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EXHIBIT 2.1
CONFORMED COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
STARWOOD LODGING CORPORATION,
CHESS ACQUISITION CORP.,
STARWOOD LODGING TRUST
AND
ITT CORPORATION
DATED AS OF NOVEMBER 12, 1997
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Charter and By-laws; Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 Election of Stock or Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.7 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.8 Parent Companies to Make Cash and Certificates Available; Transfer Taxes; Withholding . . . . . . . . . 9
Section 1.9 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.10 No Fractional Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.11 Return of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.12 Adjustment of Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.13 No Further Ownership Rights in Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.14 Closing of Company Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.15 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.16 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.17 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT COMPANIES AND SUB
Section 2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.5 SEC Documents and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.6 Registration Statement and Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.8 Permits and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.10 Actions and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.11 Compliance with Worker Safety and Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.12 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.14 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.15 Required Vote of Parent and Trust Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.16 REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.17 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.5 SEC Documents and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.6 Registration Statement and Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.8 Permits and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.10 Actions and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.11 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.13 Compliance with Worker Safety and Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.14 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.16 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.17 Parachute Payments to Disqualified Individuals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.18 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.19 State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.20 Required Vote of Company Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.2 Conduct of Business by the Parent Companies Pending the Merger . . . . . . . . . . . . . . . . . . . . . 42
Section 4.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.4 Third Party Standstill Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.5 Pre-Merger Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.6 Post-Merger Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 5.2 Filings; Other Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.3 Comfort Letters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.5 Compliance with the Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.6 Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.8 Company Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.9 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.11 Transfer and Gains Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.12 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.13 Indemnification; Directors and Officers Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.14 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.16 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.17. Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.2 Conditions to Obligation of the Company to Effect the Merger . . . . . . . . . . . . . . . . . . . . 59
Section 6.3 Conditions to Obligations of Parent, Sub and Trust to Effect the Merger . . . . . . . . . . . . . . . 60
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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Section 8.5 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.9 Enforcement of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.10 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of
November 12, 1997 (this "Agreement"), among Starwood Lodging Corporation, a
Maryland corporation ("Parent"), Chess Acquisition Corp., a Nevada corporation
and a controlled subsidiary of Parent ("Sub"), Starwood Lodging Trust, a
Maryland real estate investment trust ("Trust" and, together with Parent, the
"Parent Companies") and ITT Corporation, a Nevada corporation (the "Company")
(Sub and the Company being hereinafter collectively referred to as the
"Constituent Corporations").
W I T N E S S E T H:
WHEREAS Parent, Sub, Trust and the Company are parties to that
certain Agreement and Plan of Merger dated as of October 19, 1997 (the
"Original Merger Agreement");
WHEREAS Parent, Sub, Trust and the Company wish to amend the
Original Merger Agreement to increase the consideration to be received by
stockholders of ITT in the Merger (as defined below) and to make certain other
changes to the Original Merger Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub,
Trust and the Company have approved the merger of Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding share of Common Stock, no par value, of the
Company ("Company Common Stock"), not owned by Parent, the Company or their
respective wholly owned subsidiaries will be converted into shares of common
stock, par value $.01 per share, of Parent ("Parent Common Stock"), and trust
shares, par value $.01 per share, of Trust ("Trust Shares" and, when paired
with shares of Parent Common Stock pursuant to the Pairing Agreement dated as
of June 28, 1980, as amended from time to time, between Parent and Trust,
"Paired Shares"), and cash;
WHEREAS the respective Boards of Directors or Trustees, as the
case may be, of each of the Parent Companies and the Company have determined
that the Merger is in furtherance of and consistent with their respective
long-term business strategies and is in the best interest of their respective
stockholders or shareholders, as the case may be; and
WHEREAS the parties to this Agreement intend that the Merger
shall be treated as a taxable acquisition of all the outstanding shares of
Company Common Stock by Parent and the Trust, respectively, in proportion to
the relative percentages of Sub capital stock they own immediately prior to the
consummation of the Merger.
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NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
The Original Merger Agreement is hereby amended and restated
to read in its entirety as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to
the conditions hereof, and in accordance with the Nevada General Corporation
Law (the "NGCL"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.2). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the NGCL.
Section 1.2 Effective Time. The Merger shall become
effective when Articles of Merger (the "Articles of Merger"), executed in
accordance with the relevant provisions of the NGCL, are filed with the
Secretary of State of the State of Nevada; provided, however, that, upon mutual
consent of the Constituent Corporations, the Articles of Merger may provide for
a later date of effectiveness of the Merger not more than 30 days after the
date the Articles of Merger are filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Articles of Merger
are accepted for record or such later time established by the Articles of
Merger. The filing of the Articles of Merger shall be made on the date of the
Closing (as defined in Section 1.17).
Section 1.3 Effects of the Merger. The Merger shall have
the effects set forth in Section 92A.250 of the NGCL.
Section 1.4 Charter and By-laws; Directors. (a) At the
Effective Time, the Articles of Incorporation of Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law; provided, however, that the Articles of Incorporation of
Sub shall include provisions substantially identical to ARTICLE SEVENTH and
ARTICLE NINTH of the Restated Articles of Incorporation, as amended, of the
Company existing as of the date of this Agreement; and provided further that at
the Effective Time Article I of the Articles of Incorporation of Sub shall be
amended to read in its entirety as follows: "The name of the corporation is
ITT Corporation." At the Effective Time, the By-laws of Sub, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation
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until thereafter changed or amended as provided therein or in the Articles of
Incorporation; provided, however, that the By-laws of Sub shall include
provisions substantially identical to Section 4 of the Amended and Restated
By-laws of the Company existing on the date of this Agreement.
(b) The directors of Sub at the Effective Time shall be
the directors 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.
Section 1.5 Conversion of Securities. As of the
Effective Time, by virtue of the Merger and without any action on the part of
Sub, the Company or the holders of any securities of the Constituent
Corporations:
(a) Each issued and outstanding share of common stock, no
par value, of Sub shall be converted into one validly issued, fully
paid and nonassessable share of common stock, no par value, of the
Surviving Corporation.
(b) All shares of Company Common Stock that are held in
the treasury of the Company and shares of Company Common Stock owned
by Parent, Trust or Sub (together, in each case, with the associated
Right (as defined in Section 3.2)) shall be cancelled and no cash,
capital stock of Parent or Trust or other consideration shall be
delivered in exchange therefor. All shares of Company Common Stock
that are held by any wholly owned Subsidiary (as defined in Section
2.1) of the Company, Parent, Sub or the Trust (together, in each case,
with the associated Right) shall be converted into validly issued,
fully paid and nonassessable shares of common stock, no par value, of
the Surviving Corporation.
(c) Each share of Company Common Stock (including
restricted shares of Company Common Stock issued under Company Plans
(as defined in Section 3.12(d)) issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled or
converted into shares of the Surviving Corporation in accordance with
Section 1.5(b)), together with the associated Right, which share under
the terms of Section 1.7 is to be converted into cash, shall be
converted into the right to receive $85.00 in cash, without interest
(except to the extent specified in Section 1.5(f)).
(d) Except as otherwise provided in Section 1.7 and
subject to Sections 1.10 and 1.12, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other
than shares to be cancelled or converted into shares of the Surviving
Corporation in accordance with Section 1.5(b) or converted into the
right to receive cash pursuant to Sections 1.5(c) and 1.7), together
with the associated Right, shall be converted into
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the right to receive the Exchange Ratio (as defined below) of validly
issued, fully paid and nonassessable Paired Shares. The "Exchange
Ratio" shall be a number equal to the quotient, rounded to the nearest
thousandth, or if there shall not be a nearest thousandth, the next
higher thousandth, of (x) $85.00 divided by (y) the Market Price (as
defined below) of Paired Shares on the fifth New York Stock Exchange,
Inc. ("NYSE") trading day prior to the date of the Company Stockholder
Meeting (as defined in Section 5.1); provided, however, that in no
event shall the Exchange Ratio be (A) greater than an amount equal to
$85.00 divided by $53.263 or (B) less than an amount equal to $85.00
divided by $61.263. The "Market Price" of a Paired Share on any date
means the average of the Average Prices (as defined below) for the 20
NYSE trading days (the "Averaging Period") randomly selected by a
neutral independent accounting firm appointed by mutual agreement of
the Trust and the Company from the 30 consecutive NYSE trading days
immediately preceding such date. The "Average Price" for any date
means the average of the daily high and low prices per Paired Share as
reported on the NYSE Composite Transactions reporting system (as
published in The Wall Street Journal or, if not published therein, in
another authoritative source mutually selected by the Company and
Parent).
(e) All such shares of Company Common Stock (other than
shares to be cancelled in accordance with Section 1.5(b)), and the
associated Rights, when so converted as provided in Section 1.5(c) or
(d), shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist and each holder of a
Certificate (as defined in Section 1.6(c)) theretofore representing
any such shares (and the associated Rights) shall cease to have any
rights with respect thereto, except the right to receive, upon the
surrender of such Certificate in accordance with Section 1.8, (A) any
dividends and other distributions in accordance with Section 1.9, (B)
certificates representing the Paired Shares into which such shares
(and the associated Rights) are converted pursuant to Section 1.5(d),
(C) cash into which such shares are converted pursuant to Section
1.5(c) and cash payable pursuant to Section 1.5(f) and (D) any cash,
without interest, in lieu of fractional Paired Shares to be issued or
paid in consideration therefor upon the surrender of such certificate
in accordance with Sections 1.8 and 1.10.
(f) If (but only if) the Closing occurs after January 31,
1998, then each holder of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is entitled under Section
1.5(c) and (d) to receive either cash or Paired Shares shall in
addition be entitled to receive cash in an amount per share of Company
Common Stock equal to (i) $85.00 times (ii) 7% per annum accrued from
and
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including January 31, 1998, to but excluding the date of Closing
(without compounding).
Section 1.6 Election of Stock or Cash. Each holder of
shares of Company Common Stock (other than holders of shares to be cancelled as
set forth in Section 1.5(b)) shall have the right to submit a request
specifying the number of shares of Company Common Stock which such holder
desires to have converted into the right to receive Paired Shares in the Merger
and the number which such holder desires to have converted into the right to
receive cash in accordance with the following procedures:
(a) Each holder of shares of Company Common Stock may
specify in a request made in accordance with the provisions of this
Section 1.6 (an "Election") (i) the number of such shares which such
holder desires to have converted into the right to receive cash in the
Merger (a "Cash Election") and (ii) the number of such shares which
such holder desires to have converted into Paired Shares in the Merger
(a "Stock Election").
(b) The Parent Companies shall authorize such person or
persons as shall be acceptable to the Parent Companies and the Company
to receive Elections and to act as Exchange Agent hereunder (the
"Exchange Agent").
(c) The Parent Companies and the Company shall prepare,
for use by stockholders of the Company in surrendering certificates
(the "Certificates") representing shares of Company Common Stock, a
form (the "Form of Election") pursuant to which each holder of Company
Common Stock may make Elections. The Form of Election shall be mailed
to stockholders of record of the Company as of the record date for the
Company Stockholder Meeting and shall accompany the Joint Proxy
Statement (as defined in Section 2.6).
(d) The Company shall use all reasonable efforts to make
the Form of Election available to all persons who become stockholders
of record of the Company during the period between such record date
and the business day prior to the date of the Company Stockholder
Meeting.
(e) An Election shall have been properly made only if the
Exchange Agent shall have received, by 5:00 p.m., New York City time,
on the business day (such time on such day being referred to herein as
the "Election Date") preceding the date of the Company Stockholder
Meeting, a Form of Election properly completed and signed and
accompanied by the Certificate or Certificates representing the shares
of Company Common Stock (and associated Rights) to which such Form of
Election relates (or by an appropriate guarantee of delivery of such
Certificate or Certificates as set forth in
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such Form of Election from a member of any registered national
securities exchange or of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, provided such Certificate or
Certificates are in fact delivered by the time set forth in such
guarantee of delivery).
(f) Any holder of record of shares of Company Common
Stock may at any time prior to the Election Date change such holder's
Election by written notice received by the Exchange Agent at or prior
to the Election Date accompanied by a properly completed Form of
Election. The Parent Companies and the Company shall have the right
in their sole discretion and by mutual agreement to permit changes in
Elections after the Election Date.
(g) Any holder of record of shares of Company Common
Stock may at any time prior to the Election Date revoke such holder's
Election by written notice received by the Exchange Agent at or prior
to the Election Date or by withdrawal prior to the Election Date of
such holder's Certificates previously deposited with the Exchange
Agent. Any revocation of an Election may be withdrawn by notice of
such withdrawal delivered at or prior to the Election Date. Any
stockholder of the Company who shall have deposited Certificates with
the Exchange Agent shall have the right to withdraw such Certificates
by written notice received by the Exchange Agent and thereby revoke
such holder's Election as of the Election Date at any time after the
expiration of the period of 60 days following the Election Date if the
Merger shall not have been consummated prior thereto. The Parent
Companies shall obtain from the Exchange Agent an agreement to return
all Forms of Election and accompanying Certificates to the
stockholders submitting the same in the event this Agreement shall be
terminated in accordance with its terms.
(h) The Parent Companies and the Company by mutual
agreement shall have the right to make rules, not inconsistent with
the terms of this Agreement, governing the validity of Forms of
Election, the manner and extent to which Elections are to be taken
into account in making the determinations prescribed by Section 1.7,
the issuance and delivery of certificates for Paired Shares into which
shares of Company Common Stock are converted in the Merger and the
payment for shares of Company Common Stock converted into the right to
receive cash in the Merger.
Section 1.7 Proration. The determination of whether
shares of Company Common Stock (other than shares to be cancelled or converted
into shares of the Surviving Corporation as set forth in Section 1.5(b)), and
the associated Rights, shall be
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converted in the Merger into the Exchange Ratio of Paired Shares or the
right to receive $85.00 in cash shall be made as set forth in this Section 1.7.
(a) As is more fully set forth below, the aggregate
number of shares of Company Common Stock to be converted in the Merger
into the right to receive cash shall not (i) exceed 30% or (ii) be
less than 18%, in either case of all shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time.
(b) If Cash Elections are received for a number of shares
of Company Common Stock which is more than 30% of the total number of
shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, each Non-Electing Share (as defined in
Section 1.7(f)) and each share of Company Common Stock for which a
Stock Election has been received (in each case, together with the
associated Right) shall be converted in the Merger into the Exchange
Ratio of Paired Shares and the shares of Company Common Stock for
which Cash Elections have been received (and the associated Rights)
shall be converted in the Merger into right to receive cash and the
Exchange Ratio of Paired Shares in the following manner: the largest
whole number of shares of Company Common Stock (and the associated
Rights) covered by each Cash Election which is not in excess of the
number of shares of Company Common Stock covered by such Cash Election
multiplied by a fraction the numerator of which shall be a number
equal to 30% of the number of shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time and the
denominator shall be the aggregate number of shares of Company Common
Stock covered by all Cash Elections, shall be converted into the right
to receive $85.00 per share in cash, without interest (except to the
extent specified in Section 1.5(f)). The balance of the shares of
Company Common Stock covered by Cash Elections (together with the
associated Rights) shall be converted into the right to receive the
Exchange Ratio of Paired Shares.
(c) If Stock Elections are received for a number of
shares of Company Common Stock which is more than 82% of the total
number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, each Non-Electing Share and
each share of Company Common Stock for which a Cash Election has been
received (in each case, together with the associated Right) shall be
converted in the Merger into the right to receive $85.00 in cash,
without interest (except to the extent specified in Section 1.5(f)),
and the shares of Company Common Stock for which Stock Elections have
been received shall be converted in the Merger into the Exchange Ratio
of Paired Shares and the right to receive cash in the following
manner: the largest
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whole number of shares of Company Common Stock (and associated Rights)
covered by each Stock Election which is not in excess of the number of
shares of Company Common Stock covered by such Stock Election
multiplied by a fraction the numerator of which shall be a number
equal to 82% of the number of shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time and the
denominator of which shall be the aggregate number of shares of
Company Common Stock covered by all Stock Elections, shall be
converted into the right to receive the Exchange Ratio of Paired
Shares. The balance of the shares of Company Common Stock covered by
Stock Elections (together with the associated Rights) shall be
converted into the right to receive $85.00 per share in cash, without
interest (except to the extent specified in Section 1.5(f)).
(d) If Cash Elections are received for a number of shares
of Company Common Stock which is greater than or equal to 18%, but
less than or equal to 30%, the total number of shares of Company
Common Stock issued and outstanding immediately prior to the Effective
Time, each share of Company Common Stock covered by a Cash Election
shall be converted in the Merger into the right to receive $85.00 in
cash, without interest (except to the extent specified in Section
1.5(f)), and each share of Company Common Stock covered by a Stock
Election shall be converted in the Merger into the Exchange Ratio of
Paired Shares.
(e) If Non-Electing Shares are not converted under either
Section 1.7(b) or Section 1.7(c), the Exchange Agent shall determine
by lot (or by such other method as is deemed reasonable by the Parent
Companies) which of such Non-Electing Shares shall be converted in the
Merger into the right to receive $85.00 in cash per share, without
interest (except to the extent specified in Section 1.5(f)); provided,
however, that such selection by lot (or by such other method) will
cease when the sum of the shares converted in such manner, plus the
number of shares of Company Common Stock covered by Cash Elections is
equal to such percentage, not less than 18% nor more than 30%, as
shall be specified by the Parent Companies in writing to the Exchange
Agent prior to the Effective Time, of the total number of shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time. Each Non-Electing Share not so converted into cash
shall be converted into the right to receive the Exchange Ratio of
Paired Shares.
(f) For the purpose of this Section 1.7, outstanding
shares of Company Common Stock (other than shares owned by Parent,
Sub, Trust or the Company or any of their respective wholly owned
Subsidiaries) as to which an Election is not in effect at the Election
Date and shares as to which an
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Election has been withdrawn after the 60-day period following the
Election Date shall be called "Non-Electing Shares". If the Parent
Companies and the Company shall determine for any reason that any
Election was not properly made with respect to shares of Company
Common Stock, such Election shall be deemed to be ineffective and
shares of Company Common Stock covered by such Election shall, for
purposes hereof, be deemed to be Non-Electing Shares.
Section 1.8 Parent Companies to Make Cash and
Certificates Available; Transfer Taxes; Withholding. (a) As soon as
practicable after the Effective Time, the Parent Companies shall deposit with
the Exchange Agent, in trust for the holders of shares of Company Common Stock
converted in the Merger, certificates representing the Paired Shares issuable
and the cash then payable pursuant to Sections 1.5, 1.7, 1.9 and 1.10 (such
cash and Paired Shares, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall invest any cash included in the Exchange Fund as directed
by the Parent Companies, on a daily basis. Any interest or other income
resulting from such investments shall be paid to the Parent Companies. As soon
as practicable after the Effective Time, the Exchange Agent shall distribute to
each holder of shares of Company Common Stock converted into the right to
receive cash or Paired Shares pursuant to Section 1.5, 1.7, 1.9 and 1.10, upon
surrender to the Exchange Agent (to the extent not previously surrendered with
a Form of Election) of one or more Certificates for cancellation, a check for
the amount of cash to which such holder is entitled under such sections and
certificates representing Paired Shares to which such holder is entitled under
such sections. As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates
whose shares were converted pursuant to this Article I (other than any holder
who previously surrendered all its Certificates with a Form of Election or
pursuant to a guarantee of delivery set forth in a Form of Election) (A) a
letter of transmittal in form reasonably acceptable to the Company and the
Parent Companies (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon actual delivery of
the Certificates to the Exchange Agent) and (B) instructions for use in
effecting the surrender of the Certificates.
(b) Upon surrender for cancellation to the Exchange Agent
of a Certificate, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole Paired Shares issuable and the
cash payable to such holder pursuant to Sections 1.5, 1.7, 1.9 and 1.10 of this
Agreement. Each Paired Share into which a share of Company Common Stock shall
be converted shall be deemed to have been issued at the Effective Time. All
Paired Shares shall be issued
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directly by the Trust and Parent and no Paired Shares shall at any time be held
by the Surviving Corporation. If any certificate representing Paired Shares or
cash or other property is to be issued or delivered in a name other than that
in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such Paired
Shares in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. The Parent Companies or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as the Parent Companies or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or under any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld by the Parent Companies or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Parent Companies or the Exchange
Agent.
Section 1.9 Dividends. No dividends or other
distributions that are declared on or after the Effective Time on the Paired
Shares, or are payable to the holders of record thereof on or after the
Effective Time, will be paid to any person entitled by reason of the Merger to
receive a certificate representing Paired Shares until such person surrenders
the related Certificate or Certificates, as provided in this Article I.
Subject to the effect of applicable law, there shall be paid to each record
holder of a new certificate representing such Paired Shares: (i) at the time
of such surrender or as promptly as practicable thereafter, the amount, if any,
of any dividends or other distributions theretofore paid with respect to the
Paired Shares represented by such new certificate and having a record date on
or after the Effective Time and a payment date prior to such surrender and (ii)
at the appropriate payment date or as promptly as practicable thereafter, the
amount, if any, of any dividends or other distributions payable with respect to
such Paired Shares and having a record date on or after the Effective Time but
prior to such surrender and a payment date on or subsequent to such surrender.
In no event shall the person entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions.
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Section 1.10 No Fractional Securities. No certificates or
scrip representing fractional Paired Shares shall be issued upon the surrender
for exchange of Certificates pursuant to this Article I, and no Parent or Trust
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to
any other rights of a security holder of Parent or Trust. In lieu of any such
fractional share, each holder of Company Common Stock who would otherwise have
been entitled to a fraction of a Paired Share upon surrender of Certificates
for exchange pursuant to this Article I will be paid an amount in cash (without
interest, except pursuant to Section 1.5(f)), rounded to the nearest cent,
determined by multiplying (i) the average of the per share closing prices on
the NYSE of a Paired Share (as reported in the NYSE Composite Transactions)
during the five consecutive trading days ending on the trading day immediately
prior to the date of the Effective Time by (ii) the fractional interest to
which such holder would otherwise be entitled. As promptly as practicable
after the determination of the amount of cash to be paid to holders of
fractional share interests, the Exchange Agent shall so notify the Parent
Companies, and the Parent Companies shall deposit such amount with the Exchange
Agent and shall cause the Exchange Agent to forward payments to such holders of
fractional share interests subject to and in accordance with the terms of this
Article I. For purposes of paying such cash in lieu of fractional shares, all
Certificates surrendered for exchange by a Company stockholder shall be
aggregated, and no such Company stockholder will receive cash in lieu of
fractional shares in an amount equal to or greater than the value of one full
Paired Share with respect to such Certificates surrendered.
Section 1.11 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of the
Company for one year after the Effective Time shall be delivered to the Parent
Companies and any such former stockholders who have not theretofore complied
with this Article I shall thereafter look only to the Parent Companies for
payment of their claim for Paired Shares and/or cash into which such shares of
Company Common Stock are convertible, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Paired
Shares. None of Parent, Trust or Surviving Corporation shall be liable to any
former holder of Company Common Stock for any such Paired Shares, cash and
dividends and distributions held in the Exchange Fund which is delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 1.12 Adjustment of Exchange Ratio. In the event
that, prior to the Effective Time, Parent or Trust effects any
reclassification, stock split or stock dividend with respect to Parent Common
Stock or Trust Shares, any change or conversion of Parent Common Stock or Trust
Shares into other securities or
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any other dividend or distribution with respect to the Paired Shares, other
than (i) dividends contemplated by Sections 4.5(c) and (d) and (ii) dividends
in the aggregate not to exceed the greater of (a) the current rate of the
Parent Companies' dividends (together with any increases in such rate in the
ordinary course) and (b) the Trust's "real estate investment taxable income"
(as such term is defined for purposes of the Code) without regard to any net
capital gains or the deduction for dividends paid, appropriate and
proportionate adjustments, if any, shall be made to the Exchange Ratio, and all
references to the Exchange Ratio in this Agreement shall be deemed to be to the
Exchange Ratio as so adjusted.
Section 1.13 No Further Ownership Rights in Company Common
Stock. All Paired Shares and cash issued or paid upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any
cash or other property paid pursuant to Sections 1.9 and 1.10) shall be deemed
to have been issued in full satisfaction of all rights pertaining to the shares
of Company Common Stock and associated Rights represented by such Certificates,
subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of this Agreement
or prior to the date of this Agreement and which remain unpaid at the Effective
Time.
Section 1.14 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, the Exchange Agent or the Parent, such
Certificates shall be cancelled and exchanged as provided in this Article I.
Section 1.15 Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Parent Companies or the Exchange Agent, the posting by
such person of a bond, in such reasonable amount as the Parent Companies or the
Exchange Agent may direct (but consistent with the practices the Parent
Companies apply to their own respective stockholders) as indemnity against any
claim that may be made against them with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Paired Shares and/or cash or other property payable pursuant to
this Article I.
Section 1.16 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or
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assurances or any other acts or things are necessary, desirable or proper (a)
to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of either of the
Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
Section 1.17 Closing. The closing of the Merger (the
"Closing") and all actions contemplated by this Agreement to occur at the
Closing shall take place at the offices of Sidley & Austin, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, at 10:00 a.m., local time, on a date to be specified by the
parties, which (subject to fulfillment or waiver of the conditions set forth in
Article VI) shall be no later than the second business day following the day on
which the last of the conditions set forth in Article VI shall have been
fulfilled or waived, or at such other time and place as Parent and the Company
shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT COMPANIES AND SUB
Each of the Parent Companies and Sub represents and warrants
to the Company as follows:
Section 2.1 Organization, Standing and Power. Each of
the Parent Companies and Sub is a real estate investment trust or a
corporation, as the case may be, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to carry on its business as now being conducted.
Each Subsidiary of each of the Parent Companies is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate (in the case of a Subsidiary that is
a corporation) or other power and authority to carry on its business as now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power or authority, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect (as hereinafter defined) on the Parent Companies. The
Parent Companies and each of their Subsidiaries
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are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified, individually or in the aggregate, has not
had, and would not reasonably be expected to have, a Material Adverse Effect on
the Parent Companies.
For all purposes of this Agreement, any reference to any state
of facts, event, change or effect having a "Material Adverse Effect" on or with
respect to the Parent Companies or the Company, as the case may be, means such
state of facts, event, change or effect which has had, or would reasonably be
expected to have, a material adverse effect on the business, properties,
results of operations, financial condition or prospects of the Parent Companies
and their Subsidiaries, taken as a whole, or the Company and its Subsidiaries,
taken as a whole, as the case may be. For all purposes of this Agreement,
"Subsidiary" means any corporation, partnership, limited liability company,
joint venture or other legal entity of which the Parent Companies or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), (i) owns, directly or indirectly, more than 50% of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation, partnership, limited liability company, joint venture or other
legal entity or (ii) is a general partner, trustee or other entity performing
similar functions.
Section 2.2 Capital Structure. At the date hereof, the
authorized capital stock of Parent consists of 100,000,000 shares of Parent
Common Stock, and the authorized capital stock of Trust consists of 100,000,000
Trust Shares, 20,000,000 excess trust shares, par value $.01 per share ("Excess
Trust Shares"), and 5,000,000 excess preferred shares, par value $.01 per share
("Excess Preferred Shares"). At the close of business on October 17, 1997,
51,302,015 shares of Parent Common Stock and 51,302,015 Trust Shares were
issued and outstanding. As of October 17, 1997, 62,978,381 units of SLT Realty
Limited Partnership ("SLT Units") and 63,232,722 units of SLC Operating Limited
Partnership ("SLC Units") were outstanding. As of October 17, 1997, the Trust
beneficially owned 51,302,015 SLT Units and Parent and its subsidiaries
beneficially owned 51,302,015 SLC Units and the remaining issued and
outstanding SLT Units and SLC Units were owned by the persons and in the
quantities set forth in Section 2.2 of the Parent Letter. All the outstanding
SLT Units and SLC Units have been duly authorized and are validly issued, fully
paid and nonassessable. The capital stock of Sub consists of 100,000 shares of
Common Stock, no par value, of which as of the date of this Agreement, 1,000
shares of Common Stock were issued and outstanding, of which, as of the date of
the Agreement, 910 shares were owned directly by Parent and 90 shares were
owned directly by Trust, and 10,000
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shares of Preferred Stock, no par value, of which as of the date of this
Agreement, no shares were issued and outstanding. Immediately prior to the
Effective Time, the Trust will acquire an appropriate amount of Common Stock of
the Sub. At the close of business on October 17, 1997, none of the Parent
Companies had any shares or units reserved for issuance, except for Trust
Shares and shares of Parent Common Stock reserved for issuance upon the
exchange of the SLT Units and the SLC Units, respectively, and except that, as
of October 17, 1997, there were 5,908,313 shares of Parent Common Stock and
5,908,313 Trust Shares reserved for issuance pursuant to the Incentive and
Non-Qualified Shares Option Plan (1986) of the Trust, the Corporation Stock
Non-Qualified Stock Option Plan (1986) of the Trust, the Stock Option Plan
(1986) of the Corporation, the Trust Shares Option Plan (1986) of the
Corporation, the 1995 Share Option Plan of the Trust, and the 1995 Share Option
Plan of the Corporation (collectively, the "Parent Stock Plans"). Except as
set forth above, at the close of business on October 17, 1997, no shares of
capital stock or other voting securities of the Parent Companies were issued,
reserved for issuance or outstanding. All the outstanding shares of Parent
Common Stock and Trust Shares are validly issued, fully paid and nonassessable
and free of preemptive rights. All shares of Parent Common Stock and Trust
Shares issuable in exchange for Company Common Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights and
will be paired with each other in the same ratio as all other shares of Parent
Common Stock and Trust Shares are paired with each other, as such ratio may
change from time to time. As of the date of this Agreement, except as set
forth in Section 2.2 of the letter dated the date hereof and delivered on the
date hereof by the Parent Companies to the Company, which letter relates to
this Agreement and is designated therein as the Parent Letter (the "Parent
Letter"), and except for (a) this Agreement, (b) stock options issued pursuant
to the Parent Stock Plans covering not in excess of 5,908,313 Trust Shares and
5,908,313 shares of Parent Common Stock (collectively, the "Parent Stock
Options"), (c) 11,930,707 Trust Shares and 11,930,707 shares of Parent Common
Stock issuable upon the exchange of SLT Units and SLC Units, respectively, (d)
the Transaction Agreement dated as of September 8, 1997 (the "Westin
Transaction Agreement"), among the Parent Companies, WHWE L.L.C., Woodstar
Investor Partnership, Nomura Asset Capital Corporation, Xxxxxxx Xxxxxxx, W&S
Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S Lauderdale Corp.,
W&S Seattle Corp., Westin St. Xxxx Hotel Company, Inc., W&S Denver Corp., W&S
Atlanta Corp., SLT Realty Limited Partnership and SLC Operating Limited
Partnership, and (e) Paired Shares issuable pursuant to the Forward Purchase
Contract dated as of October 13, 1997 (the "Forward Purchase Contract") with an
affiliate of Union Bank of Switzerland, there are no options, warrants, calls,
rights or agreements to which the Parent Companies or any of their Subsidiaries
is a party or by which any
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of them is bound obligating the Parent Companies or any of their Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of the Parent Companies or any of their Subsidiaries or
obligating the Parent Companies or any of their Subsidiaries to grant, extend
or enter into any such option, warrant, call, right or agreement. Each
outstanding share of capital stock of each Subsidiary of the Parent Companies
that is a corporation is duly authorized, validly issued, fully paid and
nonassessable and, except as disclosed in the Parent SEC Documents (as defined
in Section 2.5) filed prior to the date of this Agreement, each such share is
owned by the Parent Companies or another Subsidiary of the Parent Companies,
free and clear of all security interests, liens, claims, pledges, mortgages,
options, rights of first refusal, agreements, limitations on voting rights,
charges and other encumbrances of any nature whatsoever (each, a "Lien"). As
of the date of this Agreement, none of the Parent Companies has outstanding any
bonds, debentures, notes or other indebtedness of Parent having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders or shareholders of the Parent
Companies may vote. As of the date of this Agreement, there are no outstanding
contractual obligations of the Parent Companies or any of their Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Parent Companies or any of their Subsidiaries. Except as set forth in Section
2.2 of the Parent Letter, Exhibit 21 to the Annual Report on Form 10-K of the
Parent Companies for the year ended December 31, 1996 (the "Parent Annual
Report"), as filed with the Securities and Exchange Commission (the "SEC"), is
a true, accurate and correct statement in all material respects of all the
information required to be set forth therein by the rules and regulations of
the SEC.
Section 2.3 Authority. The Boards of Directors or
Trustees, as the case may be, of the Parent Companies and Sub have duly
approved and adopted this Agreement. The Board of Directors or Trustees, as
the case may be, of each of the Parent Companies has respectively declared
advisable an amendment to Parent's Articles of Incorporation and Trust's
Declaration of Trust to (i) increase the number of authorized shares of Parent
Common Stock to 1,000,000,000 and the number of authorized Trust Shares to
1,000,000,000, respectively, and (ii) include any provisions required by, or
deemed advisable under, any Gaming Laws (the "Charter Amendments"). The Board
of Directors or Trustees, as the case may be, of each of the Parent Companies
has resolved to recommend the approval by their respective stockholders or
shareholders, as applicable, of the respective Charter Amendments and the
respective issuance of Parent Common Stock and Trust Shares, in connection with
the Merger as contemplated by this Agreement (the "Share Issuances"). Each of
the Parent Companies and Sub has all requisite power and authority to enter
into this Agreement and, subject to approval
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by the stockholders or shareholders, as applicable, of Parent and Trust of the
respective Charter Amendments and Share Issuances, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Parent Companies and Sub and the consummation by the Parent Companies
and Sub of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of the Parent Companies and Sub, subject to
approval by the stockholders or shareholders, as applicable, of Parent and
Trust of the respective Charter Amendments and Share Issuances. This Agreement
has been duly executed and delivered by each of the Parent Companies and Sub
and (assuming the valid authorization, execution and delivery of this Agreement
by the Company and the validity and binding effect of this Agreement on the
Company) constitutes the valid and binding obligation of the Parent Companies
and Sub enforceable against each of them in accordance with its terms. The
Charter Amendments, the Share Issuances and the filing of a joint registration
statement on Form S-4 with the SEC by the Parent Companies under the Securities
Act of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), for the purpose of registering the Paired
Shares to be issued in connection with the Merger as contemplated by this
Agreement (together with any amendments or supplements thereto, whether prior
to or after the effective date thereof, the "Registration Statement") have been
duly authorized by Parent's Board of Directors and Trust's Board of Trustees.
Section 2.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 2.4 have been obtained and all filings and
obligations described in this Section 2.4 have been made, and except as set
forth in Section 2.4 of the Parent Letter, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, result in any violation of,
or default or loss of a material benefit (with or without notice or lapse of
time, or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation under, or result in the creation of any Lien
upon any of the properties, assets or operations of the Parent Companies or any
of their Subsidiaries under, any provision of (i) the Declaration of Trust,
articles of incorporation, Trust Regulations or by-laws, as applicable, of the
Parent Companies, (ii) any provision of the comparable charter or organization
documents of any Subsidiary of the Parent Companies, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Parent
Companies or any of their Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Parent Companies
or any of their Subsidiaries or any of their respective properties, assets or
operations, other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults,
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losses, rights or Liens that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Parent
Companies, materially impair the ability of the Parent Companies or Sub to
perform their respective obligations hereunder or prevent the consummation of
any of the transactions contemplated hereby. No filing or registration with,
or authorization, consent or approval of, any domestic (federal or state),
foreign or supranational court, commission, governmental body, regulatory
agency, authority or tribunal (a "Governmental Entity") is required by or with
respect to the Parent Companies or any of their Subsidiaries in connection with
the execution and delivery of this Agreement by the Parent Companies or Sub or
is necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except (i) in connection, or in compliance,
with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), (ii) the filing of the Articles of
Merger with the Secretary of State of the State of Nevada and appropriate
documents with the relevant authorities of other states in which the Parent
Companies or any of their Subsidiaries are qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
public or worker safety law or regulation specified in Section 2.4 of the
Parent Letter pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement,
(iv) such filings as may be required in connection with the taxes described in
Section 5.11, (v) applicable requirements, if any, of state securities or "blue
sky" laws ("Blue Sky Laws") and the NYSE, (vi) as may be required under foreign
laws, (vii) such filings as may be required under the rules of the NYSE in
connection with the Charter Amendments, (viii) filings with and approvals by
any regulatory authority with jurisdiction over the Company's gaming operations
required under any Federal, state, local or foreign statute, ordinance, rule,
regulation, permit, consent, approval, license, judgment, order, decree,
injunction or other authorization governing or relating to the current or
contemplated casino and gaming activities and operations of the Company,
including the New Jersey Casino Control Act and the rules and regulations
promulgated thereunder, the Nevada Gaming Control Act and the rules and
regulations promulgated thereunder, the Mississippi Gaming Control Act and the
rules and regulations promulgated thereunder, the Xxxxx County governmental
authorities and the rules and regulations promulgated thereby, the Indiana
Gaming Control Act and the rules and regulations promulgated thereunder, the
Nova Scotia Gaming Control Act and the rules and regulations promulgated
thereunder, and the Ontario-Gaming Control Act and the rules and regulations
promulgated thereunder (collectively, the "Gaming Laws"), (ix) filings with and
approvals of state educational regulatory authorities, nongovernmental
accrediting commissions and the U.S. Department of
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Education and, if required, with the Federal Communications Commission, (x)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings (a) as may be required under the laws of any foreign
country in which the Company or any of its subsidiaries conducts any business
or owns any property or assets or (b) as are set forth in Section 2.4 of the
Parent Letter, and (xi) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Parent Companies, materially impair the
ability of the Parent Companies or Sub to perform their respective obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 2.5 SEC Documents and Other Reports. The Parent
Companies have filed all required documents with the SEC since January 1, 1996
(the "Parent SEC Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the respective
times they were filed, none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of the Parent
Companies included in the Parent SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as of their respective
dates of filing, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Regulation S-X of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly presented the consolidated financial position of Trust and Parent and
their consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the Parent SEC Documents or as required by generally
accepted accounting principles, the Parent Companies have not, since December
31, 1996, made any change in the accounting practices or policies applied in
the preparation of their financial statements.
Section 2.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by the Parent Companies or
Sub for inclusion or incorporation by reference in the Registration Statement
or the joint proxy statement/prospectus included therein (together with any
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amendments or supplements thereto, the "Joint Proxy Statement") relating to the
Stockholder Meetings (as defined in Section 5.1) will (i) in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Joint Proxy
Statement, at the time of the mailing of the Joint Proxy Statement and at the
time of each of the Stockholder Meetings, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior
to the Effective Time any event with respect to the Parent Companies, their
respective officers and directors or any of their Subsidiaries shall occur that
is required to be described in the Joint Proxy Statement or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Parent and the Company. The Registration
Statement will comply as to form in all material respects with the provisions
of the Securities Act, and the Joint Proxy Statement will comply (with respect
to the Parent Companies) as to form in all material respects with the
provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed prior to the date of this
Agreement, since December 31, 1996, (a) the Parent Companies and their
Subsidiaries have not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that, individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse Effect on the Parent
Companies, (b) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a Material Adverse Effect on the Parent Companies or (c) there has not
been any split, combination or reclassification of any of the capital stock of
Parent or Trust or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
such capital stock, except as contemplated by this Agreement. The approximate
aggregate amount of indebtedness of the Parent Companies and their respective
Subsidiaries as of September 30, 1997, is set forth in Section 2.7 of the
Parent Letter.
Section 2.8 Permits and Compliance. Each of the Parent
Companies and their respective Subsidiaries is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for the Parent Companies or any of their Subsidiaries
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to own, lease and operate its properties or to carry on its business as it is
now being conducted (the "Parent Permits"), except where the failure to have
any of the Parent Permits, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse Effect on the
Parent Companies, and, as of the date of this Agreement, no suspension or
cancellation of any of the Parent Permits is pending or, to the Knowledge of
the Parent Companies (as hereinafter defined), threatened, except where the
suspension or cancellation of any of the Parent Permits, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Parent Companies. None of the Parent Companies
or any of their Subsidiaries is in violation of (A) their respective charter,
by-laws or other organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order, decree or
judgment of any Governmental Entity having jurisdiction over the Parent
Companies or any of their Subsidiaries, except, in the case of clauses (A), (B)
and (C), for any violations that, individually or in the aggregate, have not
had, and would not reasonably be expected to have, a Material Adverse Effect on
the Parent Companies. Except as disclosed in the Parent SEC Documents filed
prior to the date of this Agreement, as of the date hereof, there is no
contract or agreement that is material to the business, properties, results of
operations or financial condition of the Parent Companies and their
Subsidiaries, taken as a whole. Except as set forth in the Parent SEC
Documents or Section 2.8 of the Parent Letter, prior to the date of this
Agreement, no event of default or event that, but for the giving of notice or
the lapse of time or both, would constitute an event of default exists or, upon
the consummation by the Parent Companies of the transactions contemplated by
this Agreement, will exist under any indenture, mortgage, loan agreement, note
or other agreement or instrument for borrowed money, any guarantee of any
agreement or instrument for borrowed money or any lease, license or other
agreement or instrument to which the Parent Companies or any of their
Subsidiaries is a party or by which the Parent Companies or any such Subsidiary
is bound or to which any of the properties, assets or operations of the Parent
Companies or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Parent Companies. For
purposes of this Agreement, the term "Knowledge" when used with respect to the
Parent Companies means the actual knowledge of the individuals identified in
Section 2.8 of the Parent Letter.
Section 2.9 Tax Matters. Except as otherwise set forth
in Section 2.9 of the Parent Letter, (i) the Parent Companies and each of their
respective Subsidiaries have timely filed all federal, state, local, foreign
and provincial income and Franchise Tax Returns and all other material Tax
Returns required to have been filed or appropriate extensions therefor
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have been properly obtained, and such Tax Returns are, true, correct and
complete, except to the extent that any failure to so file or any failure to be
true, correct and compete, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse Effect on the
Parent Companies; (ii) all Taxes required to have been paid by the Parent
Companies and each of their respective Subsidiaries have been timely paid or
extensions for payment have been properly obtained, except to the extent that
any failure to pay any such Taxes or to properly obtain an extension for such
payment, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the Parent
Companies; (iii) the Parent Companies and each of their respective Subsidiaries
have complied in all material respects with all rules and regulations relating
to the withholding of Taxes except to the extent that any failure to comply
with such rules and regulations, individually in the aggregate, has not had,
and would not reasonably be expected to have, a Material Adverse Effect on the
Parent Companies; (iv) none of the Parent Companies or any of their respective
Subsidiaries has waived in writing any statute of limitations in respect of its
federal, state, local, foreign or provincial income or franchise Taxes and no
deficiency with respect to any Taxes has been proposed, asserted or assessed
against any of the Parent Companies or any of their respective Subsidiaries,
except to the extent that any such waiver or deficiency, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Parent Companies; (v) all Federal income Tax
Returns referred to in clause (i) for all years through 1993 have been examined
by and settled with the Internal Revenue Service or the period for assessment
of Taxes in respect of which such Tax returns were required to be filed has
expired; (vi) no material issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; (vii) all material
deficiencies asserted or material assessments made as a result of any
examination of any Tax Returns referred to in clause (i) by any taxing
authority have been paid in full; (viii) the most recent financial statements
contained in the Parent SEC Documents reflect an adequate reserve for all Taxes
payable by the Parent Companies and their respective Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements; and (ix) there are no material liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Parent Companies or
any of their respective Subsidiaries. For purposes of this Agreement: (i)
"Taxes" means any federal, state, local, foreign or provincial income, gross
receipts, property, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or add on minimum, ad valorem, value-added,
transfer or excise tax, or other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity, and (ii) "Tax Return" means
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any return, report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
Section 2.10 Actions and Proceedings. Except as set forth
in the Parent SEC Documents filed prior to the date of this Agreement, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Parent Companies or any of their
Subsidiaries, or against or involving any of the directors, officers or
employees of the Parent Companies or any of their Subsidiaries, as such, any of
its or their properties, assets or business or any employee benefit plan of the
Parent Companies (a "Parent Plan") that, individually or in the aggregate, have
had, or would reasonably be expected to have, a Material Adverse Effect on the
Parent Companies. As of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of the Parent Companies, threatened
against or involving the Parent Companies or any of their Subsidiaries or any
of their directors, officers or employees, as such, or any of its or their
properties, assets or business or any Parent Plan that, individually or in the
aggregate, have had, or would reasonably be expected to have, a Material
Adverse Effect on the Parent Companies. As of the date hereof, there are no
actions, suits, labor disputes or other litigation, legal or administrative
proceedings or governmental investigations pending or, to the Knowledge of the
Parent Companies, threatened against or affecting the Parent Companies or any
of their Subsidiaries or any of their officers, directors or employees, as
such, or any of their properties, assets or business relating to the
transactions contemplated by this Agreement.
Section 2.11 Compliance with Worker Safety and
Environmental Laws. (a) Except as set forth in Section 2.11 of the Parent
Letter, the properties, assets and operations of the Parent Companies and their
respective Subsidiaries are in compliance with all applicable federal, state,
local, regional and foreign laws, rules and regulations, orders, decrees,
common law, judgments, permits and licenses relating to public and worker
health and safety (collectively, "Worker Safety Laws") and the protection,
regulation and clean-up of the indoor and outdoor environment and activities or
conditions related thereto, including, without limitation, those relating to
the generation, handling, disposal, transportation or release of hazardous or
toxic materials, substances, wastes, pollutants and contaminants including,
without limitation, asbestos, petroleum, radon and polychlorinated biphenyls
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, has not had, or would not reasonably be
expected to have, a Material Adverse Effect on the Parent Companies. With
respect to such properties, assets and operations, including any previously
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owned, leased or operated properties, assets or operations, there are no past,
present or reasonably anticipated future events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Parent Companies or
any of their respective Subsidiaries that may interfere with or prevent
compliance or continued compliance with applicable Worker Safety Laws and
Environmental Laws, other than any such interference or prevention that,
individually or in the aggregate, has not had, or would not reasonably be
expected to have, a Material Adverse Effect on the Parent Companies.
(b) The Parent Companies and their respective
Subsidiaries have not caused or permitted any property, asset, operation,
including any previously owned property, asset or operation, to use, generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer or
process hazardous or toxic materials, substances, wastes, pollutants or
contaminants, except in material compliance with all Environmental Laws and
Worker Safety Laws, other than any such activity that, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Parent Companies. The Parent Companies and
their respective Subsidiaries have not reported to any Governmental Entity any
material violation of an Environmental Law or any release, discharge or
emission of any hazardous or toxic materials, substances, wastes, pollutants or
contaminants, other than any such violation, release, discharge or emission
that, individually or in the aggregate, has not had, and would not reasonably
be expected to have, a Material Adverse Effect on the Parent Companies. The
Parent Companies have no Knowledge of any pending, threatened or anticipated
claims or liabilities under CERCLA, 42 U.S.C. Section 9601 et seq., RCRA, 42
U.S.C. Section 6901 et seq., or equivalent state law provisions and no
Knowledge that any current or former property, asset or operation is identified
or currently proposed for the National Priorities List at 40 CFR Section 300,
Appendix B, or the CERCLIS or equivalent state lists or hazardous substances
release sites.
Section 2.12 Liabilities. Except as set forth in the
Parent SEC Documents filed prior to the date hereof, the Parent Companies and
their Subsidiaries have no liabilities, absolute or contingent, other than
liabilities that, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Material Adverse Effect on the Parent
Companies.
Section 2.13 Intellectual Property. The Parent Companies
and their Subsidiaries own or have the right to use all patents, patent rights,
trademarks, trade names, service marks, trade secrets, copyrights and other
proprietary intellectual property rights (collectively, "Intellectual Property
Rights") as are necessary in connection with the business of the Parent
Companies and their Subsidiaries, taken as a whole, except where the failure to
have such Intellectual Property Rights,
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individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Parent Companies. Neither
the Parent Companies nor any of their respective Subsidiaries has infringed any
Intellectual Property Rights of any third party other than any infringements
that, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a Material Adverse Effect on the Parent Companies.
Section 2.14 Opinion of Financial Advisor. The Parent
Companies have received the written opinion of Bear Xxxxxxx & Co. Inc. dated
November 12, 1997, to the effect that, as of dated November 12, 1997, the
consideration to be paid by the Parent Companies in the Merger is fair to the
Parent Companies from a financial point of view.
Section 2.15 Required Vote of Parent and Trust
Stockholders. The affirmative votes of the holders of a majority of the
outstanding shares of Parent Common Stock and of the outstanding Trust Shares
are required to approve the respective Charter Amendments of Trust and Parent.
The affirmative vote of a majority of the votes cast on each Share Issuance is
required to approve such Share Issuance; provided, that the total votes cast on
each such proposal represent a majority of the outstanding shares of Parent
Common Stock or Trust Shares, as applicable. No other vote of the stockholders
or shareholders of the Parent Companies is required by law, the organization
documents of the Parent Companies or otherwise in order for the Parent
Companies to consummate the Merger and the transactions contemplated hereby.
Section 2.16 REIT Status. The Trust is a "real estate
investment trust" for federal income tax purposes and is not subject to Section
269B(a)(3) of the Code by reason of Section 136(c) of the Deficit Reduction Act
of 1984. The consummation of the transactions contemplated by this Agreement
will not cause the Trust to cease to qualify as a "real estate investment
trust" for federal income tax purposes and will not cause the Trust to become
subject to Section 269B(a)(3) of the Code.
Section 2.17 Brokers. No broker, investment banker or
other person, other than Bear Xxxxxxx & Co. Inc., Starwood Capital Group L.L.C.
and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Incorporated, the fees and expenses
of which will be paid by the Parent Companies (subject to Section 5.7), is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent Companies.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Parent
Companies and Sub as follows:
Section 3.1 Organization, Standing and Power. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has the requisite corporate power and
authority to carry on its business as now being conducted. Each Subsidiary of
the Company is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or other power
and authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
or authority, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the Company. The
Company and each of its Subsidiaries are duly qualified to do business, and are
in good standing, in each jurisdiction where the character of their properties
owned or held under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Company.
Section 3.2 Capital Structure. At the date hereof, the
authorized capital stock of the Company consists of 200,000,000 shares of
Company Common Stock and 50,000,000 shares of Preferred Stock, no par value per
share ("Company Preferred Stock"). At the close of business on October 17,
1997, (i) 118,259,684 shares of Company Common Stock were issued and
outstanding, (ii) 1,123,526 shares of Company Common Stock were held in the
treasury of the Company or by its Subsidiaries, (iii) 133,399 shares of Company
Common Stock were reserved for issuance pursuant to the Company's 1996
Restricted Stock Plan for Non-Employee Directors, as amended, and the Company's
1995 Incentive Stock Plan, as amended (collectively, the "Company Stock
Plans"), and (iv) no shares of Company Common Stock were reserved in connection
with the Rights Agreement (as hereinafter defined). Except as set forth above,
at the close of business on October 17, 1997, no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance or
outstanding. All the outstanding shares of Company Common Stock were validly
issued, fully paid and nonassessable and free of preemptive rights. As of the
date of this Agreement, except for (a) stock options issued pursuant to the
Company Stock Plans covering not in excess of 8,718,231 shares of Company
Common Stock (collectively, the "Company Stock Options"),(b) the rights to
purchase shares of Series A Participating Cumulative Preferred
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Stock (the "Rights"), issued pursuant to the Rights Agreement dated as of
November 1, 1995 (the "Rights Agreement"), between the Company and The Bank of
New York, as Rights Agent, and (c) rights existing under an Investment
Agreement dated as of July 15, 1997 (the "CDRV Investment Agreement"), between
the Company and CDRV Acquisition, L.L.C., there are no options, warrants,
calls, rights or agreements to which the Company or any of its Subsidiaries is
a party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or agreement.
Except as set forth in Section 3.2 of the letter dated the date hereof and
delivered on the date hereof by the Company to Parent, which letter relates to
this Agreement and is designated therein as the Company Letter (the "Company
Letter"), each outstanding share of capital stock of each Subsidiary of the
Company that is a corporation is duly authorized, validly issued, fully paid
and nonassessable and, except as disclosed in the Company SEC Documents (as
defined in Section 3.5) filed prior to the date of this Agreement, each such
share is owned by the Company or another Subsidiary of the Company, free and
clear of all Liens. As of the date of this Agreement, the Company does not
have outstanding any bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
the Company may vote. Except (x) pursuant to an agreement dated as of July 15,
1997 between the Company and BellSouth Corporation, (y) to the extent that
Article Ninth of the Restated Articles of Incorporation of the Company or any
comparable provision of the articles of incorporation of any Subsidiary of the
Company required under any Gaming Laws could be construed as a contractual
obligation or (z) with respect to the withholding of exercise price or
withholding taxes under any stock option plan, as of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries. Exhibit 21 to the
Company's Annual Report on Form 10- K for the year ended December 31, 1996, as
filed with the SEC (the "Company Annual Report"), is a true, accurate and
correct statement in all material respects of all the information required to
be set forth therein by the rules and regulations of the SEC.
Section 3.3 Authority. The Board of Directors of the
Company has duly approved and adopted this Agreement, and has resolved to
recommend the approval of this Agreement by the Company's stockholders and
directed that this Agreement be submitted to the Company's stockholders for
approval. The Company has all requisite corporate power and authority to enter
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into this Agreement and, subject to approval by the stockholders of the Company
of this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject to
approval of this Agreement by the stockholders of the Company. This Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent, Trust and
Sub and the validity and binding effect of this Agreement on Parent, Trust and
Sub) constitutes the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The filing of the Joint
Proxy Statement with the SEC has been duly authorized by the Company's Board of
Directors.
Section 3.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 3.4 have been obtained and all filings and
obligations described in this Section 3.4 have been made, and except as set
forth in Section 3.4 of the Company Letter, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, result in any violation of,
or default or the loss of a material benefit (with or without notice or lapse
of time, or both) under, or give to others a right of termination, cancellation
or acceleration of any obligation under, or result in the creation of any Lien,
upon any of the properties, assets or operations of the Company or any of its
Subsidiaries under any provision of (i) the Restated Articles of Incorporation,
as amended, or the Amended and Restated By-Laws of the Company, (ii) any
provision of the comparable charter or organization documents of any Subsidiary
of the Company, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective
properties, assets or operations, other than, in the case of clauses (ii),
(iii) or (iv), any such violations, defaults, losses, rights or Liens that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company, materially impair the ability of the
Company to perform its obligations hereunder or prevent the consummation of any
of the transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by
or with respect to the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by the Company or is necessary for
the consummation of the Merger and the other transactions contemplated by this
Agreement, except (i) in connection, or in compliance, with the provisions of
the XXX Xxx,
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the Securities Act and the Exchange Act, (ii) the filing of the Articles of
Merger with the Secretary of State of the State of Nevada and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or public or worker
safety law or regulation specified in Section 3.4 of the Company Letter
pertaining to any notification, disclosure or required approval triggered by
the Merger or by the transactions contemplated by this Agreement, (iv) such
filings as may be required in connection with the taxes described in Section
5.11, (v) applicable requirements, if any, of Blue Sky Laws and the NYSE, (vi)
as may be required under foreign laws, (vii) filings with and approvals in
respect of the Gaming Laws, (viii) filings with and approvals of state
educational regulatory authorities, non-governmental accrediting commissions
and the U.S. Department of Education and, if required, with the Federal
Communications Commission, (ix) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as are set forth in
Section 3.4 of the Company Letter, and (x) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, materially impair
the ability of the Company to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company
has filed all required documents with the SEC since January 1, 1996 (the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the respective
times they were filed, none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of the
Company included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as of their respective
dates of filing, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Regulation S-X of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of operations and their consolidated cash flows for the
periods then ended (subject, in the case of
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unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Company SEC
Documents or as required by generally accepted accounting principles, the
Company has not, since December 31, 1996, made any change in the accounting
practices or policies applied in the preparation of its financial statements.
Section 3.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by the Company for inclusion
or incorporation by reference in the Registration Statement or the Joint Proxy
Statement will (i) in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading or (ii) in
the case of the Joint Proxy Statement, at the time of the mailing of the Joint
Proxy Statement and at the time of each of the Stockholder Meetings, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to the Company, its officers and directors or any of its Subsidiaries shall
occur that is required to be described in the Joint Proxy Statement or the
Registration Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and, as required
by law, disseminated to the stockholders of Parent and the Company. The Joint
Proxy Statement will comply (with respect to the Company) as to form in all
material respects with the provisions of the Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except
as disclosed in the Company SEC Documents filed prior to the date of this
Agreement since December 31, 1996, (a) the Company and its Subsidiaries have
not sustained any loss or interference with their business or properties from
fire, flood, windstorm, accident or other calamity (whether or not covered by
insurance) that, individually or in the aggregate, has had, or would reasonably
be expected to have, a Material Adverse Effect on the Company and (b)(i) there
has been no change in the capital stock of the Company (except for the issuance
of shares of the Company Common Stock pursuant to Company Stock Plans) and no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its stock and (ii) there have not been any events, changes or
developments that, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect on the Company. The
aggregate amount of indebtedness of the Company and its Subsidiaries as of
September 30, 1997, is set forth in Section 3.7 of the Company Letter.
Section 3.8 Permits and Compliance. Except as set forth
in Section 3.8 of the Company Letter, each of the Company
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and its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company or any of its Subsidiaries to own, lease and operate its properties or
to carry on its business as it is now being conducted (the "Company Permits"),
except where the failure to have any of the Company Permits, individually or in
the aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company, and, as of the date of this Agreement,
no suspension or cancellation of any of the Company Permits is pending or, to
the Knowledge of the Company (as hereinafter defined), threatened, except where
the suspension or cancellation of any of the Company Permits, individually or
in the aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries is in violation of (A) its charter, by-laws or other
organizational documents, (B) any applicable law, ordinance, administrative or
governmental rule or regulation or (C) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries, except, in the case of clauses (A), (B) and (C), for any
violations that, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the Company.
Except as disclosed in the Company SEC Documents filed prior to the date of
this Agreement, as of the date hereof, there is no contract or agreement that
is material to the business, properties, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole. Except as set
forth in the Company SEC Documents or Section 3.8 of the Company Letter, prior
to the date of this Agreement, no event of default or event that, but for the
giving of notice or the lapse of time or both, would constitute an event of
default exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
license or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any such Subsidiary is bound
or to which any of the properties, assets or operations of the Company or any
such Subsidiary is subject, other than any defaults that, individually or in
the aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company. For purposes of this Agreement, the
term "Knowledge" when used with respect to the Company means the actual
knowledge of the individuals identified in Section 3.8 of the Company Letter.
Section 3.9 Tax Matters. Except as otherwise set forth
in Section 3.9 of the Company Letter, (i) the Company and each of its
Subsidiaries have timely filed all federal, state, local, foreign and
provincial income and Franchise Tax Returns
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and all other material Tax Returns required to have been filed or appropriate
extensions therefor have been properly obtained, and such Tax Returns are true,
correct and complete, except to the extent that any failure to so file or any
failure to be true, correct and complete, individually or in the aggregate, has
not had, and would not reasonably be expected to have, a Material Adverse
Effect on the Company; (ii) all Taxes required to have been paid by the Company
and each of its Subsidiaries have been timely paid or extensions for payment
have been properly obtained, except to the extent that any failure to pay any
such Taxes or to properly obtain an extension for such payment, individually or
in the aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company; (iii) the Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company; (iv) neither the Company nor any of its
Subsidiaries has waived in writing any statute of limitations in respect of its
federal, state, local, foreign or provincial income or franchise Taxes and no
deficiency with respect to any Taxes has been proposed, asserted or assessed
against the Company or any of its Subsidiaries, except the extent that any such
waiver to deficiency, individually or in the aggregate has not had, and would
not reasonably be expected to have, a Material Adverse Effect on the Company;
(v) all Federal income Tax Returns referred to in clause (i) for all years
through 1989 have been examined by and settled with the Internal Revenue
Service or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (vi) no material issues that
have been raised in writing by the relevant taxing authority in connection with
the examination of the Tax Returns referred to in clause (i) are currently
pending; and (vii) all material deficiencies asserted or material assessments
made as a result of any examination of any Tax Returns referred to in clause
(i) by any taxing authority have been paid in full; (viii) the most recent
financial statements contained in the Company SEC Documents reflect an adequate
reserve for all Taxes payable by the Company and its Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements; and (ix) there are no material liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company or any of
its Subsidiaries.
Section 3.10 Actions and Proceedings. Except as set forth
in the Company SEC Documents filed prior to the date of this Agreement, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its
Subsidiaries, or against or involving any of the directors, officers or
employees of the Company or any of its Subsidiaries, as such, any of its or
their
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properties, assets or business or any Company Plan (as hereinafter defined)
that, individually or in the aggregate, have had, or would reasonably be
expected to have, a Material Adverse Effect on the Company. Except as set
forth in Section 3.10 of the Company Letter or in the Company SEC Documents
filed prior to the date hereof, as of the date of this Agreement, there are no
actions, suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of the Company, threatened against
or involving the Company or any of its Subsidiaries or any of its or their
directors, officers or employees as such, or any of its or their properties,
assets or business or any Company Plan that, individually or in the aggregate,
have had, or would reasonably be expected to have, a Material Adverse Effect on
the Company. Except as set forth in Section 3.10 of the Company Letter or in
the Company SEC Documents filed prior to the date hereof, as of the date
hereof, there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or, to the
Knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of its or their officers, directors or employees, as
such, or any of its or their properties, assets or business relating to the
transactions contemplated by this Agreement.
Section 3.11 Certain Agreements. Except as set forth in
the Company SEC Documents filed prior to the date hereof or as listed on
Section 3.11 of the Company Letter, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to purchase shares of
Company Common Stock, or shares of Company Common Stock granted in connection
with the performance of services for the Company or its Subsidiaries, is or
will be entitled to receive cash from the Company or any Subsidiary in lieu of
or in exchange for such option or shares as a result of the transactions
contemplated by this Agreement (subject to Section 5.8).
Section 3.12 ERISA. (a) Section 3.12 (a) of the Company
Letter contains a list of each Company Plan (as hereinafter defined) maintained
by the Company and each material Company Plan maintained by a Subsidiary of the
Company. To the extent applicable, with respect to each Company Plan, the
Company has made, or will as soon as practicable after the date hereof, make
available to Parent a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Company Plan and all
amendments thereto, (iii) each trust
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agreement, insurance contract or administration agreement relating to such
Company Plan, (iv) the most recent summary plan description for each Company
Plan for which a summary plan description is required, (v) the most recent
actuarial report or valuation relating to a Company Plan subject to Title IV of
ERISA, (vi) the most recent determination letter, if any, issued by the IRS
with respect to any Company Plan intended to be qualified under section 401(a)
of the Code, (vii) any request for a determination currently pending before the
IRS and (viii) all correspondence with the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation relating to any outstanding controversy.
Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, (i) each Company Plan
complies with ERISA, the Code and all other applicable statutes and
governmental rules and regulations, (ii) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred within the past three years with
respect to any Company Plan which is likely to result in liability to the
Company, (iii) neither the Company nor any of its ERISA Affiliates (as
hereinafter defined) has withdrawn from any Company Multiemployer Plan (as
hereinafter defined) at any time within the past six years or instituted, or is
currently considering taking, any action to do so, and (iv) no action has been
taken, or is currently being considered, to terminate any Company Plan subject
to Title IV of ERISA.
(b) There has been no failure to make any contribution or pay
any amount due to any Company Plan as required by Section 412 of the Code,
Section 302 of ERISA, or the terms of any such Plan, and no Company Plan, nor
any trust created thereunder, has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived.
(c) With respect to the Company Plans, no event has
occurred and, to the Knowledge of the Company, there exists no condition or set
of circumstances in connection with which the Company or any ERISA Affiliate
would be subject to any liability under the terms of such Company Plans, ERISA,
the Code or any other applicable law which has had, or would reasonably be
expected to have, a Material Adverse Effect on the Company. Except as listed
on Section 3.12(c) of the Company Letter, all Company Plans that are intended
to be qualified under Section 401(a) of the Code have been determined by the
IRS to be so qualified, or a timely application for such determination is now
pending or will be filed on a timely basis and, except as listed on Section
3.12(c) of the Company Letter, to the Knowledge of the Company there is no
reason why any Company Plan is not so qualified in operation. Neither the
Company nor any of its ERISA Affiliates has been notified by any Company
Multiemployer Plan that such Company Multiemployer Plan is currently in
reorganization or insolvency under and within the meaning of Section 4241 or
4245 of ERISA or that such Company Multiemployer Plan intends to terminate or
has been terminated under Section
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4041A of ERISA. Neither the Company nor any of its ERISA Affiliates has any
liability or obligation under any welfare plan to provide life insurance or
medical benefits after termination of employment to any employee or dependent
other than as required by (i) Part 6 of Title I of ERISA or as disclosed in
Section 3.12(c) of the Company Letter or (ii) the laws of a jurisdiction
outside the United States.
(d) As used herein, (i) "Company Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Company Multiemployer
Plan)), a "welfare plan" (as defined in Section 3(1) of ERISA), or any material
bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, vacation, severance,
death benefit, insurance or other plan, arrangement or understanding, in each
case established or maintained or contributed to by the Company or any of its
ERISA Affiliates or as to which the Company or any of its ERISA Affiliates or
otherwise may have any liability, (ii) "Company Multiemployer Plan" means a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which the
Company or any of its ERISA Affiliates is or has been obligated to contribute
or otherwise may have any liability, and (iii) with respect to any person,
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which is under common control or would be considered a single employer with
such person pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated under those sections or pursuant to Section 4001(b) of
ERISA and the regulations promulgated thereunder.
(e) Section 3.12(e) of the Company Letter contains a list
of each Company Ex-U.S. Pension Plan and the Company has made, or as soon as
practicable after the date hereof will make, available to Parent a copy of any
written plan document. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
each such plan has been maintained in all material respects in compliance with
all applicable laws, orders and regulations, and the fair market value of the
assets of each such plan which is intended to be a funded Company plan or
arrangement equals or exceeds the value of the accrued benefits. "Company
Ex-U.S. Pension Plan" shall mean any arrangement (other than a Company Plan)
providing retirement pension benefits that is established or maintained by the
Company or any Subsidiary exclusively for the benefit of employees who are or
were employed outside the United States.
(f) Section 3.12(f) of the Company Letter contains a
list, as of the date of this Agreement, of all (i) severance and employment
agreements with officers of the Company and each ERISA Affiliate, (ii)
severance programs and formal policies of the Company with or relating to its
employees and (iii) plans, programs, agreements and other arrangements of the
Company with
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or relating to its employees which contain change of control or similar
provisions, in each case involving a severance or employment agreement or
arrangement with an individual officer or employee, only to the extent such
agreement or arrangement provides for minimum annual payments in excess of
$150,000. The Company has provided to the Parent a true and complete copy of
each of the foregoing or will provide such a copy as soon as practical after
the date hereof.
Section 3.13 Compliance with Worker Safety and
Environmental Laws. (a) Except as set forth in Section 3.13 of the Company
Letter, the properties, assets and operations of the Company and its
Subsidiaries are in compliance with all applicable federal, state, local,
regional and foreign laws, rules and regulations, orders, decrees, common law,
judgments, permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and the protection, regulation and
clean-up of the indoor and outdoor environment and activities or conditions
related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous or toxic
materials, substances, wastes, pollutants and contaminants including, without
limitation, asbestos, petroleum, radon and polychlorinated biphenyls
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Company. With respect to
such properties, assets and operations, including any previously owned, leased
or operated properties, assets or operations, there are no past, present or
reasonably anticipated future events, conditions, circumstances, activities,
practices, incidents, actions or plans of the Company or any of its
Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Worker Safety Laws and Environmental Laws, other
than any such interference or prevention that, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company.
(b) The Company and its Subsidiaries have not caused or
permitted any property, asset, operation, including any previously owned
property, asset or operation, to use, generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer or process hazardous or toxic
materials, substances, wastes, pollutants or contaminants, except in material
compliance with all Environmental Laws and Worker Safety Laws, other than any
such activity that, individually or in the aggregate, has not had, and would
not reasonably be expected to have, a Material Adverse Effect on the Company.
The Company and its Subsidiaries have not reported to any Governmental Entity
any material violation of an Environmental Law or any release, discharge or
emission of any hazardous or toxic materials, substances, wastes, pollutants or
contaminants, other than any such violation, release, discharge or emission
that, individually or in the
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aggregate, has not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company. The Company has no Knowledge of any
pending, threatened or anticipated claims or liabilities under CERCLA, 42
U.S.C. Section 9601 et seq., RCRA, 42 U.S.C. Section 6901 et seq., or
equivalent state law provisions and no Knowledge that any current or former
property, asset or operation is identified or currently proposed for the
National Priorities List at 40 CFR Section 300, Appendix B, or the CERCLIS or
equivalent state lists or hazardous substances release sites.
Section 3.14 Liabilities. Except as set forth in Section
3.14 of the Company Letter or in the Company SEC Documents filed prior to the
date hereof, the Company and its Subsidiaries have no liabilities, absolute or
contingent, other than liabilities that, individually or in the aggregate, have
not had, and would not reasonably be expected to have, a Material Adverse
Effect on the Company.
Section 3.15 Intellectual Property. The Company and its
Subsidiaries own or have the right to use all Intellectual Property Rights as
are necessary in connection with the business of the Company and its
Subsidiaries, taken as a whole, except where the failure to have such
Intellectual Property Rights, individually or in the aggregate, has not had,
and would not reasonably be expected to have, a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has infringed any
Intellectual Property Rights of any third party other than any infringements
that, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a Material Adverse Effect on the Company.
Section 3.16 Rights Agreement. The Company has taken all
necessary action to (i) render the Rights inapplicable to the Merger and the
other transactions contemplated by this Agreement and (ii) ensure that (y)
neither Parent nor any of its affiliates is an Acquiring Person (as defined in
the Rights Agreement) and (z) a Distribution Date (as defined in the Rights
Agreement) does not occur by reason of the announcement or consummation of the
Merger or the consummation of any of the other transactions contemplated by
this Agreement.
Section 3.17 Parachute Payments to Disqualified
Individuals. The estimated "excess parachute payments" (as such term is
defined in Section 280G(a) of the Code) payable to all employees of the Company
and its Subsidiaries who (i) are "disqualified individuals" under Section 280G
of the Code and (ii) are not covered in the report prepared by Towers Xxxxxx as
of October 18, 1997 and delivered to the Parent Companies prior to or on the
date hereof will not exceed $5,000,000, assuming for this purpose that no such
employee's employment is terminated in connection with the transactions
contemplated under this Agreement.
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Section 3.18 Opinion of Financial Advisor. The Company
has received the written opinion of Lazard Freres & Co. LLC, dated November 12,
1997, to the effect that, as of November 12, 1997, the consideration to be paid
by the Parent Companies in the Merger is fair to the Company's stockholders
from a financial point of view.
Section 3.19 State Takeover Statutes. The Board of
Directors of the Company has, to the extent such statutes are applicable, taken
(or, with respect to Sections 78.378 to 78.3793 of the NGCL, will take prior to
the Effective Time) all action necessary to exempt the Parent Companies, their
respective Subsidiaries and affiliates, the Merger, this Agreement and the
transactions contemplated hereby from Sections 78.378 to 78.3793 and Sections
78.411 to 78.444 of the NGCL or to satisfy the requirements thereof. To the
Knowledge of the Company, no other state takeover statutes are applicable to
the Merger, this Agreement or the transactions contemplated hereby.
Section 3.20 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to approve this Agreement. No other vote of
the stockholders of the Company is required by law, the Restated Articles of
Incorporation, as amended, or the Amended and Restated By-laws of the Company
or otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby.
Section 3.21 Brokers. No broker, investment banker or
other person, other than Xxxxxxx, Xxxxx & Co., Lazard Freres & Co. LLC and
Gleacher NatWest Inc., the fees and expenses of which will be paid by the
Company (as reflected in agreements between such firms and the Company, copies
of which have been furnished to Parent), is entitled to any broker's, finder's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending
the Merger. Except as contemplated by Section 4.5 or as set forth in Section
4.1 of the Company Letter, during the period from the date of this Agreement to
the Effective Time, the Company shall, and shall cause each of its Subsidiaries
to, carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers, licensors,
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lessors and others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time.
Except as otherwise expressly permitted by this Agreement and as set forth in
Section 4.2 of the Company Letter, the Company shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of Parent:
(a) except as set forth in Section 4.5 ,(i) declare, set
aside or pay any dividends on, or make any other actual, constructive
or deemed distributions in respect of, any of its capital stock, or
otherwise make any payments to its stockholders in their capacity as
such (other than dividends and other distributions by direct or
indirect wholly owned Subsidiaries), (ii) other than in the case of
any direct or indirect wholly owned Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(b) except as set forth in Section 4.5, issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of its capital
stock, any other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants or options to
acquire any such shares, voting securities, equity equivalent or
convertible securities, other than the issuance of shares of Company
Common Stock (and associated Rights) upon the exercise of employee
stock options pursuant to the Company Stock Plans outstanding on the
date of this Agreement in accordance with their current terms;
(c) amend its articles or certificate of incorporation or
by-laws or other comparable organizational documents;
(d) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of or equity in, or by any other manner, any business or any
corporation, partnership, association or other business organization
or division thereof or (ii) any assets that are, individually or in
the aggregate material to the Company and its Subsidiaries taken as a
whole, other than transactions that are in the ordinary course of
business consistent with past practice and not material to the Company
and its Subsidiaries taken as a whole;
(e) except as set forth in Section 4.5, sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise
dispose of, or agree to sell, lease, license, mortgage or otherwise
encumber or subject to any
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Lien or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business consistent
with past practice and not material to the Company and its
Subsidiaries taken as a whole;
(f) except as set forth in Section 4.5, incur any
indebtedness for borrowed money, guarantee any such indebtedness,
issue or sell any debt securities or warrants or other rights to
acquire any debt securities, guarantee any debt securities or make any
loans, advances or capital contributions to, or other investments in,
any other person, or enter into any arrangement having the economic
effect of any of the foregoing, other than (i) indebtedness incurred
in the ordinary course of business consistent with past practice and
(ii) indebtedness, loans, advances, capital contributions and
investments between the Company and any of its wholly owned
Subsidiaries or between any of such wholly owned Subsidiaries;
(g) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or any Subsidiary;
(h) except as required under any collective bargaining
agreement or under Section 5.8, enter into or adopt any new, or amend
any existing, severance plan, agreement or arrangement or enter into
any new or amend any existing Company Plan or employment or consulting
agreement, other than as required by law or as set forth in Section
4.1(h) of the Company Letter, except that the Company or its
Subsidiaries may enter into (a) employment agreements if such
agreements (i) are no longer than one year in duration and (ii)
provide for an annual base salary of less than $150,000, and (b)
consulting agreements in the ordinary course of business that are
terminable on no more than 90 days' notice without penalty, and the
Company or its Subsidiaries may amend any Company Plan or other plan,
program, policy or arrangement if such amendment will result in not
more than a de minimus additional cost to the Company or its
Subsidiaries;
(i) except (1) as permitted under Section 4.1(h), (2) as
permitted under Section 5.15 or (3) to the extent required by written
employment agreements existing on the date of this Agreement, increase
the compensation payable or to become payable to its officers or
employees, except for (i) increases in the ordinary course of business
consistent with past practice in salaries or wages of employees of the
Company or any of its Subsidiaries and (ii) except to the extent
required under the terms of any applicable incentive plan, the payment
of annual incentive bonuses for 1997 which are not in the aggregate in
excess of two times the target
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bonus for 1997 established for 1997 prior to the date of this
Agreement;
(j) grant or award any stock options, restricted stock,
performance shares, stock appreciation rights or other equity- based
incentive awards, other than an award which (i) is made to a
management employee or non-employee director who would be eligible to
receive such award under the terms of the Company Stock Plans as
applied consistently with past practice and (ii) is made on terms
substantially the same as the terms of awards previously awarded under
such plan;
(k) take any action, other than reasonable and usual actions
in the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures (other than actions
required to be taken by generally accepted accounting principles);
(l) except as disclosed in the Company's capital expenditure
plan which has been disclosed to Parent or for maintenance capital
expenditures in the ordinary course of business consistent with past
practice, make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $5,000,000 or, in
the aggregate, are in excess of $50,000,000;
(m) except as permitted by Section 4.5, pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto)
of the Company included in the Company SEC Documents or incurred in
the ordinary course of business consistent with past practice;
(n) settle or compromise any material federal, state, local
or foreign tax liability;
(o) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Section 4.2 Conduct of Business by the Parent Companies
Pending the Merger. Except as contemplated by Section 4.5 or as set forth in
Section 4.2 of the Parent Letter, during the period from the date of this
Agreement to the Effective Time, the Parent Companies shall, and shall cause
each of their respective Subsidiaries to, carry on their respective businesses
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in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent therewith, use all
reasonable efforts to keep available the services of their respective current
officers and employees and preserve their respective relationships with
customers, suppliers, licensors, lessors and others having business dealings
with them to the end that their goodwill and ongoing business shall be
unimpaired at the Effective Time. Except as otherwise expressly permitted by
this Agreement and as set forth in Section 4.2 of the Parent Letter, the Parent
Companies shall not, and shall not permit any of their respective Subsidiaries
to, without the prior written consent of the Company:
(a) except as contemplated by Section 4.5, (i) declare, set
aside or pay any dividends on, or make any other actual, constructive
or deemed distributions in respect of, any of its capital stock, or
otherwise make any payments to its stockholders or shareholders, as
applicable, in their capacity as such (other than (A) dividends in the
aggregate amount not to exceed the greater of (a) the current rate of
the Parent Companies dividends and (b) the Trust's "real estate
investment taxable income" (as such term is defined for purposes of
the Code) without regard to any net capital gains or the deduction for
dividends paid (provided that this Section 4.2(a) shall not be deemed
to restrict any increases in the dividend rate of the Parent
Companies in the ordinary course consistent with past practice) and
(B) dividends and other distributions by direct, indirect or wholly
owned Subsidiaries) or (ii) other than in the case of any Subsidiary,
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for Paired Shares;
(b) in the case of the Parent Companies only, except as set
forth in Section 4.5, amend its articles or certificate of
incorporation or declaration of trust, other than in connection with
the respective Charter Amendments;
(c) take or omit any action that would reasonably be
expected to cause the Trust to cease to qualify as a "real estate
investment trust" for federal income tax purposes or that would
reasonably be expected to cause the Trust to become subject to Section
269B(a)(3) of the Code; or
(d) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Notwithstanding anything contained herein to the contrary and
except as permitted by Section 4.5(c), neither Trust nor Parent shall declare,
set aside or pay any cash dividend or
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make any cash distribution or otherwise make any payments in cash to its
stockholders or shareholders, as applicable, having a record date for the
determination of the stockholders or shareholders entitled to such dividend,
distribution or other payment occurring during the period from and including the
first day of the Averaging Period through and including the fourth trading day
after the last day of the Averaging Period.
Section 4.3 No Solicitation. (a) The Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall it authorize or
permit any officer, director or employee of or any investment banker, attorney,
accountant, agent or other advisor or representative of the Company or any of
its Subsidiaries to, (i) solicit, initiate, or encourage the submission of, any
takeover proposal, (ii) except to the extent permitted by paragraph (b), enter
into any agreement with respect to any takeover proposal or (iii) participate
in any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any takeover proposal; provided, however, that prior to
the Company Stockholders' Meeting (as defined in Section 5.1), to the extent
required by the fiduciary obligations of the Board of Directors of the Company,
as determined in good faith by a majority of the disinterested members thereof
based on the advice of outside counsel, the Company may, in response to
unsolicited requests therefor, participate in discussions or negotiations with,
or furnish information pursuant to an appropriate confidentiality agreement to,
any person. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
officer, director or employee of or any investment banker, attorney,
accountant, agent or other advisor or representative of the Company or any of
its Subsidiaries, whether or not such person is purporting to act on behalf of
the Company or otherwise, shall be deemed to be a breach of this paragraph by
the Company. For all purposes of this Agreement, "takeover proposal" means any
proposal, other than a proposal by Parent or Trust for a merger, consolidation,
share exchange, business combination or other similar transaction involving the
Company or any of its Significant Subsidiaries or any proposal or offer
(including, without limitation, any proposal or offer to stockholders of the
Company), other than a proposal or offer by Parent or Trust to acquire in any
manner, directly or indirectly, an equity interest in, any voting securities
of, or a substantial portion of the assets of, the Company or any of its
Significant Subsidiaries. The Company immediately shall cease and cause to be
terminated all existing discussions or negotiations with any persons conducted
heretofore with respect to, or that could reasonably be expected to lead to,
any takeover proposal. As used herein, a "Significant Subsidiary" means any
Subsidiary that would constitute a
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"significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X of
the SEC.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent, Trust or Sub, the approval or
recommendation by the Board of Directors of the Company or any such committee
of this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any takeover proposal. Notwithstanding the foregoing,
the Board of Directors of the Company, to the extent required by the fiduciary
obligations thereof, as determined in good faith by a majority of the
disinterested members thereof based on the advice of outside counsel, may
approve or recommend (and, in connection therewith, withdraw or modify its
approval or recommendation of this Agreement or the Merger) a superior
proposal. For all purposes of this Agreement, "superior proposal" means a bona
fide written proposal made by a third party to acquire the Company pursuant to
a tender or exchange offer, a merger, a share exchange, a sale of all or
substantially all its assets or otherwise on terms which a majority of the
disinterested members of the Board of Directors of the Company determines in
their good faith judgment (based on the opinion, with only customary
qualifications, of independent financial advisors that the value of the
consideration provided for in such proposal exceeds the value of the
consideration provided for in the Merger) to be more favorable to the Company
and its stockholders than the Merger and for which financing, to the extent
required, is then fully committed or which, in the good faith judgment of a
majority of such disinterested members (based on the advice of independent
financial advisors), is reasonably capable of being financed by such third
party. If, to the extent permitted by this Section 4.2(b), the Board of
Directors of the Company approves or recommends a superior proposal, the
Company may take appropriate action to render the Rights inapplicable to such
superior proposal.
(c) The Company shall immediately advise Parent orally
and in writing of any takeover proposal or any inquiry with respect to or which
could reasonably be expected to lead to any takeover proposal, the material
terms and conditions of such takeover proposal or inquiry and the identity of
the person making any such takeover proposal or inquiry. The Company will keep
Parent fully informed of the status and details of any such takeover proposal
or inquiry. The Parent Companies shall waive any applicable confidentiality
provisions to the extent necessary to allow the Company solely to explain the
terms of this transaction to persons making takeover proposals.
Section 4.4 Third Party Standstill Agreements. Except to
the extent reasonably required in connection with the Company's obligations
under Section 4.5(a) and permitted pursuant to that letter agreement dated as
of November 6, 1997, among the
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Company, the Parent Companies and Sub, during the period from the date of this
Agreement through the Effective Time, the Company shall not terminate, amend,
modify or waive any provision of any confidentiality or standstill or similar
agreement to which the Company or any of its Subsidiaries is a party (other
than any involving Parent or Trust) unless a majority of the disinterested
members of the Board of Directors of the Company determines in their good faith
judgment based on the advice of outside counsel that failure to take such
action would violate the fiduciary obligations of such Board under applicable
law. Subject to the foregoing, during such period, the Company agrees to
enforce, to the fullest extent permitted under applicable law, the provisions
of any such agreements, including, but not limited to, obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States or any state thereof
having jurisdiction.
Section 4.5 Pre-Merger Transactions.
(a) The Company shall use reasonable efforts to enter
into agreements to sell assets of the Company as agreed from time to time
between the Company and Parent on terms acceptable to the Company and shall
permit the Parent Companies and their financial and legal advisors to
participate in such process; provided, however, that such agreements may
provide at the Company's election that any such sale or disposition shall not
be consummated until after the Effective Time and may provide at the Company's
election that such agreements are terminable by the Company if this Agreement
is terminated for any reason; provided further, however, that neither the
Company nor any of its Subsidiaries shall enter into a definitive agreement
with respect to any such sale without the prior approval of both Parent
Companies and the Board of Directors of the Company.
(b) The Company shall not implement the Comprehensive Plan
(as such term is defined in the Definitive Proxy Statement on Schedule 14A
filed with the SEC on October 9, 1997 (the "Proxy Statement")), including,
without limitation, consummating the Tender Offers (as such term is defined in
the Proxy Statement); provided, however, that the Company shall be permitted to
pay the Termination Fee and Purchaser's Expenses (each as defined in the CDRV
Investment Agreement) and any other payments pursuant to the CDRV Investment
Agreement.
(c) Prior to the Effective Time, Trust may declare a
dividend not to exceed $1.5 billion, payable to its shareholders of record as
of such time and payable in property other than cash which property may
subsequent to such payment (but in any event not later than one day after the
Effective Time) be acquired by Parent in exchange for shares of Parent's
capital stock, and Parent may acquire all or any portion of such property in
such manner. In connection with the foregoing, the Pairing Agreement
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dated as of June 28, 1980 between Parent and Trust may be amended to permit and
facilitate such transactions. In the event that Parent fails to exercise its
right, in whole or in part, to acquire such property prior to the Effective
Time or within one day thereafter, the Exchange Ratio shall be equitably
adjusted. The Parent Companies agree that in effecting transactions
contemplated by this Section 4.5(c), the stockholders of the Company shall be
treated on a fair and equitable basis (including in respect of the
consideration payable in the Merger).
(d) The Company acknowledges and agrees that, prior to
the Effective Time, the Parent Companies and their Subsidiaries are obligated
under the Westin Transaction Agreement to use all reasonable efforts to
consummate the transactions contemplated thereby, including debt and equity
financings and certain restructurings and share issuances related thereto, the
payment of dividends on such share issuances, increases in stock option and
similar employee benefit plans and the increases in authorized capital of the
Parent Companies, all of which shall be deemed to be consistent with the Parent
Companies' obligations under Section 4.2. The Company and the Parent Companies
further acknowledge and agree that, prior to the Effective Time, the Parent
Companies shall have paid a fee to certain investment banks in connection with
the transactions contemplated by the Westin Transaction Agreement, and such fee
shall have been paid in the type and amount of consideration previously
discussed by and among the parties to this Agreement.
Section 4.6 Post-Merger Transactions. Promptly after the
consummation of the Merger, the Trust shall dispose of any shares of common
stock of the Surviving Corporation received by the Trust in connection with the
Merger.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholders Meetings. The Company, Parent
and Trust each shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold, a meeting of its
stockholders or shareholders (respectively, the "Company Stockholder Meeting",
the "Parent Stockholder Meeting", the "Trust Shareholder Meeting" and,
collectively, the "Stockholder Meetings") for the purpose of considering the
approval of this Agreement (in the case of the Company) and the respective
Charter Amendments and the Share Issuances (in the case of Parent and Trust).
The Company, Parent and Trust will, through their respective Boards of
Directors or Trustees, as the case may be, recommend to their respective
stockholders or shareholders, as applicable, approval of such matters and shall
not withdraw such recommendation except to the
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extent that the Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement of the Merger as
permitted by Section 4.3(b). Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
Section 5.1 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any takeover proposal. The
Company, Parent and Trust shall coordinate and cooperate with respect to the
timing of such meetings and shall use all reasonable efforts to hold such
meetings on the same day. At the Parent Stockholder Meeting and the Trust
Shareholder Meeting, the Parent Companies shall cause to be submitted to their
respective shareholders or stockholders, as applicable, a proposal to amend
Parent's Articles of Incorporation and Trust's Declaration of Trust to include
a provision substantially similar to ARTICLE NINTH of Restated Articles of
Incorporation, as amended, of the Company.
Section 5.2 Filings; Other Actions. (a) The Company,
Parent and Trust shall promptly prepare and file with the SEC the Joint Proxy
Statement and the Parent Companies shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included as
a prospectus. Each of Parent, Trust and the Company shall use all reasonable
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing. As promptly as
practicable after the Registration Statement shall have become effective, each
of Parent, Trust and the Company shall mail the Joint Proxy Statement to its
respective stockholders or shareholders. Parent and Trust shall also take any
action (other than qualifying to do business in any jurisdiction in which they
are currently not so qualified) required to be taken under any applicable state
securities laws in connection with the issuance of Paired Shares in the Merger
and upon the exercise of the Substitute Options (as defined in Section 5.8),
and the Company shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in connection
with any such action, including information relating to the number of Paired
Shares required to be registered.
(b) Each party hereto agrees, subject to applicable laws
relating to the exchange of information, promptly to furnish the other parties
hereto with copies of written communications (and memoranda setting forth the
substance of all oral communications) received by such party, or any of its
subsidiaries, affiliates or associates (as such terms are defined in Rule 12b-2
under the Exchange Act as in effect on the date hereof), from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
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(c) Each of the Company, Parent and Trust will promptly, and
in any event within fifteen business days after execution and delivery of this
Agreement, make all filings or submissions as are required under the HSR Act.
Each of the Company, Parent and Trust will promptly furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with its preparation of any filing or submissions necessary under
the HSR Act. Without limiting the generality of the foregoing, each of the
Company, Parent and Trust will promptly notify the other of the receipt and
content of any inquiries or requests for additional information made by any
Governmental Entity in connection therewith and will promptly (i) comply with
any such inquiry or request and (ii) provide the other with a description of
the information provided to any Governmental Entity with respect to any such
inquiry or request. In addition, each of the Company, Parent and Trust will
keep the other apprised of the status of any such inquiry or request.
Section 5.3 Comfort Letters. (a) The Company shall use
all reasonable efforts to cause to be delivered to Parent "comfort" letters of
Xxxxxx Xxxxxxxx LLP, the Company's independent public accountants, dated the
date on which the Registration Statement shall become effective and as of the
Effective Time, and addressed to Parent, Trust and the Company, in form and
substance reasonably satisfactory to Parent and reasonably customary in scope
and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
(b) Parent and Trust shall use all reasonable efforts to
cause to be delivered to the Company "comfort" letters of Coopers & Xxxxxxx
L.L.P., Parent's and Trust's independent public accountants, dated the date on
which the Registration Statement shall become effective and as of the Effective
Time, and addressed to the Company, Parent and Trust, in form and substance
reasonably satisfactory to the Company and reasonably customary in scope and
substance for letters delivered by independent public accountants in connection
with transactions such as those contemplated by this Agreement.
Section 5.4 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to the Parent Companies
or to the Company or any of their Subsidiaries, each of the Parent Companies
and the Company shall, and shall cause each of its Subsidiaries to, afford to
the accountants, counsel, financial advisors and other representatives of the
other party hereto reasonable access to, and permit them to make such
inspections as they may reasonably require of, during normal business hours
during the period from the date of this Agreement through the Effective Time,
all their respective properties, books, Tax Returns, contracts, commitments and
records (including, without limitation, the work papers of independent
accountants, if available and subject to the consent
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of such independent accountants) and, during such period, each of the Parent
Companies and the Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as the other may reasonably
request. Notwithstanding the first sentence of this Section 5.4, neither the
Company nor any of its accountants, counsel, financial advisors or other
representatives shall have access to any information relating to the matters
described in Section 5.4 of the Parent Letter. Notwithstanding the first
sentence of this Section 5.4, neither the Parent Companies nor any of their
respective accountants, counsel, financial advisors or other representatives
shall have access to any information relating to the matters described in
Section 5.4 of the Company Letter. No investigation pursuant to this Section
5.4 shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. All
information obtained by Parent or the Company pursuant to this Section 5.4
shall be kept confidential in accordance with the Confidentiality Agreement
dated October 6, 1997 among the Parent Companies and the Company.
Section 5.5 Compliance with the Securities Act. Within
30 days following the date of this Agreement, the Company shall cause to be
prepared and delivered to Parent a list (reasonably satisfactory to counsel for
Parent) identifying all persons who, at the time of the Company Stockholder
Meeting, in the Company's reasonable judgment may be deemed to be "affiliates"
of the Company as that term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "Rule 145 Affiliates"). The Company shall use all
reasonable efforts to cause each person who is identified as a Rule 145
Affiliate in such list to deliver to Parent on or prior to the Effective Time a
written agreement in substantially the form of Exhibit 5.5 hereto, executed by
such person.
Section 5.6 Stock Exchange Listings. Parent shall use
all reasonable efforts to list on the NYSE, upon official notice of issuance,
the Paired Shares to be issued in connection with the Merger.
Section 5.7 Fees and Expenses. (a) Except as provided
in Section 5.7(b) and (c), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses, except that expenses incurred in connection with printing and mailing
the Joint Proxy Statement and the Registration Statement shall be borne equally
by Parent and the Company.
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(b) Provided that none of Parent, Sub or Trust is in
material breach of their representations, warranties and agreements under this
Agreement, (i) if this Agreement is terminated by the Board of Directors of the
Company pursuant to Section 7.1(g), (ii) if this Agreement is terminated by the
Parent Companies pursuant to Section 7.1(b), (iii) if this Agreement is
terminated by the Parent Companies pursuant to Section 7.1(f) or (iv) if (A)
after the date of this Agreement, (x) any person or "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) shall have made or indicated an
intention to make or amend or modify (whether or not subject to conditions) a
takeover proposal or (y) it shall have been publicly disclosed or Parent shall
have otherwise learned that any person or "group" has beneficial ownership
(determined for the purpose of this paragraph as set forth in Rule 13d-3
promulgated under the Exchange Act) of more than 15% of the outstanding shares
of Company Common Stock or (z) Parent has the right to terminate this Agreement
under Section 7.1(f) because the Board of Directors of the Company shall or
shall resolve to take an action referred to therein and (B) the stockholders of
the Company do not approve the Merger at the Company Stockholders Meeting
called for such purpose pursuant to Section 5.1 or this Agreement is terminated
pursuant to Section 7.1(d) prior to the Company Stockholders Meeting being
held, then the Company shall pay to Parent $225,000,000 (the "Termination Fee")
in same-day funds, plus (notwithstanding paragraph (a) of this Section 5.7) all
the Expenses (as defined below), on the date of such termination, in the case
of clause (i), (ii) or (iii), or on the date of the Company Stockholders
Meeting or such termination, as the case may be, in the case of clause (iv);
provided, however, that in the event the date of such termination, in the case
of clause (i), (ii), (iii) or (iv), is prior to November 21, 1997, then the
amount of the Termination Fee shall be deemed to be $195,000,000.
(c) If this Agreement is terminated for any reason (other
than by the Company pursuant to Section 7.1(b)), then the Company shall
(notwithstanding paragraph (a) of this Section 5.7), on the date of such
termination, pay to Parent the cash amount necessary to permit Parent fully to
reimburse itself, Sub and Trust and their affiliates for all out-of-pocket fees
and expenses incurred at any time prior to such termination by any of them or
on their behalf in connection with the Merger, the preparation of this
Agreement and the transactions contemplated by this Agreement (including any
currency or interest rate hedging activities in connection with the
transactions contemplated hereby), including (x) all fees and expenses of
counsel, investment banking firms, financial advisors (regardless of whether
such financial advisors are affiliates of the Parent Companies), accountants,
experts and consultants to Parent, Sub and Trust or any of their affiliates and
(y) all fees and expenses payable to banks, investment banking firms and other
financial institutions and their respective counsel, accountants and agents in
connection with arranging or providing financing )
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(fees and expenses under clause (y) collectively, "Financing Fees", and the
fees and expenses contemplated by this paragraph (c), collectively, but subject
to the next succeeding proviso, the "Expenses"); provided, however, that the
aggregate amount of Expenses, other than Financing Fees and all fees and
expenses of counsel in connection with any litigation, shall not exceed
$25,000,000.
(d) The Company acknowledges that the agreements
contained in paragraphs (b) and (c) of this Section 5.7 are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, Parent, Sub and Trust would not enter into this Agreement;
accordingly, if the Company fails to pay promptly any amount due pursuant to
this Section 5.7 and, in order to obtain such payment, Parent, Sub or Trust
commences a suit that results in a judgment against the Company for any such
amount, the Company shall pay to Parent, Sub or Trust its cost and expenses
(including attorneys' fees) in connection with such suit, together with
interest on the amount of the fee at the prime or base rate of Citibank, N.A.
from the date such payment was due under this Agreement.
Section 5.8 Company Stock Options. (a) As of the
Effective Time, each Company Stock Option (and related stock appreciation right
("SAR")) that is outstanding immediately prior to the Effective Time pursuant
to the Company's stock option plans (other than any "stock purchase plan"
within the meaning of Section 423 of the Code) in effect on the date hereof
(the "Stock Plans") shall be assumed by Parent and become and represent a fully
exercisable option (and related SAR) to purchase the number of Paired Shares (a
"Substitute Option") (decreased to the nearest full share) determined by
multiplying (i) the number of shares of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time by (ii) the
Exchange Ratio, at an exercise price per Paired Share (rounded up to the
nearest tenth of a cent) equal to the difference between (A) the exercise price
per share of Company Common Stock immediately prior to the Effective Time
divided by the Exchange Ratio and (B) the amount, if any, payable per share of
Company Common Stock pursuant to Section 1.5(f) divided by the Exchange Ratio.
Parent shall pay cash to holders of Company Stock Options in lieu of issuing
fractional Paired Shares upon the exercise of Substitute Options. As of the
Effective Time, each Substitute Option shall be subject to the same terms and
conditions as were applicable immediately prior to the Effective Time under the
related Company Stock Option and Stock Plan under which it was granted,
including those providing for the accelerated exercisability and other special
rights arising upon an "Acceleration Event" in accordance with the terms of
such Stock Plan. The Company agrees to use all reasonable efforts to obtain
any necessary consents of holders of Company Stock Options and take such other
actions as may be necessary to effect this Section 5.8. The accelerated lapse
of restrictions and other
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special rights with respect to shares of restricted Company Common Stock issued
under the Stock Plans shall also be preserved following the Effective Time in
accordance with the terms of the Stock Plans.
(b) In respect of each Company Stock Option (and related SAR)
as converted into a Substitute Option pursuant to Section 5.8(a) and assumed by
Parent, and the shares of Parent Common Stock underlying such option, Parent
shall file and keep current a registration statement on Form S-8 (or a
post-effective amendment to a Registration Statement on Form S-8) or other
appropriate form for as long as such options remain outstanding.
(c) The provisions of this Section 5.8 are intended to be for
the benefit of, and shall be enforceable by, each person who is or has been an
employee of the Company or any of its subsidiaries and is a holder of Employee
Stock Options or SARS, and such employee's heirs and personal representatives
and shall be binding on all successors and assigns of the Parent Companies.
Section 5.9 Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, unless, to the extent
permitted by Section 4.3, the Board of Directors of the Company approves or
recommends a superior proposal, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including, but not limited to: (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and
the taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the HSR Act, state takeover statutes and
Gaming Laws), (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity with respect to the Merger or this Agreement vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by this Agreement.
(b) The Company shall use all reasonable efforts not to take
any action that, in any such case, might reasonably be expected to (i) cause
any of its representations or warranties
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contained in this Agreement that is qualified as to materiality to be untrue,
(ii) cause any of its representations or warranties contained in this Agreement
that is not so qualified to be untrue in any material respect, (iii) result in
a breach of any covenant made by it in this Agreement, (iv) result directly or
indirectly in any of the conditions to the Merger set forth in Article VI not
being satisfied or (v) impair the ability of the parties to consummate the
Merger at the earliest practicable time (regardless of whether such action
would otherwise be permitted or not prohibited hereunder).
Section 5.10 Public Announcements. The Parent Companies
and the Company will not issue any press release with respect to the
transactions contemplated by this Agreement or otherwise issue any written
public statements with respect to such transactions without prior consultation
with each other party, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 5.11 Transfer and Gains Tax. The Parent Companies
will pay any Federal, state, local, foreign or provincial tax which is
attributable to the transfer of the beneficial ownership of the Company's or
its Subsidiaries' real property, if any (collectively, the "Gains Taxes"), any
penalties or interest with respect to the Gains Taxes, payable in connection
with the consummation of the Merger, (except as otherwise provided in Section
1.8) any Federal, state, local, foreign or provincial tax which is attributable
to the transfer of Company Common Stock or Paired Shares pursuant to the terms
of this Agreement (collectively, "Stock Transfer Taxes") and any penalties or
interest with respect to any such Stock Transfer Taxes. The Company and the
Parent Companies agree to cooperate with the other in the filing of any returns
with respect to the Gains Taxes, including supplying in a timely manner a
complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the
consideration allocable to the real property of the Company and its
Subsidiaries shall be agreed to between Parent and the Company. The
stockholders of the Company shall be deemed to have agreed to be bound by the
allocation established pursuant to this Section 5.11 in the preparation of any
return with respect to the Gains Taxes.
Section 5.12 State Takeover Laws. If any "fair price",
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the transactions contemplated
hereby, Parent, Trust and the Company and their respective Boards of Directors
or Trustees, as the case may be, shall use all reasonable efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as
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promptly as practicable on the terms contemplated hereby and shall otherwise
act to minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
Section 5.13 Indemnification; Directors and Officers
Insurance. (a) The Parent Companies agree that all rights to indemnification
and exculpation from liabilities for acts or omissions occurring prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company and its subsidiaries as provided in their respective
articles or certificates of incorporation or by-laws (or comparable
organizational documents) and any indemnification agreements of the Company
shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of not less than six years from the
Effective Time and the obligations of the Company in connection therewith shall
be assumed by the Parent Companies. Parent shall provide, or shall cause the
Surviving Corporation to provide, the Company's current directors and officers
an insurance and indemnification policy (including any fiduciary liability
policy) that provides coverage with respect to any claims made during the
six-year period following the Effective Time for events occurring prior to the
Effective Time (the "D&O Insurance") that is substantially similar to the
Company's existing policies or, if substantially equivalent insurance coverage
is unavailable, the best available coverage; provided, however, that the
Surviving Corporation shall not be required to pay an annual premium for the
D&O Insurance in excess of 150 percent of the last annual premium paid prior to
the date hereof (which premium the Company represents and warrants to be
approximately $1.4 million in the aggregate), but if such annual premium would
but for this proviso exceed such amount, then Parent shall purchase as much
coverage as possible for such amount.
(b) The provisions of this Section 5.13 are intended to be
for the benefit of, and shall be enforceable by, each person who is or has been
a director or officer of the Company or a subsidiary of the Company, and such
director's or officer's heirs and personal representatives and shall be binding
on all successors and assigns of the Parent Companies.
Section 5.14 Notification of Certain Matters. The Parent
Companies shall use all reasonable efforts to give prompt notice to the
Company, and the Company shall use all reasonable efforts to give prompt notice
to the Parent Companies, of: (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which it is aware and which would
be reasonably likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in all material respects, (ii) any failure of any of the
Parent Companies or the Company, as the case may be, to comply in a
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timely manner with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder or (iii) any event, change or
development that, individually or in the aggregate, has had, or would
reasonably be expected to have, a Material Adverse Effect on the Parent
Companies or the Company, as the case may be; provided, however, that the
delivery of any notice pursuant to this Section 5.14 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.15 Employees. (a) Comparable Benefits. Except
as provided in Section 5.8, for not less than one year following the Effective
Time, the Parent Companies shall maintain, or shall cause the Company and its
Subsidiaries to maintain, compensation and employee benefits plans and
arrangements for employees of the Company and its Subsidiaries ("Affected
Employees") that are, in the aggregate, no less favorable than as provided
under the compensation arrangements and Company Plans as in effect on the date
hereof. Without limiting the generality of the foregoing, for not less than
one year following the Effective Time (or such longer period as may be required
under the applicable Company Plan), the Parent Companies shall provide, or
cause the Company and its Subsidiaries to provide, severance pay and benefits
to each Affected Employee as of the Effective Time that are no less favorable
than under the Company Plans and current practices of the Company as in effect
as of the date of this Agreement. Notwithstanding the foregoing, the Parent
Companies shall have the right (i) following the Effective Time to transfer to
one or more employee benefit plans maintained by the Parent Companies any
employee of the Company or any Subsidiary who becomes an employee of the Parent
Companies or any of their respective Subsidiaries and (ii) in the good faith
exercise of it managerial discretion, to terminate the employment of any
employee. Nothing in this Agreement shall be construed as granting to any
employee any rights of continuing employment.
(b) Honoring Company Plans and Accrued Vacation. Parent
Companies shall, or shall cause the Company to, honor all Company Plans and
other contractual commitments in effect immediately prior to the Effective Time
between the Company or its Subsidiaries and Affected Employees or former
employees of the Company or its Subsidiaries. Without limiting the generality
or the foregoing, Parent Companies shall honor all vacation, holiday, sickness
and personal days accrued by Affected Employees and, to the extent applicable,
former employees of the Company and its Subsidiaries ("Former Employees") as of
the Effective Time.
(c) Participation in Benefit Plans. Employees and, to
the extent applicable, Former Employees shall be given credit for all service
with the Company and its Subsidiaries (or service credited by the Company or
such Subsidiaries) under all employee
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benefit plans and arrangements currently maintained by the Parent Companies or
any of their respective Subsidiaries in which they are or become participants
for purposes of eligibility, vesting, level of participant contributions and
benefit accruals (but subject to an offset, if necessary, to avoid duplication
of benefits) to the same extent as if rendered to the Parent Companies or any
of their respective Subsidiaries. The Parent Companies shall cause to be
waived any pre-existing condition limitation under their welfare plans that
might otherwise apply to an Affected Employee or, to the extent applicable, a
Former Employee. The Parent Companies agree to recognize (or cause to be
recognized) the dollar amount of all expenses incurred by Affected Employees
or, to the extent applicable, Former Employees, during the calendar year in
which the Effective Time occurs for purposes of satisfying the calendar year
deductions and co-payment limitations for such year under the relevant benefit
plans of the Parent Companies and their respective Subsidiaries.
Section 5.16 Rights Agreement. (a) The Board of Directors
of the Company shall take all further action (in addition to that referred to
in Section 3.16) requested in writing by Parent (including redeeming the Rights
immediately prior to the Effective Time of the Merger or amending the Rights
Agreement) in order to render the Rights inapplicable to the Merger and the
other transactions contemplated by this Agreement. Except as requested in
writing by Parent or as permitted by Section 5.16(b), prior to the Company
Stockholders Meeting, the Board of Directors of the Company shall not (i) amend
the Rights Agreement or (ii) take any action with respect to, or, except as
specifically permitted by Section 5.16(b), make any determination under, the
Rights Agreement (including a redemption of the Rights).
(b) If, to the extent permitted by Section 4.3(b), the
Board of Directors of the Company approves or recommends a superior proposal,
the Company may take appropriate action under the Rights Agreement solely in
order to render the Rights inapplicable to such superior proposal; provided,
however, that the foregoing shall not permit the Company to make any
determination under, or take any action with respect to, the Rights Agreement
in order to render the Rights applicable to the Merger or any of the other
transaction contemplated by this Agreement or to redeem the Rights.
Section 5.17. Regulatory Matters. In connection with
subsection (i) of the first sentence of Section 5.9(a) and without limiting the
generality of Section 5.9, the Parent Companies shall, and shall cause their
respective subsidiaries to (and shall use all reasonable efforts to cause their
respective affiliates other than subsidiaries to), if it is necessary to obtain
any regulatory approval for this Agreement or the transactions contemplated
hereby, disassociate themselves from
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any person or persons deemed, or reasonably likely to be deemed, unacceptable
by a Governmental Entity with authority to administer Gaming Laws and, in the
case of any such person who is a nominee to serve as a director or trustee of a
Parent Company or any subsidiary of a Parent Company, the Parent Companies
shall, and shall cause the relevant subsidiary or subsidiaries to, replace any
such director nominee with a suitable substitute nominee. In connection with
subsection (i) of the first sentence of Section 5.9(a), the Parent Companies
agree that they shall use all reasonable efforts to cause the trust
arrangements described in either clause (x) or (y) of Section 6.1(c)(iii) to be
in full force and effect and further agree that, if the requisite approvals are
obtained from the New Jersey Casino Control Commission, they will place shares
of Company Common Stock or shares of common stock of the Surviving Corporation,
as applicable, in trust as contemplated by such clauses.
Section 5.18. New Jersey Trust. In connection with the
application for qualification and licensing by the Parent Companies with the
New Jersey Casino Control Commission pursuant to the New Jersey Casino Control
Act and the rules and regulations promulgated thereunder, if requested by the
Parent Companies (for the purpose of permitting the Parent Companies to hold
directly (and not in trust) the shares of Company Common Stock to be acquired
pursuant to the Merger while the Parent Companies' application for
qualification and licensing is pending with the New Jersey Casino Control
Commission), the Company shall execute and deliver a trust agreement prepared
by the Parent Companies and reasonably acceptable to the Company and the New
Jersey Casino Control Commission and complying with the requirements of the New
Jersey Casino Control Act and the rules and regulations promulgated thereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of the parties to effect the
Merger shall be subject to the fulfillment (or waiver by such party) at or
prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
duly approved by the requisite vote of share holders of the Company in
accordance with applicable law and the Restated Articles of Incorporation, as
amended, and Amended and Restated By- laws of the Company, and the respective
Charter Amendments and Share Issuances shall have been duly approved by the
requisite vote of the stockholders or shareholders, as applicable, of each of
Parent and Trust in accordance with applicable rules of the NYSE, applicable
law and the Articles of
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Incorporation and By-laws of Parent and Declaration of Trust and Trust
Regulations of the Trust.
(b) Stock Exchange Listings. The Paired Shares issuable in
the Merger and pursuant to the Substitute Options shall have been authorized
for listing on the NYSE, subject to official notice of issuance.
(c) HSR and Other Approvals. (i) The waiting period (and
any extension thereof) applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
(ii) All consents, approvals, orders or authorizations of or
registrations, declarations or filings with any Governmental Entity, which the
failure to obtain, make or occur would reasonably be expected to have a
Material Adverse Effect on the Company (assuming the Merger had taken place),
shall have been obtained, shall have been made or shall have occurred, and
shall be in full force and effect.
(iii) All consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, (A) any Governmental Entity
with jurisdiction in respect of Gaming Laws (other than New Jersey), (B) the
Federal Communications Commission and (C) state educational authorities,
non-governmental educational accrediting commissions and the U.S. Department of
Education (in the case of this clause (C) required to be made or obtained prior
to consummation of the Merger), in each case, required or necessary in
connection with the Merger and this Agreement and the transactions contemplated
by this Agreement (including the changes in the composition of the Board of
Directors of the Company) shall have been obtained and shall be in full force
and effect, and in the case of the New Jersey Casino Control Act and the rules
and regulations promulgated thereunder, either, at the option of the Parent
Companies, (x) as contemplated by Section 5.17, all shares of the common stock
of Sub shall have been deposited in trust with a trustee qualified and
otherwise acceptable to the New Jersey Casino Control Commission and the
transactions and arrangements contemplated by Section 5.17 shall be in full
force and effect or (y) (1) the New Jersey Casino Control Commission shall have
approved a form of trust agreement in form and substance reasonably
satisfactory to the Parent Companies (including in respect of control by the
Parent Companies of the Company and its subsidiaries) in respect of a trust
arrangement for the shares of Company Common Stock to be acquired pursuant to
the Merger or shares of the common stock of the Surviving Corporation pending
final qualification of the Parent Companies to hold a casino license under the
New Jersey Casino Control Act and the rules and regulations thereunder, (2) a
trustee qualified and otherwise acceptable to the New Jersey Casino Control
Commission and the Parent Companies in respect of such trust arrangement for
the shares of Company Common Stock to be acquired pursuant to the Merger or
shares of the common stock
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of the Surviving Corporation shall have been appointed or designated and (3)
the directors of Sub shall have been qualified on a permanent or temporary
basis to serve as directors of a company (including the Company) that either
directly, or through its subsidiaries, holds a casino license under the New
Jersey Casino Control Act and the rules and regulations thereunder.
(d) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the Knowledge of the Parent Companies or the Company,
threatened by the SEC. All necessary state securities or blue sky
authorizations shall have been received.
(e) No Order. No court or other Governmental Entity having
jurisdiction over the Company, Parent or Trust, or any of their respective
Subsidiaries, shall (after the date of this Agreement) have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the Merger or any of the
transactions contemplated hereby illegal; provided, however, that each of the
parties shall have used all reasonable efforts to prevent and to appeal as
promptly as possible any such law, rule, regulation, executive order, decree,
injunction or other order
(f) Change in Tax Laws. There shall not have been any
Federal legislative or regulatory change that would cause the Trust to cease to
qualify as a "real estate investment trust" for federal income tax purposes or
that would cause the Trust to become subject to Section 269B(a)(3) of the Code.
Section 6.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger shall be
subject to the fulfillment (or waiver by the Company) at or prior to the
Effective Time of the following additional condition:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent, Sub and Trust shall have performed in all material
respects each of its agreements contained in this Agreement required to be
performed at or prior to the Effective Time, each of the representations and
warranties of Parent, Sub and Trust contained in this Agreement that is
qualified as to materiality shall be true and correct at and as of the
Effective Time as if made at and as of such time (other than representations
and warranties which address matters only as of a certain date, which shall be
true and correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all material
respects
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at and as of the Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a certain date,
which shall be true and correct in all material respects as of such certain
date), in each case except as contemplated or permitted by this Agreement, and
the Company shall have received certificates signed on behalf of each of
Parent, Sub and Trust by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(b) No Litigation. There shall not be pending or threatened
any suit, action or proceeding by any Governmental Entity or any other person,
or before any court or governmental authority, agency or tribunal, domestic or
foreign, in each case that has a significant likelihood of success challenging
the acquisition by any of the Parent Companies of any shares of Company Common
Stock, seeking to restrain or prohibit the consummation of the Merger or any of
the other transactions contemplated by this Agreement or seeking to obtain from
Parent, Trust or Sub any damages that are material in relation to the Company,
the Parent Companies and their Subsidiaries taken as a whole.
(c) Tax Opinion. On the Closing Date, the opinion of
Sidley & Austin, counsel to the Parent Companies, shall have been delivered to
the Company in form and substance reasonably satisfactory to the Company
stating that (i) the Trust is a "real estate investment trust" for federal
income tax purposes and the Trust is not subject to Section 269B(a)(3) of the
Code by reason of Section 136(c) of the Deficit Reduction Act of 1984 and (ii)
consummation of the transactions contemplated by this Agreement will not cause
the Trust to cease to qualify as a "real estate investment trust" for federal
income tax purposes and will not cause the Trust to become subject to Section
269B(a)(3) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon customary representations reasonably requested by such
counsel and made by the Parent Companies.
Section 6.3 Conditions to Obligations of Parent, Sub and
Trust to Effect the Merger. The obligations of Parent, Sub and Trust to effect
the Merger shall be subject to the fulfillment (or waiver by the Parent
Companies) at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material respects each of
its agreements contained in this Agreement required to be performed at or prior
to the Effective Time, each of the representations and warranties of the
Company contained in this Agreement that is qualified as to materiality shall
be true and correct at and as of the Effective Time as if made at and as of
such time (other than representations and warranties which address matters only
as of a certain date, which shall be true and correct as of such certain date)
and each of the
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representations and warranties that is not so qualified shall be true and
correct in all material respects at and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date, which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and the Parent Companies shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer and
its Chief Financial Officer to such effect.
(b) Consents Under Agreements. Except for the consents
listed in Section 6.3(b) of the Company Letter, the Company shall have obtained
the consent or approval of each person that is not a Governmental Entity whose
consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, hotel management agreement or other agreement or instrument,
except as to which the failure to obtain such consents and approvals,
individually or in the aggregate, would not be expected, in the reasonable
opinion of the Parent Companies, to have a Material Adverse Effect on the
Company or upon the consummation of the transactions contemplated in this
Agreement.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in Section 5.5 an
executed copy of an agreement substantially in the form of Exhibit 5.5 hereto.
(d) No Litigation. There shall not be pending or threatened
any suit, action or proceeding by any Governmental Entity or any other person,
or before any court or governmental authority, agency or tribunal, domestic or
foreign, in each case that has a significant likelihood of success (i)
challenging the acquisition by any of the Parent Companies of any shares of
Company Common Stock, seeking to restrain or prohibit the consummation of the
Merger or any of the other transactions contemplated by this Agreement or
seeking to obtain from the Company any damages that are material in relation to
the Company, the Parent Companies and their Subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent
or any of their respective Subsidiaries of any material portion of the combined
business or assets of the Company, Parent, Trust and their respective
Subsidiaries, or to compel the Company, Parent, Trust and their respective
subsidiaries to dispose of or hold separate any material portion of the
combined business or assets of the Company, Parent, the Trust and their
respective Subsidiaries, as a result of the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Parent, the Trust or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock,
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including, without limitation, the right to vote any Company Common Stock
purchased by it on all matters properly presented to the shareholders of the
Company, (iv) seeking to prohibit Parent, the Trust or any of their respective
Subsidiaries from effectively controlling in any material respect the business
or operations of the Company or its Subsidiaries or (v) which otherwise would
reasonably be expected to have a Material Adverse Effect on the Company.
(e) Rights Agreement. The Rights shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the terms of
the Rights Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval of any matters presented in connection with the Merger by the
stockholders or shareholders, as applicable, of the Company or of the Parent
Companies:
(a) by mutual written consent of the Parent Companies and
the Company;
(b) by either the Parent Companies or the Company if
there has been a material breach of the representations, warranties, covenants
and agreements on the part of the other set forth in this Agreement, which
breach has not been cured within ten business days following receipt by the
breaching party of notice of such breach from the nonbreaching party;
(c) by either the Parent Companies or the Company if any
permanent order, decree, ruling or other action of a court or other competent
authority restraining, enjoining or otherwise preventing the consummation of
the Merger shall have become final and non- appealable;
(d) by either the Parent Companies or the Company if the
Merger shall not have been consummated before December 31, 1998, unless the
failure to consummate the Merger is the result of a material breach of this
Agreement by the party seeking to terminate this Agreement; provided, however,
that the passage of such period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order, decree, ruling or other
action restraining, enjoining or otherwise preventing the consummation of
Merger;
(e) by either the Parent Companies or (if the Company has
paid to Parent an amount in cash equal to the sum of the
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Termination Fee plus all Expenses if required by Section 5.7 (b) and (c)) the
Board of Directors of the Company if any required approval of the Merger by the
stockholders of the Company shall not have been obtained by reason of the
failure to obtain the required vote upon a vote held at a duly held meeting of
such stockholders or at any adjournment thereof;
(f) by the Parent Companies if the Board of Directors of
the Company shall or shall resolve to (i) not recommend, or withdraw its
approval or recommendation of, the Merger, this Agreement or any of the
transactions contemplated hereby (other than transactions contemplated by
Section 4.5(a)), (ii) modify such approval or recommendation in a manner
adverse to Parent, Sub or Trust or (iii) approve or recommend a superior
proposal pursuant to Section 4.3(b);
(g) by the Board of Directors of the Company if (i) (x)
to the extent permitted by Section 4.3(b), the Board of Directors of the
Company approves or recommends a superior proposal or (y) nominees of Hilton
Hotels Corporation are elected as a majority of the members of the Board of
Directors of the Company at the Company's 1997 annual meeting of stockholders
and (ii) the Company has paid to Parent an amount in cash equal to the sum of
the Termination Fee plus all Expenses as provided by Section 5.7(b); or
(h) by either the Parent Companies or the Board of Directors
of the Company if the approval of the Charter Amendments and the Share
Issuances by the shareholders of Trust or the stockholders of Parent shall not
have been obtained by reason of the failure to obtain the required vote upon a
vote held at a duly held meeting of such shareholders or stockholders, as the
case may be, or at any adjournment thereof.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either the Parent Companies or the Company, as
provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability hereunder on the part of the Company, Parent, Trust, Sub
or their respective officers or directors (except for the last sentence of
Section 5.4 and the entirety of Sections 2.14, 3.21, 5.7 and 5.16, this Section
7.2 and Article VIII, which shall survive the termination); provided, however,
that nothing contained in this Section 7.2 shall relieve any party hereto from
any liability for any willful breach of a representation or warranty contained
in this Agreement or the breach of any covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by
the parties hereto, by or pursuant to action taken by their respective Boards
of Directors or Trustees, as the case may be, at any time before or after
approval of the matters presented in connection with the Merger by the
respective stockholders or
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shareholders of Parent, Trust and the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders or shareholders without such further approval. This Agreement may
not be amended except by an instrument in writing duly executed by each of the
parties hereto.
Section 7.4 Waiver. At any time prior to the Effective
Time, the parties hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing duly executed by such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and
Warranties. The representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate at the
Effective Time.
Section 8.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, one day after being delivered to a nationally recognized
overnight courier or when telecopied (with a confirmatory copy sent by such
overnight courier) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, Sub or Trust, to
Starwood Lodging Corporation
Starwood Lodging Trust
c/o Starwood Capital Group
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Chief Executive Officer
Facsimile No.: (000) 000-0000
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with copies to:
Xxxxxxx X. Xxxxxxx
Sidley & Austin
000 X. Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Xxxxx X. Xxxxxxx
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
(b) if to the Company, to
ITT Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Chairman and Chief
Executive
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Section 8.3 Interpretation. When a reference is made in
this Agreement to a Section or Article, such reference shall be to a Section or
Article of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "the date hereof" in this Agreement means the date of
the Original Merger Agreement and this Agreement shall be deemed to have been
entered into as of the date of the Original Merger Agreement.
Section 8.4 Counterparts. This Agreement may be executed
in counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
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Section 8.5 Entire Agreement; No Third-Party
Beneficiaries. This Agreement, except as provided in the last sentence of
Section 5.4 and the first sentence of Section 4.4, constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral (including the Original Merger Agreement), among the parties with
respect to the subject matter hereof. This Agreement, except for the
provisions of Section 5.8 and Section 5.13, is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. Except to the extent that the
laws of the State of Nevada are mandatorily applicable to the Merger, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 8.7 Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent, Trust or to any direct or indirect wholly owned Subsidiary
of Parent or Trust, but no such assignment shall relieve Sub of any of its
obligations under this Agreement. 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.
Section 8.8 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other terms, conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic and legal substance of the transactions contemplated hereby are
not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally contemplated to
the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties
hereto 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 wording or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically
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the terms and provisions hereof in any court of the United States or any state
having jurisdiction, such remedy being in addition to any other remedy to which
any party is entitled at law or in equity.
Section 8.10 Trust. The name "Starwood Trust" is the
designation of Trust and its Trustees (as Trustees but not personally) under a
Declaration of Trust dated August 25, 1969 as amended and restated, and all
persons dealing with Trust must look solely to Trust's property for the
enforcement of any claims against Trust, as the Trustees, officers, agents and
security holders of Trust assume no personal obligations of Trust, and their
respective properties shall not be subject to claims of any person relating to
such obligation.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
STARWOOD LODGING CORPORATION
By: /s/Xxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Authorized Signatory
CHESS ACQUISITION CORP.
By: /s/Xxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Authorized Signatory
STARWOOD LODGING TRUST
By: /s/Xxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman and Chief
Executive Officer
ITT CORPORATION
By: /s/Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman and Chief
Executive
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