnership interest or any security convertible into its
capital stock, membership interests or units of limited partnership
interest, or any security the value of which is measured by shares of
capital stock, or any security subordinated to the claim of its
general creditors;
(o) Not (i) authorize, declare, set aside or pay any
dividend or make any other distribution or payment with respect to any
shares of its capital stock or change such party's normal record date
for the payment of any permitted dividend or distribution, other than
as provided in Schedule 4.2 to the FelCor Disclosure Letter or (ii)
directly or indirectly redeem, purchase or otherwise acquire any
shares of capital stock, membership interests or
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units of partnership interest or any option, warrant or right to
acquire, or security convertible into, shares of capital stock,
membership interests or units of partnership interest, other than
pursuant to (A) the conversion of FelCor Series A Preferred Shares
pursuant to the terms of the FelCor Series A Preferred Shares and (B)
the redemption of FelCor OP Units for FelCor Common Shares pursuant to
the terms of the FelCor OP Units;
(p) Not adopt any new employee benefit plan or amend any
existing plans or rights, except for changes which are required by Law
or changes which are not more favorable to participants than
provisions presently in effect;
(q) Not settle any stockholder derivative or class action
claims arising out of or in connection with any of the transactions
contemplated by this Agreement and the Transaction Documents;
(r) Not change the ownership of any of its Subsidiaries
except pursuant to the Spin-Off Agreement;
(s) Not amend any of the Transaction Documents in any
material respect;
(t) Not take any action that would cause the Merger not
to qualify as a tax-free reorganization under Section 368(a)(1)(A) of
the Code;
(u) Promptly notify the other party of any action, suit,
proceeding, claim or audit pending against or with respect to such
party or its Subsidiaries in respect of any Taxes where there is a
reasonable possibility of a determination or decision which would
materially increase the Tax liabilities of such party, and not change
any of the Tax elections, accounting methods, conventions or
principals which relate to such party or its Subsidiaries that could
reasonably be expected to increase such party's liabilities;
(v) Continue to maintain and repair all of its assets and
properties in a manner consistent with past practices; and
(w) Maintain all licenses and Permits as may be required
by any Governmental Entity administering Laws regulating the sale of
alcoholic beverages at the Bristol Hotels or the FelCor Hotels and
take whatever actions are necessary to maintain the continuity of
service of alcoholic beverage at the Bristol Hotels or the FelCor
Hotels.
4.3. Other Actions. Each of FelCor and Bristol will not, and will
use commercially reasonable efforts to cause its respective Subsidiaries not
to, take any action that would result in (i) any of the representations and
warranties of such party
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(without giving effect to any "Knowledge" qualification) set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of
such representations and warranties (without giving effect to any "Knowledge"
qualification) that are not so qualified becoming untrue in any material
respect, or (iii) except as contemplated by Section 4.1, any of the conditions
to the Merger set forth in Article VI not being satisfied.
V. ADDITIONAL COVENANTS
5.1. Preparation of the Registration Statements and the Proxy
Statement; FelCor Stockholders Meeting and Bristol Stockholders Meeting. (a)
As soon as practicable following the date of this Agreement, FelCor and Bristol
will prepare and file with the SEC a preliminary Proxy Statement in form and
substance satisfactory to each of Bristol and FelCor and such Registration
Statements as may be required to effect the Merger and the Spin-Off. To the
extent practicable, the parties will utilize one document for transmittal to
their respective stockholders to meet applicable legal requirements. Each of
FelCor and Bristol will use its reasonable best efforts to (i) prepare and
provide the other party as promptly as practicable the financial information
required to be disclosed in the Proxy Statement, (ii) cause Xxxxxxx and XX
Xxxxxxxxxx, as appropriate, to bring-down the opinions referred to in Section
2.16 and Section 3.17 to the date of the Proxy Statement, (iii) respond to any
comments of the SEC, and (iv) have the Registration Statements declared
effective under the Securities Act and the rules and regulations promulgated
thereunder as promptly as practicable after such filing and to keep the
Registration Statements effective as long as is necessary to consummate the
Merger and the Spin-Off. Each of FelCor and Bristol will use its reasonable
best efforts to cause the Proxy Statement to be mailed to FelCor's stockholders
and Bristol's stockholders, respectively, as promptly as practicable after the
Registration Statements are declared effective under the Securities Act. Each
party agrees to date its Proxy Statement as of the same date, which will be the
approximate date of mailing to the stockholders of the respective parties.
Each party will notify the other promptly of the receipt of any comments from
the SEC and of any request by the SEC for amendments or supplements to the
Registration Statements or the Proxy Statement or for additional information
and will supply the other with copies of all correspondence between such party
or any of its representatives and the SEC with respect to the Registration
Statements or the Proxy Statement. The Registration Statements and the Proxy
Statement will comply in all material respects with all applicable requirements
of Law. Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Registration Statements or the Proxy Statement,
Bristol or FelCor, as the case may be, will promptly inform the other of such
occurrences and cooperate in filing with the SEC and/or mailing to the
stockholders of Bristol and the stockholders of FelCor such amendment or
supplement to the Registration Statements or the Proxy Statement.
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(b) Bristol will, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Bristol Stockholders Meeting") for the purpose of obtaining
the Bristol Stockholder Approval. Bristol will, through the Bristol Board,
recommend to its stockholders adoption of this Agreement; provided that,
notwithstanding any other provision of this Agreement, prior to the Bristol
Stockholders Meeting, such recommendation may be withdrawn, modified or amended
to the extent that, as a result of a Superior Proposal, the Bristol Board
determines that such withdrawal, modification or amendment is appropriate.
(c) FelCor will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "FelCor Stockholders Meeting") for the purpose of obtaining
the FelCor Stockholder Approval. FelCor will, through the FelCor Board,
recommend to its stockholders adoption of this Agreement and the transactions
contemplated by this Agreement; provided that, notwithstanding any other
provision of this Agreement, prior to the FelCor Stockholders Meeting, such
recommendation may be withdrawn, modified or amended to the extent that, as a
result of a Superior Proposal, the FelCor Board determines that such
withdrawal, modification or amendment is appropriate.
(d) Bristol and FelCor will use their respective best efforts to
hold their respective stockholder meetings on the same day.
(e) If on the date for the Bristol Stockholders Meeting and FelCor
Stockholders Meeting established pursuant to Section 5.1(d), either Bristol or
FelCor has not received a sufficient number of proxies to approve the adoption
of this Agreement, then both parties will adjourn their respective stockholders
meetings until the first to occur of (i) the date ten calendar days after the
originally scheduled date of the stockholders meetings or (ii) the date on
which the requisite number of proxies approving the Merger has been obtained.
5.2. Access to Information; Confidentiality. Subject to the
requirements of confidentiality agreements with third parties, each of FelCor
and Bristol will, and will cause each of its Subsidiaries to, afford to the
other party and to the officers, employees, accountants, counsel, financial
advisors and other representatives of such other party, reasonable access
during normal business hours prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records
and, during such period, each of FelCor and Bristol will, and will cause each
of its Subsidiaries to, furnish promptly to the other party (a) a copy of each
report, schedule, registration statement and other document filed by it during
such
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period pursuant to the requirements of federal or state securities Laws and (b)
all other information concerning its business, properties and personnel as such
other party may reasonably request. Each of FelCor and Bristol will, and will
cause its Subsidiaries to, and will use commercially reasonable efforts to
cause its officers, employees, accountants, counsel, financial advisors and
other representatives and Affiliates to, hold any nonpublic information in
confidence to the extent required by, and in accordance with, and will comply
with the provisions of the letter agreements, dated as of January 14, 1998 and
February 27, 1998, between FelCor and Bristol (the "Confidentiality
Agreements").
5.3. Consents; Notifications; Other Actions. (a) Subject to the
terms and conditions herein provided, FelCor and Bristol will (i) use all
reasonable best efforts to cooperate with one another in (A) determining which
filings are required to be made prior to the Effective Time with, and which
consents, approvals, Permits or authorizations are required to be obtained
prior to the Effective Time from, any Governmental Entity and any third parties
in connection with the execution and delivery of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby and (B) timely making all such filings and timely seeking
all such consents, approvals, Permits and authorizations, (ii) use all
reasonable best efforts to obtain in writing any consents required from third
parties to effectuate the Merger, such consents to be in such form and
substance as may be reasonably satisfactory to FelCor and Bristol, and in
connection therewith, not pay any consent fees unless approved by FelCor, and
(iii) use all reasonable best efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement and the Transaction Documents. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of FelCor and
Bristol will take all such necessary action.
(b) Each of Bristol and FelCor will give prompt notice to the
other (i) if any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becomes untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becomes untrue or inaccurate in any material respect or (ii) of the failure by
it to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification will affect the representations,
warranties or covenants of the parties or the conditions to the obligations of
the parties under this Agreement.
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(c) Bristol will use all reasonable efforts to cause each of the
directors and officers of Bristol and the Bristol Subsidiaries (other than BHMC,
BHR and their respective Subsidiaries) to resign as a director or officer of
each applicable company effective as of the Effective Time.
5.4. Tax Treatment. Each of Bristol and FelCor will use its
reasonable best efforts to cause the Merger to qualify as a tax-free
reorganization under the provisions of Section 368(a)(1)(A) of the Code and to
obtain the opinions of counsel referred to in Sections 6.1(e), 6.1(f) and
6.2(f).
5.5. Public Announcements. Bristol and FelCor will consult with
each other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other written public statements with respect
to the transactions contemplated by this Agreement and the Transaction
Documents, including the Merger and the Spin-Off, and will not issue any such
press release or make any such written public statement prior to such
consultation, except to the extent it may be advised by counsel that it is
required by applicable Law or legal process. The parties agree that the
initial press release to be issued with respect to the transactions
contemplated by this Agreement will be in the form agreed to by the parties
hereto prior to the execution of this Agreement.
5.6. Listing. Prior to the Effective Time, (a) FelCor will use its
best efforts to have the NYSE approve for listing, upon official notice of
issuance, the Surviving Corporation Common Shares to be issued in the Merger
and (b) Bristol will cause BHR to use reasonable efforts to have the NYSE, the
NASDAQ or another national securities exchange approve for listing, upon
official notice of issuance, the BHR Common Shares to be distributed in the
Spin-Off.
5.7. Transfer and Gains Taxes. Bristol and FelCor will cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any
transfer, recording, registration and other fees and any similar Taxes which
become payable in connection with the transactions contemplated by this
Agreement (together with any related interests, penalties or additions to Tax,
"Transfer and Gains Taxes"). From and after the Effective Time, the Surviving
Corporation will, or will cause FelCor Operating Partnership, as appropriate,
to pay or cause to be paid, without deduction or withholding from any amounts
payable to the holders of Surviving Corporation Common Shares, all Transfer and
Gains Taxes.
5.8. Indemnification. (a) From and after the Effective Time, the
Surviving Corporation will provide exculpation and indemnification for each
individual who is now or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director of Bristol or any
Bristol Subsidiary (the "Indemnified Parties") which is the same as the
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exculpation and indemnification provided to the Indemnified Parties by Bristol
and the Bristol Subsidiaries immediately prior to the Effective Time in the
Bristol Certificate and Bylaws or the applicable charter or other
organizational document of such Bristol Subsidiary, as in effect on the date
hereof; provided, that such exculpation and indemnification covers actions on
or prior to the Effective Time, including without limitation all transactions
contemplated by this Agreement and the Transaction Documents. In no event will
the Surviving Corporation be obligated to provide directors' and officers'
liability insurance. If the Surviving Corporation has directors' and officers'
insurance, such insurance will apply to all directors and officers of the
Surviving Corporation serving as such during the period such coverage is in
effect. Notwithstanding anything in this Agreement to the contrary, Bristol
will purchase insurance coverage for the directors and officers of Bristol who
are covered under Bristol's directors' and officers' insurance policy as of the
Effective Time for claims made after the Effective Time with respect to
liabilities arising or relating to periods prior to the Effective Time, which
insurance coverage will provide that FelCor is a named insured thereunder.
(b) The Surviving Corporation will continue in force and effect
after the Effective Time each indemnification agreement between Bristol or any
Bristol Subsidiary, on the one hand, and any Person, on the other hand, which
was in force and effect immediately prior to the Effective Time.
(c) The provisions of this Section 5.8 are intended to be for the
benefit of, and will be enforceable by, each Indemnified Party or other Person
referred to in this Section 5.8, his or her heirs, and his or her personal
representatives and will be binding on all successors and assigns of Bristol
and FelCor.
(d) In the event that the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any other
Person and will not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case the successors
and assigns of such entity will assume the obligations set forth in this
Section 5.8, which obligations are expressly intended to be for the irrevocable
benefit of, and will be enforceable by, each Person covered hereby.
5.9. Spin-Off Transactions. (a) Bristol will diligently seek and
use reasonable best efforts to obtain prior to the Closing Date all material
consents required to be obtained by BHMC and BHR to perform their respective
obligations under the Spin-Off Agreement and the other agreements contemplated
hereby to which BHMC and BHR is a party. Bristol will keep FelCor apprised in
reasonable detail of its progress in obtaining such consents.
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(b) Bristol will furnish to FelCor copies of all documentation
relating to or to be delivered in connection with the Spin-Off Transactions.
Without limiting the generality or effect of the foregoing, Bristol will
furnish to FelCor copies of all documentation relating to (i) the transfers to
BHR of the Spin-Off Assets (as defined in the Spin- Off Agreement) and the
assumptions by BHR of the Spin-Off Liabilities (as defined in the Spin-Off
Agreement), (ii) the formation and organizational documents for the
Non-Corporate Bristol Hotel Subsidiaries, and (iii) the merger documents
between the Bristol Corporate Subsidiaries and the Non-Corporate Bristol Hotel
Subsidiaries, and provide FelCor an opportunity to comment thereon and consent
to any of such documentation.
5.10. Declaration of Dividends and Distributions. From and after the
date of this Agreement, except for the Spin-Off, Bristol will not declare or
pay any dividend or distribution to its stockholders. From and after the date
of this Agreement, FelCor will not declare or pay any dividend or other
distribution to the stockholders except in accordance with Schedule 4.2 to the
FelCor Disclosure Letter.
5.11. Affiliates; Etc. Prior to the Closing Date, Bristol will
deliver to FelCor a letter identifying all Persons who are, at the time this
Agreement is submitted for adoption by to the stockholders of Bristol,
"affiliates" of Bristol for purposes of Rule 145 under the Securities Act.
Bristol will use reasonable efforts to cause each such Person to deliver to
FelCor on or prior to the Closing Date a written agreement substantially in the
form attached as Exhibit A.
5.12. Bristol's Accumulated and Current Earnings and Profits.
Bristol will use all reasonable efforts to assist FelCor and Xxxxxx Xxxxxxxx
LLP in the calculation of the current and accumulated earnings and profits (as
determined for federal income Tax purposes) ("E&P") of Bristol as of the
Closing Date, giving effect to the Spin-Off. Bristol will deliver to FelCor
not later than 21 calendar days prior to the expected Closing Date, (i) a
statement of accumulated and current E&P of Bristol as of a date not more than
30 calendar days prior to the Closing Date but after giving effect to the
Spin-Off and (ii) a statement of estimated accumulated and current E&P of
Bristol as of the Closing Date after giving effect to the Spin-Off (together,
the "Preliminary E&P Statement"). Bristol will use reasonable efforts to
obtain from Xxxxxx Xxxxxxxx LLP (i) upon delivery of the Preliminary E&P
Statement, such firm's computation, or confirmation of Bristol's computation,
of accumulated and current E&P of Bristol as set forth in the Preliminary E&P
Statement and (ii) an undertaking to provide within three months after the
Closing Date, such firm's final computation, or confirmation of Bristol's
computation, of accumulated and current E&P of Bristol as of the Closing Date,
in substantially the form set forth on Schedule 5.12 (with such changes thereto
as FelCor may reasonably request and to which Xxxxxx Xxxxxxxx LLP may agree).
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5.13. REIT-Related Matters. (a) Bristol will take such further
actions and engage in such further transactions as determined by FelCor, based
on written advice of FelCor's counsel, as may be reasonably necessary to
preserve FelCor's status as a REIT under the Code, provided that no such
actions could reasonably be expected to have a material adverse economic effect
on Bristol or its stockholders if the Merger is not consummated or on BHR
following the Spin-Off Transactions.
(b) At the Closing, FelCor will deliver to each of the Principal
Stockholders an exemption from the stock ownership limitations in the FelCor
Articles that permits each of the Principal Stockholders to own at any time up
to 15% of the FelCor Common Shares outstanding (the "Exemptions"). The
Exemptions will be conditioned upon the continuing accuracy of the
representations provided by the Principal Stockholders as to their ownership of
FelCor Common Shares and BHR Common Shares in connection with obtaining the
Exemptions. The percentage of FelCor Common Shares that each Principal
Stockholder may own under the Exemption will be reduced automatically (i) to
the extent FelCor issues additional FelCor Common Shares which entitle such
Principal Stockholder to purchase additional FelCor Common Shares to maintain
its percentage ownership and such Principal Stockholder elects not to maintain
its percentage ownership of FelCor Common Shares by acquiring additional shares
in connection with such issuance and (ii) to the extent necessary for FelCor to
maintain its REIT status.
5.14 Interim Credit Facility. As promptly as practicable and in
any event not later than April 15, 1998, the parties will enter into an interim
credit facility providing for loans of (i) $25.0 million to fund a portion of
the cash required in connection with the Omaha Hotel, Inc. acquisition as
described in Schedule 4.2 to the Bristol Disclosure Letter, and (ii) $31.2
million to fund the prepayment on June 15, 1998 of the $30 million Senior
Secured Notes described in Schedule 3.4 to the Bristol Disclosure Letter. Such
loans will be secured by certain of the Omaha assets so acquired or other real
estate acceptable to FelCor, will bear a market rate of interest and be on
other commercially reasonable terms and conditions. The loans will be due and
payable 120 days following the termination of this Agreement pursuant to
Section 7.1 hereof ; provided, however, that (i) if FelCor is obligated to pay
the Break-up Fee in connection with such termination, the maturity date of such
loan will be extended to the date on which FelCor pays the Break-up Fee (but in
no event beyond December 31, 2003) and (ii) if this Agreement is terminated
prior to the Effective Time pursuant to Section 7.1(f), any loans then
outstanding will be converted into unsecured indebtedness of Bristol, will bear
a market rate of interest and be on other commercially reasonable terms and
will be due and payable on December 31, 2003.
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VI. CONDITIONS
6.1. Conditions To Each Party's Obligation To Effect the Merger.
The obligations of each party to effect the Merger will be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Stockholder Approvals. The Bristol Stockholder Approval and
the FelCor Stockholder Approval shall have been obtained;
(b) Listing of Shares. The NYSE shall have approved for listing
the Surviving Corporation Common Shares to be issued in the Merger, subject to
official notice of issuance;
(c) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings by the SEC seeking a stop order;
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger, the Spin-Off or any of the other transactions
contemplated hereby shall be in effect;
(e) Tax Opinion. Bristol and FelCor shall have received an
opinion, dated the Closing Date, from Hunton & Xxxxxxxx, Xxxxxxx & Xxxxxxxxx or
Xxxxx, Day, Xxxxxx & Xxxxx, based upon certificates and letters substantially
in the form set forth in Exhibit B hereto and dated the Closing Date (and which
the parties agree to provide as reasonably requested by counsel), to the effect
that the Merger will qualify as a tax-free reorganization under the provisions
of Section 368(a)(1)(A) of the Code;
(f) Opinion Relating to REIT Status and Partnership Status.
Bristol and FelCor shall have received an opinion of Hunton & Xxxxxxxx, counsel
to FelCor, or Xxxxx, Day, Xxxxxx & Xxxxx, counsel to Bristol, in each case in
substantially the form set forth in Exhibit C hereto dated the Closing Date to
the effect that (i) commencing with its taxable year ended December 31, 1994,
FelCor was organized and has operated in conformity with the requirements for
qualification as a REIT under the Code,(ii) FelCor Operating Partnership has
been since its formation in 1994 and continues to be treated for federal income
Tax purposes as a partnership, and not as a corporation or association taxable
as a corporation, and (iii) the Merger will not prevent FelCor from continuing
to operate in conformity with the requirements for qualification as a REIT
under the Code; and
(g) Change in Tax Laws. There shall not have been any Federal
Legislative or Regulatory Change. For purposes of this Agreement, the term
"Federal Legislative or Regulatory Change"
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means any enacted, promulgated or proposed legislative, administrative or
judicial action, interpretation or decision that causes or if effected could be
reasonably expected to cause FelCor to cease to qualify as a REIT for federal
income tax purposes.
6.2. Conditions To Obligations of FelCor. The obligations of
FelCor to effect the Merger and to consummate the other transactions
contemplated to occur on the Closing Date is further subject to the following
conditions, any one or more of which may be waived by FelCor:
(a) Representations and Warranties of Bristol. The
representations and warranties of Bristol set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date
(other than changes thereto which occurred solely by reason of the Spin-Off
Transactions), as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and FelCor shall have received a certificate (which certificate
may be qualified by Knowledge to the same extent as the representations and
warranties of Bristol contained herein are so qualified) signed on behalf of
Bristol by the President of Bristol, in such capacity, to such effect. For the
purposes of Section 6.2(a), the representations and warranties of Bristol will
be deemed true and correct unless the breach of such representations and
warranties, in the aggregate, could reasonably be expected to have a Bristol
Material Adverse Effect; provided, however, that for purposes of this Section
6.2(a), the representation and warranty of Bristol set forth in Section 3.11(d)
will be deemed to be true and correct unless the breach thereof would have a
FelCor Material Adverse Effect;
(b) Performance of Covenants of Bristol. Bristol shall have
performed in all material respects all covenants required to be performed by it
under this Agreement at or prior to the Effective Time, and FelCor shall have
received a certificate signed on behalf of Bristol by the President of Bristol,
in such capacity, to such effect;
(c) Material Adverse Change. Since the date of this Agreement,
there shall have been no Bristol Material Adverse Change and FelCor shall have
received a certificate of the President of Bristol, in such capacity,
certifying to such effect;
(d) Spin-Off Transactions. The Spin-Off Transactions shall have
been completed and all documents required to be delivered in connection with
the Spin-Off Transactions pursuant to the Spin-Off Agreement shall have been
executed and delivered by all parties thereto;
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(e) Delivery of E&P Statement. Xxxxxx Xxxxxxxx LLP shall have
delivered to FelCor its confirmation of Bristol's E&P set forth in the
Preliminary E&P Statement as required by Section 5.12; and
(f) Other Opinions. Bristol shall have received an opinion of
Xxxxx, Day, Xxxxxx & Xxxxx to the effect that (i) the Merger will not result in
either (A) the merger of Holiday Inns, Inc. with and into Bristol pursuant to
that certain Agreement and Plan of Merger dated as of December 15, 1996, as
amended as of April 1, 1997, among Holiday Corporation, Holiday Inns, Inc., and
Bristol or (B) the Exchange (as that term is defined in that Agreement and Plan
of Merger) failing to qualify for tax free treatment under Section 368(a)(1)(D)
of the Code and Section 355 of the Code and Section 368(a)(1)(A) of the Code,
respectively, and (ii) the distribution to the holders of Bristol Common Shares
of all of the BHR Common Shares as provided in the Spin-Off Agreement will be
treated for federal income tax purposes as a taxable dividend by Bristol to the
holders of Bristol Common Shares.
6.3. Conditions To Obligations of Bristol. The obligations of
Bristol to effect the Merger and to consummate the other transactions
contemplated to occur on the Closing Date is further subject to the following
conditions, any one or more of which may be waived by Bristol:
(a) Representations and Warranties of FelCor. The representations
and warranties of FelCor set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date, as though made on
and as of the Closing Date, except to the extent the representation or warranty
is expressly limited by its terms to another date, and Bristol shall have
received a certificate (which certificate may be qualified by Knowledge to the
same extent as the representations and warranties of FelCor contained herein
are so qualified) signed on behalf of FelCor by the President of FelCor, in
such capacity, to such effect. For the purposes of this Section 6.3(a), the
representations and warranties of FelCor will be deemed true and correct unless
the breach of such representations and warranties, in the aggregate, could
reasonably be expected to have a FelCor Material Adverse Effect;
(b) Performance of Covenants of FelCor. FelCor shall have
performed in all material respects all covenants required to be performed by it
under this Agreement at or prior to the Effective Time, and Bristol shall have
received a certificate signed on behalf of FelCor by the President of FelCor,
in such capacity, to such effect; and
(c) Material Adverse Change. Since the date of this Agreement,
there shall have been no FelCor Material Adverse Change and Bristol shall have
received a certificate of the President of FelCor, in such capacity, certifying
to such effect.
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6.4. Frustration of Closing Conditions. Neither FelCor nor Bristol
may rely on the failure of any condition set forth in Section 6.1, 6.2 or 6.3,
as the case may be, to be satisfied if such failure was caused by such party's
failure to use reasonable efforts to consummate the Merger, the Spin-Off and
the other transactions contemplated by this Agreement and the Spin-Off
Agreement, as required by and subject to Sections 5.3 and 5.9.
VII. TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated at any time
prior to the filing of the Articles of Merger with the Department, whether
before or after either of the Stockholder Approvals are obtained:
(a) By mutual written consent duly authorized by the
FelCor Board and the Bristol Board;
(b) By FelCor, upon a breach of any representation,
warranty or covenant on the part of Bristol set forth in this
Agreement, in any case such that the conditions set forth in Section
6.2(a) or Section 6.2(b), as the case may be, would be incapable of
being satisfied by the Drop-Dead Date;
(c) By Bristol, upon a breach of any representation,
warranty or covenant on the part of FelCor set forth in this
Agreement, in any case such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would be incapable of
being satisfied by the Drop-Dead Date;
(d) By either Bristol or FelCor, if any judgment,
injunction, order, decree or action by any Governmental Entity of
competent authority preventing the consummation of the Merger or the
Spin-Off shall have become final and nonappealable;
(e) By either FelCor or Bristol, if the Merger is not
consummated by September 30, 1998 or such later date to which the
parties may agree in their respective sole discretion (the "Drop Dead
Date"); provided, in the case of termination pursuant to this Section
7.1(e), the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that shall
have proximately contributed to the occurrence of the failure referred
to in this Section;
(f) By either Bristol or FelCor if, upon a vote at a duly
held FelCor Stockholders Meeting or any adjournment thereof, the
FelCor Stockholder Approval shall not have been obtained;
(g) By either Bristol or FelCor if, upon a vote at a duly
held Bristol Stockholders Meeting or any adjournment thereof, the
Bristol Stockholder Approval shall not have been obtained;
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(h) By Bristol, if (i) prior to the FelCor Stockholders
Meeting, the FelCor Board shall have withdrawn or modified in any
manner adverse to Bristol, or failed within ten Business Days of a
request therefor to reconfirm, its approval or recommendation of the
Merger or this Agreement, or approved or recommended or resolved to
approve or recommend any Superior Proposal, (ii) FelCor shall have
entered into an Acquisition Agreement, or (iii) FelCor or any of its
officers, directors, employees or representatives shall have taken any
action that would be prohibited by Section 4.1 but for the exceptions
therein allowing certain actions to be taken pursuant to Section
4.1(c);
(i) By FelCor, if (i) prior to the Bristol Stockholders
Meeting, the Bristol Board shall have withdrawn or modified in any
manner adverse to FelCor, or failed within ten Business Days of a
request therefor to reconfirm, its approval or recommendation of the
Merger or this Agreement, or approved or recommended or resolved to
approve or recommend any Superior Proposal, (ii) Bristol shall have
entered into an Acquisition Agreement, or (iii) Bristol or any of its
officers, directors, employees or representatives shall have taken any
action that would be prohibited by Section 4.1 but for the exceptions
therein allowing certain actions to be taken pursuant to Section
4.1(c); and
(j) By Bristol if the Volume Weighted Average Trading
Price for FelCor Common Shares as reported in the NYSE Composite
Transactions Report for any ten Trading Day period prior to the
Effective Time is less than $28.00 per share.
7.2. Certain Fees and Expenses. (a) If this Agreement shall be
terminated (i) pursuant to Section 7.1(c) or 7.1(h), then FelCor will pay
Bristol (provided FelCor was not entitled to terminate this Agreement pursuant
to Section 7.1(b) at the time of such termination) a fee equal to the Break-Up
Fee and (ii) pursuant to Section 7.1(b) or 7.1(i), then Bristol will pay FelCor
(provided Bristol was not entitled to terminate this Agreement pursuant to
Section 7.1(c) at the time of such termination) an amount equal to the Break-Up
Fee. If this Agreement shall be terminated (i) pursuant to Section 7.1(g),
then Bristol will pay FelCor (provided Bristol was not entitled to terminate
this Agreement pursuant to Section 7.1(c) at the time of such termination), an
amount equal to the Break-Up Expenses, and (ii) pursuant to Section 7.1(f),
then FelCor will pay Bristol (provided FelCor was not entitled to terminate
this Agreement pursuant to Section 7.1(b) at the time of such termination), an
amount equal to the Break-Up Expenses. Notwithstanding the foregoing, if the
Merger is not consummated (other than due to the termination of this Agreement
pursuant to Section 7.1(a), 7.1(d) or 7.1(j) or Bristol's failure to perform
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its obligations under this Agreement in such a manner so as to entitle FelCor
to terminate this Agreement pursuant to Section 7.1(b)) and at the time of the
termination of this Agreement an Acquisition Proposal has been received by
FelCor, and either prior to the termination of this Agreement or within 12
months thereafter FelCor or any FelCor Subsidiary enters into any agreement
providing for an Acquisition Proposal which is subsequently consummated
(whether or not such Acquisition Proposal is the same Acquisition Proposal
which had been received at the time of the termination of this Agreement), then
FelCor will pay the Break-Up Fee and the Break-Up Expenses to Bristol. If the
Merger is not consummated (other than due to the termination of this Agreement
pursuant to Section 7.1(a), 7.1(d) or 7.1(j) or FelCor's failure to perform its
obligations under this Agreement in such a manner so as to entitle Bristol to
terminate this Agreement pursuant to Section 7.1(c)) and at the time of the
termination of this Agreement an Acquisition Proposal has been received by
Bristol, and either prior to the termination of this Agreement or within 12
months thereafter Bristol or any Bristol Subsidiary enters into any agreement
providing for an Acquisition Proposal which is subsequently consummated
(whether or not such Acquisition Proposal is the same Acquisition Proposal
which had been received at the time of the termination of this Agreement), then
Bristol will pay the Break-Up Fee and the Break-Up Expenses to FelCor.
(b) Any payment of the Break-Up Fee and, if applicable, Break-Up
Expenses, as aforesaid, will be compensation and liquidated damages for the
loss suffered by Bristol or FelCor, as applicable, as a result of the failure
of the Merger to be consummated and to avoid the difficulty of determining
damages under the circumstances, and neither party will have any other
liability to the other after such payment. The Break-Up Fee and/or the
Break-Up Expenses will be paid by FelCor to Bristol or Bristol to FelCor (as
applicable), in immediately available funds within 10 Business Days after the
date the event giving rise to the obligation to make such payment occurred,
provided, however, that neither party may enter into any agreement providing
for an Acquisition Proposal unless, prior thereto, this Agreement is terminated
in accordance with its terms and the required Break-Up Fee and Break-Up
Expenses are paid or otherwise provided for. As used in this Agreement,
"Break-Up Fee" will be an amount equal to the lesser of (i) $60 million plus
Break-Up Expenses (the "Base Amount") and (ii) in the case of FelCor, the sum
of (A) the maximum amount that can be paid to FelCor without causing it to fail
to meet the requirements of Sections 856(c)(2) and (3) of the Code determined
as if the payment of such amount did not constitute income described in
Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying
Income"), as determined by independent accountants to FelCor, and (B) in the
event FelCor receives a letter from outside counsel (the "Break-Up Fee Tax
Opinion") indicating that FelCor has received a ruling from the Internal
Revenue Service ("IRS") holding that FelCor's receipt of the Base Amount would
either constitute Qualifying Income or
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would be excluded from gross income within the meaning of Sections 856(c)(2)
and (3) of the Code (the "REIT Requirements") (and therefore would not cause
FelCor to fail to satisfy the REIT Requirements) or that the receipt by FelCor
of the remaining balance of the Base Amount following the receipt of and
pursuant to such ruling would not be deemed constructively received prior
thereto, the Base Amount less the amount payable under clause (A) above.
Bristol's obligation to pay any unpaid portion of the Break-Up Fee will
terminate five years from the date of this Agreement. In the event that FelCor
is not able to receive the full Base Amount, Bristol will place the unpaid
amount in escrow and will not release any portion thereof to FelCor unless and
until Bristol receives any one or combination of the following: (i) a letter
from FelCor's independent accountants indicating the maximum amount that can be
paid at that time to FelCor without causing FelCor to fail to meet the REIT
Requirements or (ii) a Break-Up Fee Tax Opinion, in which event Bristol will
pay to FelCor the lesser of the unpaid Base Amount or the maximum amount stated
in the letter referred to in clause (i) above.
(c) The "Break-Up Expenses" payable to Bristol or FelCor, as the
case may be (the "Recipient"), will be an amount equal to the lesser of (i) $5
million as payment for all of the Recipient's out-of-pocket costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including without limitation all attorneys', consultants', accountants'
and investment bankers' fees and expenses and all other costs and expenses such
as travel, fax, long-distance telephone and other costs) (the "Expense Fee")
and (ii) in the case of FelCor, the sum of (A) the maximum amount that can be
paid to the Recipient without causing it to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute Qualifying Income, as determined by independent
accountants to the Recipient, and (B) in the event the Recipient receives a
Break-Up Fee Tax Opinion indicating that the Recipient has received a ruling
from the IRS holding that the Recipient's receipt of the Expense Fee would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of the REIT Requirements (and therefore would not cause
FelCor to fail to satisfy the REIT Requirements) or that receipt by the
Recipient of the remaining balance of the Expense Fee following the receipt of
and pursuant to such ruling would not be deemed constructively received prior
thereto, the Expense Fee less the amount payable under clause (A) above. The
obligation of Bristol or FelCor, as applicable ("Payor"), to pay any unpaid
portion of the Break-Up Expenses will terminate five years from the date of
this Agreement. In the event that the Recipient is not able to receive the
full Expense Fee, the Payor will place the unpaid amount in escrow and will not
release any portion thereof to the Recipient unless and until the Payor
receives any one or combination of the following: (i) a letter from the
Recipient's independent accountants indicating the maximum amount that can be
paid at that time to the Recipient without causing the Recipient
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to fail to meet the REIT Requirements or (ii) a Break-Up Fee Tax Opinion, in
which event the Payor will pay to the Recipient the lesser of the unpaid
Expense Fee or the maximum amount stated in the letter referred to in clause
(i) above.
(d) Following the Effective Time, FelCor and BHR will each
reasonably consult with the other as to the computation of the contemplated
distribution of cash (the "Cash Distribution") sufficient, after giving effect
to the Spin-Off, to effect the complete elimination of Bristol's historical and
current E&P accumulated since the formation of Bristol until the Effective
Time, such Cash Distribution to be made on or before December 31, 1998. In the
event that it is determined, subsequent to the making of the Cash Distribution,
that the Cash Distribution did not eliminate Bristol's E&P as contemplated
above, BHR will (i) to the extent of any such shortfall, indemnify FelCor for
an amount equal to the costs incurred (including Tax payments and any
associated interest and penalties and reasonable accounting, legal and other
out-of-pocket expenses) in disputing any claim that the E&P had not been
completely eliminated upon payment of the Cash Distribution, provided, however,
that BHR will be solely responsible under this sentence for costs incurred up
to a maximum of $5 million, and (ii) if such costs exceed $5 million, (A) BHR
will be responsible for 10% of any such costs exceeding $5 million, up to a
total of $5 million of additional payments by BHR, and (B) any excess costs of
this nature will be borne solely by FelCor.
7.3. Effect of Termination. In the event of termination of this
Agreement by either FelCor or Bristol as provided in Section 7.1, this
Agreement will forthwith become void and have no effect, without any liability
or obligation on the part of Bristol or FelCor (other than the last sentence of
Section 5.2, Section 7.2, this Section 7.3 and Article VIII); provided that (a)
if this Agreement is terminated by FelCor pursuant to Section 7.1(b), Bristol
will not be entitled to any of the benefits of Section 7.2, or (b) if this
Agreement is terminated by Bristol pursuant to Section 7.1(c), FelCor will not
be entitled to any of the benefits of Section 7.2.
7.4. Amendment. This Agreement may be amended by the parties in
writing by action of their respective Boards at any time before or after any
Stockholder Approvals are obtained and prior to the filing of the Articles of
Merger with the Department or the Certificate of Merger with the Secretary of
State of the State of Delaware; provided, however, that, after the Stockholder
Approvals are obtained, no such amendment, modification or supplement will be
made which by Law requires the further approval of stockholders without
obtaining such further approval.
7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of
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the other party contained in this Agreement or in any document delivered
pursuant to this Agreement, or (c) subject to the proviso of Section 7.4, waive
compliance with any of the agreements or conditions of the other party
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver will be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise will not constitute
a waiver of those rights.
VIII. GENERAL PROVISIONS
8.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement confirming the representations and warranties in
this Agreement will survive the Effective Time. This Section 8.1 will not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
8.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by fax (providing confirmation of transmission) at the
following addresses or fax numbers (or at such other address or fax number for
a party as will be specified by like notice):
(a) if to Bristol, to:
Bristol Hotel Company
00000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: President
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
(b) if to FelCor, to:
FelCor Suite Hotels, Inc.
000 X. Xxxx Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: President
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Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
All notices will be deemed given only when actually received.
8.3. Certain Definitions. As used in this Agreement, the following
terms have the following meanings when used herein with initial capital
letters:
(a) "Affiliate" (or words of similar import) has the same meaning
as such term is defined in Rule 405 promulgated under the Securities Act.
(b) "Bristol Hotel" means each of the hotels listed in Schedule
3.2 to the Bristol Disclosure Letter, which constitutes all of the hotels in
which Bristol owns, directly or indirectly, an ownership interest.
(c) "Bristol Hotel Subsidiaries" means the Bristol Subsidiaries
that own or hold, directly or indirectly, an interest in a Bristol Hotel.
(d) "Business Day" means a day other than Saturday, Sunday or any
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or obligated to close.
(e) "Environmental Law" means any Law or order of any Governmental
Entity relating to the regulation or protection of human health, safety or the
environment or to emissions, discharges, releases or threatened releases of
Hazardous Materials into the environment (including without limitation, ambient
air, soil, surface water, ground water, wetlands, land or subsurface strata),
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
(f) "FelCor Hotel" means each of the hotels listed in Schedule 2.2
to the FelCor Disclosure Letter, which constitutes all of the hotels in which
FelCor owns, directly or indirectly, an ownership interest.
(g) "Hazardous Material" means (i) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment
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that contain dielectric fluid containing levels of polychlorinated biphenyls
(PCBs), (ii) any chemicals or other materials or substances which are now or
hereafter become defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants"
or words of similar import under any Environmental Law, and (iii) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental Entity under any
Environmental Law.
(h) "Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money, whether
secured or unsecured, (ii) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such
Person, (iii) all capitalized lease obligations of such Person, (iv) all
obligations of such Person under interest rate cap, swap, collar or similar
transaction or currency hedging transactions (valued at the termination value
thereof), and (v) all guarantees of such Person of any such indebtedness of any
other Person.
(i) "Non-Corporate Bristol Hotel Subsidiaries" means those of the
Bristol Hotel Subsidiaries that are taxable as partnerships or are disregarded
as entities under the Code.
(j) "Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(k) "Record Date" means the date determined by the Bristol Board
or the FelCor Board as the record date for determining the stockholders
entitled to notice of, and to vote at, the Bristol Stockholders Meeting or the
FelCor Stockholders Meeting, as applicable.
(l) "Spin-Off Transactions" means, collectively, the
Reorganization, the Contribution, the Subsidiary Mergers, the Holdings
Distribution, the Excess Shares Redemption and the Spin-Off, each as defined in
the Spin-Off Agreement, and the Leasing Transactions.
(m) "Subsidiary" of any Person means another Person, at least 50%
of the equity or voting securities of which is owned, directly or indirectly,
by such first Person.
(n) "Taxes" means all federal, state, local and foreign income,
property, sales, franchise, employment, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, together with penalties,
interest or additions to Tax with respect thereto.
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(o) "Transaction Documents" means this Agreement, the Spin-Off
Agreement, the Voting Agreement, the FelCor Stockholders and Registration
Rights Agreement (as defined in the Voting Agreement), the BHR Stockholders
Agreement (as defined in the Voting Agreement), the BHR Registration Rights
Agreement (as defined in the Voting Agreement), the New Leases (as defined in
the Spin-Off Agreement), the Hotel Properties Agreement (as defined in the
Voting Agreement), the Articles of Merger, the Certificate of Merger and each
other agreement, document, certificate or instrument delivered in connection
with any of the foregoing and to which either FelCor, Bristol, BHR, BHMC or any
FelCor Subsidiary or Bristol Subsidiary is a party.
(p) "Volume Weighted Average Trading Price" means, during any
relevant period, the quotient of (i) the sum of the product of (A) the number
of shares sold at a particular price per share during such period and (B) such
per share trading price over (ii) the total number of shares sold during such
period.
8.4. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule such reference will be to a Section, Exhibit or
Schedule of or to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they will be deemed to be followed by the words "without
limitation."
8.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
8.6. Entire Agreement; No Third-party Beneficiaries. This
Agreement, the FelCor Disclosure Letter, the Bristol Disclosure Letter, the
Confidentiality Agreement and the Transaction Documents (a) constitute the
entire agreement of the parties and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement and (b) except as provided in Article I and
Sections 5.8 and 5.9, are not intended to confer upon any Person other than the
parties hereto any rights or remedies.
8.7. Governing Law. This Agreement will be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable conflict of laws
principles thereof.
8.8. Assignment. Neither this Agreement, nor any of the rights,
interests or obligations under this Agreement, may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written
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consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
8.9. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Texas or Delaware or in any Texas or Delaware State
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to
submit itself (without making such submission exclusive) to the personal
jurisdiction of any federal court located in the State of Texas or Delaware or
any Texas or Delaware State court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
8.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision will be
interpreted to be only so broad as is enforceable.
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IN WITNESS WHEREOF, Bristol and FelCor have caused this Agreement to
be signed by their respective officers thereunto duly authorized all as of the
date first written above.
BRISTOL HOTEL COMPANY
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Vice President
FELCOR SUITE HOTELS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------
Senior Vice President
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