EXHIBIT (G)(33)
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ITT CORPORATION
HILTON HOTELS CORPORATION
AND
HLT CORPORATION
DATED AS OF
NOVEMBER __, 1997
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TABLE OF CONTENTS
ARTICLE I. THE AMENDED OFFER............................................................................... 2
Section 1.1. The Amended Offer.......................................................................... 2
Section 1.2. ITT Actions................................................................................ 3
Section 1.3. ITT Stockholders' Meeting.................................................................. 4
Section 1.4. Hilton Stockholders' Meeting............................................................... 4
Section 1.5. Directors.................................................................................. 5
ARTICLE II. THE MERGER..................................................................................... 6
Section 2.1. The Merger................................................................................. 6
Section 2.2. Effective Time............................................................................. 6
Section 2.3. Certificate of Incorporation and By-Laws of Surviving Corporation.......................... 6
Section 2.4. Directors and Officers of Surviving Corporation............................................ 6
Section 2.5. Consummation of the Merger................................................................. 7
Section 2.6. Registration on Form S-4................................................................... 7
Section 2.7. Further Assurances......................................................................... 7
Section 2.8. Alternative Merger Structures.............................................................. 8
ARTICLE III. CONVERSION OF SHARES.......................................................................... 8
Section 3.1. Effect on ITT Shares and the Purchaser's Capital Stock..................................... 8
Section 3.2. ITT Option Plans........................................................................... 9
ARTICLE IV. EXCHANGE OF SHARES............................................................................. 11
Section 4.1. No Rights of Appraisal..................................................................... 11
Section 4.2. Exchange of Certificates................................................................... 11
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ITT........................................................... 14
Section 5.1. Organization............................................................................... 14
Section 5.2. Capitalization............................................................................. 14
Section 5.3. Authority.................................................................................. 15
Section 5.4. No Violations; Consents and Approvals...................................................... 15
Section 5.5. SEC Documents; Financial Statements........................................................ 16
Section 5.6. Absence of Certain Changes................................................................. 17
Section 5.7. Rights Agreement........................................................................... 18
Section 5.8. Information................................................................................ 18
Section 5.9. NGCL....................................................................................... 19
Section 5.10. Broker's Fees.............................................................................. 19
Section 5.11. Third-Party Agreements..................................................................... 19
Section 5.12. ITT Affiliate Agreements................................................................... 20
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ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF HILTON AND THE PURCHASER..................................... 20
Section 6.1. Organization............................................................................... 20
Section 6.2. Capitalization............................................................................. 21
Section 6.3. Authority.................................................................................. 21
Section 6.4. No Violations; Consents and Approvals...................................................... 22
Section 6.5. SEC Documents; Financial Statements........................................................ 23
Section 6.6. Absence of Certain Changes................................................................. 24
Section 6.7. Information................................................................................ 24
Section 6.8. Financing.................................................................................. 24
Section 6.9. Broker's Fees.............................................................................. 24
ARTICLE VII. ADDITIONAL COVENANTS.......................................................................... 25
Section 7.1 Conduct of Business of ITT................................................................. 25
Section 7.2. Access to Information...................................................................... 26
Section 7.3. Reasonable Best Efforts; Other Actions..................................................... 26
Section 7.4. Public Announcements....................................................................... 26
Section 7.5. Notification of Certain Matters............................................................ 26
Section 7.6. Indemnification............................................................................ 27
Section 7.7. Expenses................................................................................... 27
Section 7.8. ITT Rights Agreement....................................................................... 27
Section 7.9. Takeover Laws and Provisions............................................................... 27
Section 7.10. Registration and Listing................................................................... 27
Section 7.11. Restricted Transactions.................................................................... 28
ARTICLE VIII. CONDITIONS TO THE OBLIGATIONS OF HILTON, THE PURCHASER AND ITT............................... 28
Section 8.1. Purchase of Shares......................................................................... 28
Section 8.2. Stockholder Approval....................................................................... 28
Section 8.3. No Legal Impediments....................................................................... 28
ARTICLE IX. TERMINATION AND ABANDONMENT.................................................................... 28
Section 9.1. Termination................................................................................ 28
Section 9.2. Termination by Hilton...................................................................... 29
Section 9.3. Procedure for Termination.................................................................. 29
Section 9.4. Effect of Termination and Abandonment...................................................... 29
ARTICLE X. DEFINITIONS..................................................................................... 30
Section 10.1. Terms Defined in the Agreement............................................................. 30
ARTICLE XI. MISCELLANEOUS.................................................................................. 32
Section 11.1. Amendment and Modification................................................................. 32
Section 11.2. Waiver of Compliance; Consents............................................................. 32
Section 11.3. Survivability; Investigations.............................................................. 32
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Section 11.4. Notices.................................................................................... 32
Section 11.5. Assignment................................................................................. 33
Section 11.6. Governing Law.............................................................................. 34
Section 11.7. Counterparts............................................................................... 34
Section 11.8. Severability............................................................................... 34
Section 11.9. Interpretation............................................................................. 34
Section 11.10. Entire Agreement........................................................................... 34
ANNEX I - CONDITIONS OF THE AMENDED OFFER
EXHIBIT 3.1 - TERMS OF CONTINGENT VALUE PREFERRED STOCK
EXHIBIT 5.12 - FORM OF ITT AFFILIATE AGREEMENT
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November [__], 1997 (this
"Agreement"), by and among ITT CORPORATION, a Nevada corporation ("ITT"), HILTON
HOTELS CORPORATION, a Delaware corporation ("Hilton"), and HLT CORPORATION, a
Delaware corporation and a wholly owned subsidiary of Hilton (the "Purchaser").
ITT and the Purchaser are hereinafter sometimes collectively referred to as the
"Constituent Corporations." Capitalized terms used in this Agreement shall have
the meanings ascribed to them herein.
RECITALS
WHEREAS, the Boards of Directors of Hilton (the "Hilton Board"), the
Purchaser and ITT (the "ITT Board") have each approved the acquisition of ITT by
Hilton upon the terms and subject to the conditions set forth herein;
WHEREAS, the Purchaser has made an offer, which was commenced on January
31, 1997 and amended on August 7, 1997 and November 3, 1997 (the "Offer"), to
purchase: (i) 65,000,000 shares of Common Stock, without par value, of ITT
("Shares") and (ii) unless and until validly redeemed by the ITT Board, the
Series A Participating Cumulative Preferred Stock Purchase Rights (the "Rights")
associated therewith, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated January 31, 1997, as amended on August 7, 1997 and
November 3, 1997, and in the related Letters of Transmittal, at a purchase price
of $80 per Share (and associated Right), net to the tendering stockholder in
cash, without interest thereon;
WHEREAS, the Boards of Directors of Hilton, the Purchaser and ITT have each
determined that it is in the best interests of their respective stockholders for
the Purchaser to acquire ITT pursuant to the Offer, as amended pursuant to the
terms of this Agreement (the "Amended Offer");
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Hilton, the Purchaser and ITT have each approved the merger of the Purchaser
with and into ITT in accordance with the terms of this Agreement, the General
Corporation Law of the State of Delaware (the "DGCL"), the Nevada Revised
Statutes Sections 92A.010 et. seq. (the "NRS"), and the Nevada General
Corporation Law (the "NGCL") and with any other applicable law; and
WHEREAS, the ITT Board has, in light of and subject to the terms and
conditions set forth herein, (i) determined that the consideration to be paid
for each Share
in the Amended Offer and the Merger is fair to, and in the best interests of,
the stockholders of ITT and (ii) approved and adopted this Agreement and the
transactions contemplated hereby and to recommend acceptance of the Amended
Offer and approval and adoption by the stockholders of ITT of this Agreement and
the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I.
THE AMENDED OFFER
Section 1.1. The Amended Offer. (a) Hilton and the Purchaser have filed
with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule 14D-1 (as amended, the "Schedule 14D-1") with respect to the Offer
which contains (included as an exhibit) the Purchaser's Offer to Purchase dated
January 31, 1997 together with the Supplement thereto dated August 7, 1997 and
the Second Supplement thereto dated November 3, 1997 (together, the "Offer to
Purchase") and forms of the related letters of transmittal (collectively, the
"Offer Documents"). As promptly as practicable (but no later than the second
business day after the date of this Agreement), Hilton and the Purchaser shall
file with the SEC an amendment to the Schedule 14D-1 (i) to provide that the
obligation of the Purchaser and Hilton to accept for payment and pay for Shares
tendered pursuant to the Amended Offer shall only be subject to the conditions
set forth in Annex I hereto, (ii) to extend the expiration date of the Amended
Offer to 12:00 midnight, New York City time, on _____day, November __, 1997, and
(iii) to make such other amendments as are required to conform the Amended Offer
to this Agreement; it being understood and agreed that, except for the foregoing
amendments or as otherwise provided herein, the Amended Offer shall be on the
same terms and subject to the same conditions as the Offer. Without the prior
written consent of ITT, the Purchaser shall not decrease the price per Share or
change the form of consideration payable in the Amended Offer, decrease the
number of Shares sought, waive the Minimum Condition (as defined in Annex I),
impose additional conditions to the Amended Offer or amend any other term of the
Amended Offer in any manner adverse to the holders of Shares. Upon the terms and
subject to the conditions of the Amended Offer, the Purchaser will accept for
payment and purchase, as soon as practicable after the expiration of the Amended
Offer, all Shares validly tendered and not withdrawn prior to the expiration of
the Amended Offer, provided that if more than the Maximum Number (as defined in
the Offer to Purchase) of Shares is validly tendered and not withdrawn prior to
the expiration of the Amended Offer, the Purchaser will purchase such Shares on
a pro rata
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basis. ITT agrees that no Shares held by ITT or any of its wholly owned
subsidiaries will be tendered pursuant to the Amended Offer.
(b) Each of Hilton and the Purchaser, on the one hand, and ITT, on
the other hand, agrees promptly to correct any information provided by it for
use in the Schedule 14D-1 if and to the extent that it shall have become false
or misleading in any material respect, and Hilton and the Purchaser further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and, if necessary, to disseminate corrected Offer
Documents to stockholders of ITT, in each case as and to the extent required by
applicable federal securities laws.
(c) Hilton and the Purchaser agree that the Purchaser shall not
terminate or withdraw the Amended Offer or extend the expiration date of the
Amended Offer unless at the expiration date of the Amended Offer the conditions
to the Amended Offer described in Annex I hereto shall not have been satisfied
or earlier waived. Hilton and the Purchaser shall use their reasonable best
efforts to consummate the Amended Offer.
Section 1.2. ITT Actions. (a) ITT hereby approves of and consents to
the Amended Offer and represents that the ITT Board, by vote of all directors at
a meeting duly called and held, has, in light of and subject to the terms and
conditions set forth herein, unanimously (i) determined that each of the Amended
Offer and the Merger is fair to, and in the best interests of, the stockholders
of ITT and (ii) approved and adopted this Agreement and the transactions
contemplated hereby, including the Amended Offer and the Merger, and resolved to
recommend acceptance of the Amended Offer and approval and adoption of this
Agreement and the Merger and the other transactions contemplated hereby by the
stockholders of ITT.
(b) ITT hereby agrees promptly to prepare and, after review by the
Purchaser, to file with the SEC on the date the amendment to the Schedule 14D-1
contemplated by Section 1.1(a) hereof is filed, and to mail to its stockholders,
an amendment to ITT's Solicitation/Recommendation Statement on Schedule 14D-9
with respect to the Amended Offer (together with any amendments or supplements
thereto, the "Amended Schedule 14D-9") containing the recommendation described
in Section 1.2(a) hereof and to disseminate the Amended Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Each of ITT, on the one hand, and Hilton and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by either of them for use in the Amended Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any material respect,
and ITT further agrees to take all steps necessary to cause the Amended Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to the
stockholders of ITT, in each case as and to the extent required by applicable
federal securities laws; provided, however, that such rec-
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ommendation may be withdrawn, modified or amended to the extent that the ITT
Board deems it necessary to do so in the exercise of its fiduciary and other
legal obligations after being so advised in writing by outside counsel.
(c) In connection with the Amended Offer, ITT will furnish the
Purchaser with such information (which, subject to applicable law, shall be held
in confidence) and assistance as the Purchaser or its agents or representatives
may reasonably request in connection with the preparation of the Amended Offer
and communicating the Amended Offer to the record and beneficial holders of the
Shares.
Section 1.3. ITT Stockholders' Meeting. (a) ITT, acting through the ITT
Board, shall as soon as practicable after the date hereof, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following the
purchase of and payment for Shares by the Purchaser pursuant to the
Amended Offer for the purpose of considering and taking action upon the
Merger and this Agreement and such other matters as may be necessary to
consummate the transactions contemplated herein;
(ii) use its reasonable best efforts to obtain the necessary
approvals of the Merger, this Agreement and such other matters as may
be necessary to consummate the transactions contemplated hereby by its
stockholders; and
(iii) subject to the fiduciary obligations of the ITT Board
under applicable law as advised by outside counsel, include in the
Prospectus/Joint Proxy Statement the recommendation of the ITT Board
that stockholders of ITT vote in favor of the approval of the Merger,
the adoption of this Agreement and such other matters as may be
necessary to consummate the transactions contemplated hereby.
(b) Hilton agrees that it will vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other subsidiaries in
favor of the approval of the Merger, the adoption of this Agreement and such
other matters as may be necessary to consummate the transactions contemplated
hereby.
Section 1.4. Hilton Stockholders' Meeting. (a) Hilton, acting
through the Hilton Board, shall as soon as practicable after the date hereof, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following the
purchase of and payment for
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Shares by the Purchaser pursuant to the Amended Offer for the purpose
of considering and taking action upon (A) the amendment of the
Certificate of Incorporation of Hilton (the "Hilton Charter") to
authorize a sufficient number of shares of Hilton Common Stock, $2.50
par value per share ("Hilton Common Stock"), as necessary to complete
the Merger and (B) approval of the issuance of shares of Hilton Common
Stock in the Merger as contemplated by this Agreement, and such other
matters as may be necessary to consummate the transactions contemplated
herein;
(ii) use its reasonable best efforts to obtain the necessary
approval of its stockholders as contemplated above; and
(iii) subject to the fiduciary obligations of the Hilton Board
under applicable law as advised by outside counsel, include in the
Prospectus/Joint Proxy Statement the recommendation of the Hilton Board
that stockholders of Hilton vote in favor of the approval of the
amendment to the Hilton Charter, the issuance of shares of Hilton
Common Stock in the Merger, and such other matters as may be necessary
to consummate the transactions contemplated hereby.
Section 1.5. Directors. (a) Subject to compliance with applicable law,
promptly upon the payment by the Purchaser for Shares purchased pursuant to the
Amended Offer, and from time to time thereafter, ITT shall, upon request of
Hilton, promptly take all actions necessary to cause a majority of the directors
of ITT to be comprised of Hilton's designees, including by accepting the
resignations of those incumbent directors designated by ITT or increasing the
size of the ITT Board and causing Hilton's designees to be elected.
(b) ITT's obligations to appoint Hilton's designees to the ITT Board
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder,
if applicable. ITT shall promptly take all actions required pursuant to such
Section and Rule in order to fulfill its obligations under this Section 1.5 and
shall include in the Amended Schedule 14D-9 such information with respect to ITT
and its officers and directors as is required under such Section and Rule in
order to fulfill its obligations under this Section 1.5. Hilton will supply any
information with respect to itself and its officers, directors and affiliates
required by such Section and Rule to ITT.
(c) Following the election or appointment of Hilton's designees
pursuant to this Section 1.5 and prior to the Effective Time, any amendment or
termination of this Agreement by ITT, any extension by ITT of the time for the
performance of any of the obligations or other acts of Hilton or the Purchaser,
and any waiver of ITT's rights hereunder, will require the concurrence of a
majority of the directors of ITT then in office who were not designated by
Hilton pursuant to this Section 1.5.
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ARTICLE II.
THE MERGER
Section 2.1. The Merger. (a) In accordance with the provisions of this
Agreement, the DGCL, and the NRS, at the Effective Time the Purchaser shall be
merged with and into ITT (the "Merger"), and ITT shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Nevada. At the
Effective Time, the separate existence of the Purchaser shall cease.
(b) The name of the Surviving Corporation shall be "ITT Corporation."
(c) The Merger shall have the effects on ITT and the Purchaser as
Constituent Corporations of the Merger as provided under the DGCL and the NRS.
Section 2.2. Effective Time. The Merger shall become effective at the
time of filing of, or at such later time specified in, a certificate of merger
(the "Certificate of Merger"), in the form required by and executed in
accordance with the DGCL, filed with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State") in accordance with the provisions
of Sections 103 and 252 of the DGCL, and articles of merger (the "Articles of
Merger"), in the form required by and executed in accordance with the NRS, filed
with the Secretary of State of the State of Nevada (the "Nevada Secretary of
State") in accordance with Sections 92A.200 and 92A.230 of the NRS. The date and
time when the Merger shall become effective is herein referred to as the
"Effective Time".
Section 2.3. Articles of Incorporation and By-Laws of Surviving
Corporation. The Articles of Incorporation of the Surviving Corporation shall be
amended to be in the form attached as an exhibit to the Certificate of Merger
and the Articles of Merger, which form shall be substantially identical to the
Certificate of Incorporation of the Purchaser, with such changes as may be
required to conform to the requirements of the NRS, until thereafter amended as
provided by law, except that such Articles of Incorporation shall provide that
the Surviving Corporation shall retain the name "ITT Corporation" and shall
contain provisions with respect to the CVP Stock as set forth in Exhibit 3.1.
The By-Laws of the Purchaser shall be the By-Laws of the Surviving Corporation,
until thereafter amended as provided by law.
Section 2.4. Directors and Officers of Surviving Corporation. (a)
Subject to applicable law, the directors of the Purchaser immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
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(b) The officers of ITT immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation, and shall hold office
until their respective successors are duly elected and qualified, or their
earlier death, resignation or removal.
Section 2.5. Consummation of the Merger. As soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VIII hereof,
the Surviving Corporation shall execute (i) in the manner required by the DGCL
and file with the Delaware Secretary of State the Certificate of Merger and (ii)
in the manner required by the NRS and file with the Nevada Secretary of State
the Articles of Merger, and the parties shall take such other and further
actions as may be required by law to make the Merger effective as promptly as is
practicable.
Section 2.6. Registration on Form S-4. The Hilton Common Stock and CVP
Stock to be issued in the Merger shall be registered under the Securities Act of
1933, as amended (the "Securities Act"), on Form S-4 registration statements
(the "Forms S-4"). As promptly as practicable after the date of this Agreement,
Hilton and ITT shall prepare and file with the SEC the Forms S-4, together with
the prospectus/joint proxy statement to be included therein (the
"Prospectus/Joint Proxy Statement") and any other documents required by the
Securities Act or the Exchange Act, in connection with the Merger. Each of
Hilton and ITT shall use its reasonable best efforts to respond promptly to any
comments of the SEC and to have the Forms S-4 declared effective under the
Securities Act as promptly as practicable after such filing and to cause the
Prospectus/Joint Proxy Statement to be mailed to each company's stockholders at
the earliest practicable time. Each party shall promptly furnish to the other
party all information concerning such party as may be required in connection
with any action contemplated by this Section 2.6. The Prospectus/Joint Proxy
Statement and Forms S-4 shall comply in all material respects with all
applicable requirements of law. Each of Hilton and ITT will notify the other
promptly of the receipt of any comments from the SEC or its staff and of any
request of the SEC or its staff for amendments or supplements to the Forms S-4
or the Prospectus/Joint Proxy Statement or for additional information and will
supply the other with copies of all correspondence with the SEC or its staff
with respect to the Forms S-4 or the Prospectus/Joint Proxy Statement. Whenever
an event occurs which should be set forth in an amendment or supplement to the
Forms S-4 or the Prospectus/Joint Proxy Statement, Hilton or ITT, as the case
may be, shall promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff, and/or mailing to stockholders of Hilton and
ITT, such amendments or supplements.
Section 2.7. 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, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title
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or interest in, to or under any of the rights, properties or assets of either of
the Constituent Corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Constituent Corporations or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
Section 2.8. Alternative Merger Structures. Hilton and ITT agree that
they will explore in good faith, between the date of this Agreement and the
Effective Time, the possibility of restructuring the Merger so that some or all
of the consideration to be received by ITT shareholders in the Merger will be
tax-free to such shareholders, so long as such restructuring would not alter the
economic benefits and terms of the Merger to Hilton, ITT or their respective
shareholders or be likely to delay or otherwise interfere with completion of the
Merger.
ARTICLE III.
CONVERSION OF SHARES
Section 3.1. Effect on ITT Shares and the Purchaser's Capital Stock.
(a) As of the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares held by Hilton, the
Purchaser, any wholly owned subsidiary of Hilton or the Purchaser, in the
treasury of ITT or by any wholly owned subsidiary of ITT, which Shares, by
virtue of the Merger and without any action on the part of the holder thereof,
shall be canceled and retired and shall cease to exist with no payment being
made with respect thereto) shall be converted into the right to receive upon the
surrender of the Certificate in accordance with Section 4.2 hereof, (i) two
shares (the "Exchange Ratio") of Hilton Common Stock and (ii) unless the
volume-weighted average of the prices per share of Hilton Common Stock for all
trades reported on the New York Stock Exchange ("NYSE") (or such other exchange
on which shares of Hilton Common Stock are then listed) during the 20 trading
days immediately preceding the last business day before the Effective Time (the
"Average Hilton Share Price") is equal to or greater than $40 per share of
Hilton Common Stock, two shares of Contingent Value Preferred Stock of the
Surviving Corporation ("CVP Stock") having the terms set forth in Exhibit 3.1
hereto.
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(b) No fractional shares of Hilton Common Stock or CVP Stock shall be
issued, but in lieu thereof each holder of Shares who would otherwise be
entitled to receive a fraction of a share of Hilton Common Stock or a fraction
of a share of CVP Stock, shall receive from the Exchange Agent (i) a certificate
representing whole shares of Hilton Common Stock to which such holder is
entitled, (ii) if issued, a certificate representing whole shares of CVP Stock
to which such holder is entitled, and (iii) an amount of cash equal to the sum
of (x) the Average Hilton Share Price multiplied by the fraction of a share of
Hilton Common Stock to which such holder would otherwise be entitled and (y) if
the CVP Stock is issued, the Effective Time Deficiency multiplied by the
fraction of a share of CVP Stock to which such holder would otherwise be
entitled. The "Effective Time Deficiency" shall mean the amount by which $40
exceeds the Average Hilton Share Price. The fractional share interests of each
stockholder of ITT shall be aggregated, so that no ITT stockholder shall receive
cash in an amount equal to or greater than the sum of the Average Hilton Share
Price and, if the CVP Stock is issued, the Effective Time Deficiency.
(c) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, each share of capital stock of the
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and become one fully paid and nonassessable share of Common
Stock, par value $1.00 per share, of the Surviving Corporation.
(d) If, prior to the Effective Time, Hilton or ITT recapitalizes
through a subdivision of its outstanding shares into a greater number of shares,
or a combination of its outstanding shares into a lesser number of shares, or
reorganizes, reclassifies or otherwise changes its outstanding shares into the
same or a different number of shares of other classes, or declares a dividend on
its outstanding shares payable in shares of its capital stock or securities
convertible into shares of its capital stock, then the Exchange Ratio and the
terms of the CVP Stock will be adjusted appropriately so as to maintain the
relative proportionate and economic interests of the holders of Shares and the
holders of shares of Hilton Common Stock.
Section 3.2. ITT Option Plans. (a) ITT shall take all actions necessary
to provide that each outstanding option to purchase Shares (the "ITT Options")
granted under either ITT's 1995 Incentive Stock Plan, as amended, or ITT's 1996
Restricted Stock Plan for Non-Employee Directors, as amended (collectively, the
"Option Plans"), and in respect of 1995 substitute options, will by virtue of
the Merger and at the Effective Time, and without any further action on the part
of any holder thereof, be converted into an option to purchase Hilton Common
Stock and CVP Stock (a "Hilton Option"), and such ITT Options shall be so
assumed by Hilton as provided herein. The ITT Options so assumed by Hilton shall
continue to have, and be subject to, the same terms and conditions as set forth
in the Option Plans and agreements pursuant to which such ITT Options were
issued as in effect immediately prior to the Ef-
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fective Time, except that each such ITT Option shall be exercisable for (i) that
number of whole shares of Hilton Common Stock equal to the product of the number
of Shares covered by such ITT Option immediately prior to the Effective Time
multiplied by the Exchange Ratio and rounded up to the nearest whole number of
shares of Hilton Common Stock and (ii) if CVP Stock is issued in the Merger, a
number of whole shares of CVP Stock equal to the number of whole shares of
Hilton Common Stock calculated pursuant to the foregoing clause (i); provided
that, if the option holder has not exercised his or her ITT Option prior to the
redemption of the CVP Stock (if issued), then each share of CVP Stock described
in clause (ii) above shall be replaced by that number of shares of Hilton Common
Stock equal in value (based upon the volume-weighted average of the prices per
share of Hilton Common Stock for all trades reported on the NYSE during the 20
consecutive trading days ending on the date of redemption) to the lesser of (A)
the amount, if any, by which $40 exceeds the Current Market Value (as defined in
Exhibit 3.1 hereto) on the date the CVP Stock is redeemed and (B) $12, rounded
down to the nearest whole number of shares of Hilton Common Stock (the
"Additional Amount"). The exercise price of the ITT Options so assumed by Hilton
shall be adjusted so that the exercise price for each unit consisting of one
share of Hilton Common Stock together with one share of CVP Stock (if the CVP
Stock was issued and not redeemed prior to such exercise) or the Additional
Amount, if any, shall equal the exercise price per Share of such ITT Option
immediately prior to the Effective Time divided by the Exchange Ratio. Stock
appreciation rights related to the ITT Options ("SARs") shall also be assumed by
Hilton on terms equivalent to those set forth above with respect to the ITT
Options.
(b) Except as provided herein or as otherwise agreed to by the
parties and to the extent permitted by the Option Plans, (i) the Option Plans
shall terminate as of the Effective Time and the provisions in any other plan,
program or arrangement, providing for the issuance or grant of any other
interest in respect of the capital stock of ITT or any of its subsidiaries shall
be terminated as of the Effective Time and (ii) ITT shall use its reasonable
best efforts to ensure that following the Effective Time no holder of ITT
Options or any participant in the Option Plans or any other plans, programs or
arrangements shall have any right thereunder to acquire any equity securities of
ITT, the Surviving Corporation or any subsidiary thereof or any other interest
in respect of such securities.
(c) Hilton will cause the Hilton Common Stock and the CVP Stock
issuable upon exercise of the assumed ITT Options to be registered on Form S-8
promulgated by the SEC as soon as practicable after the Effective Time and will
use its reasonable efforts to maintain the effectiveness of such registration
statement or registration statements for so long as such assumed ITT Options
shall remain outstanding. With respect to those individuals who subsequent to
the Merger will be subject to the reporting requirements under Section 16(a) of
the Exchange Act, Hilton shall adminis-
-10-
ter the ITT Option Plans assumed pursuant to this Section 3.2 in a manner that
complies with Rule 16b-3 promulgated by the SEC under the Exchange Act. Hilton
will reserve a sufficient number of shares of Hilton Common Stock, and the
Surviving Corporation will reserve a sufficient number of shares of CVP Stock,
for issuance upon exercise of ITT Options assumed by Hilton pursuant to this
Section 3.2.
ARTICLE IV.
EXCHANGE OF SHARES
Section 4.1. No Rights of Appraisal. Holders of Shares will not be
entitled to rights of appraisal under Section 92A.380 of the NRS by virtue of
Section 92A.390 of the NRS.
Section 4.2. Exchange of Certificates. (a) From and after the Effective
Time, a bank or trust company to be designated by Hilton shall act as exchange
agent (the "Exchange Agent") in effecting the exchange of shares of Hilton
Common Stock and CVP Stock, if applicable, for certificates (the "Certificates")
formerly representing Shares and entitled to exchange of the Certificates for
shares of Hilton Common Stock and CVP Stock, if applicable, pursuant to Section
3.1 hereof. At the Effective Time, Hilton and, if applicable, the Surviving
Corporation shall deposit, or cause to be deposited, in trust with the Exchange
Agent, for the benefit of the holders of Shares, for exchange in accordance with
this Agreement, (i) certificates representing the shares of Hilton Common Stock
and, if applicable, shares of CVP Stock (such shares of Hilton Common Stock and
CVP Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") issuable pursuant to this
Agreement in exchange for outstanding Shares, and (ii) cash in an amount
sufficient for payment in lieu of fractional shares pursuant to Section 3.1(b).
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each record holder of Certificates that immediately prior to the Effective Time
represented Shares (other than Certificates representing Shares held by Hilton
or the Purchaser, any wholly owned subsidiary of Hilton or the Purchaser, in the
treasury of ITT or by any wholly owned subsidiary of ITT) (i) a form of letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and (ii) instructions for use in surrendering
such Certificates in exchange for certificates representing Hilton Common Stock
and, if applicable, CVP Stock and cash in lieu of fractional shares. Upon the
surrender of each such Certificate, the Exchange Agent shall deliver to the
holder of such Certificate (i) a certificate representing that number of whole
shares of Hilton Common Stock which such holder has the right to receive
pur-
-11-
suant to the provisions of this Agreement, (ii) a certificate representing that
number of whole shares of CVP Stock, if any, which such holder has the right to
receive pursuant to the provisions of this Agreement, and (iii) the amount of
any cash payable in lieu of a fractional share of Hilton Common Stock and a
fractional share of CVP Stock to which such holder is entitled pursuant to
Section 3.1(b), and such Certificate shall immediately be canceled. Until so
surrendered, each such Certificate (other than Certificates representing Shares
held by Hilton or the Purchaser, any wholly owned subsidiary of Hilton or the
Purchaser, in the treasury of ITT or by any wholly owned subsidiary of ITT)
shall represent solely the right to receive a certificate representing that
number of whole shares of Hilton Common Stock, and a certificate representing
that number of whole shares of CVP Stock which such holder has the right to
receive pursuant to the provisions of this Agreement, and cash in lieu of any
fractional shares of Hilton Common Stock and CVP Stock as contemplated by
Section 3.1(b).
(c) Promptly following the date which is one year after the Effective
Time, the Exchange Agent shall deliver to Hilton any portion of the Exchange
Fund which remains undistributed to the stockholders of ITT, and the Exchange
Agent's duties shall terminate. Thereafter, each holder of a Certificate
formerly representing a Share (other than Certificates representing Shares held
by Hilton or the Purchaser, any wholly owned subsidiary of Hilton or the
Purchaser, in the treasury of ITT or by any wholly owned subsidiary of ITT) may
surrender such Certificate to Hilton and (subject to applicable abandoned
property, escheat and similar laws) receive in consideration therefor the
payment of their claim for Hilton Common Stock, CVP Stock, any cash in lieu of
fractional shares of Hilton Common Stock and CVP Stock and any dividends or
distributions with respect to Hilton Common Stock and CVP Stock to which such
holder may be entitled.
(d) No dividends or other distributions declared or made after the
Effective Time with respect to Hilton Common Stock with a record date after the
Effective Time, and no redemption payment made with respect to CVP Stock, shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Hilton Common Stock or CVP Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 3.1(b), until the holder of record of such Certificate shall
surrender such Certificate.
(e) If exchange for shares of Hilton Common Stock and CVP Stock or
payment in lieu of fractional shares of Hilton Common Stock and CVP Stock in
respect of any Certificate is to be made to a person other than the person in
whose name such Certificate is registered, it shall be a condition to such
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of such
exchange or payment in a name other than that of the registered holder of the
Certificate surrendered or shall have established to the satis-
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faction of Hilton or the Exchange Agent that such tax either has been paid or is
not payable.
(f) All Hilton Common Stock and CVP Stock delivered upon surrender for
exchange of Shares in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such Shares.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of any Shares which were outstanding
immediately prior to the Effective Time.
(g) In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall make payment in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, of such shares of Hilton Common Stock and CVP Stock and
cash in lieu of fractional shares, if any, as may be required pursuant to
Section 3.1(b), provided, however, that Hilton may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as Hilton may
reasonably direct as indemnity against any claim that may be made against
Hilton, the Exchange Agent or the Surviving Corporation with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(h) Notwithstanding anything to the contrary in this Article IV, none
of the Exchange Agent, the Surviving Corporation or any party hereto shall be
liable to a holder of Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(i) Hilton, or if applicable the Surviving Corporation, 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 such amounts as
Hilton, or if applicable the Surviving Corporation, 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 Hilton, or if applicable the Surviving Corporation, 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 in respect of which such
deduction and withholding was made by Hilton, or if applicable the Surviving
Corporation, or the Exchange Agent.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF ITT
ITT represents and warrants to Hilton and the Purchaser as follows:
Section 5.1. Organization. ITT and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of their respective jurisdictions of incorporation and ITT and each of its
subsidiaries has all requisite corporate power and authority to own, lease and
operate their respective properties and to carry on their respective businesses
as now being conducted. ITT and each of its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, financial condition or results of operations of
ITT and its subsidiaries taken as a whole (an "ITT Material Adverse Effect").
The disclosure letter previously delivered by ITT to Hilton (the "ITT Disclosure
Letter") contains a complete and correct description of the shares of stock or
other equity interests that are authorized, issued and outstanding of each of
ITT's subsidiaries. Except as set forth in the ITT Disclosure Letter, ITT owns
directly or indirectly all of the outstanding capital stock of each of its
subsidiaries free and clear of all liens. Except as set forth in the ITT
Disclosure Letter, ITT has no equity interests in any person other than the
subsidiaries.
Section 5.2. Capitalization. The authorized capital stock of ITT
consists of 200,000,000 Shares and 50,000,000 shares of preferred stock, without
par value ("ITT Preferred Stock"). As of the close of business on October 17,
1997, there were (i) 118,259,684 Shares issued and outstanding, (ii) 1,123,526
Shares held in the treasury of ITT or by its wholly owned subsidiaries, (iii)
133,399 Shares reserved for issuance pursuant to ITT's 1996 Restricted Stock
Plan for Non-Employee Directors, as amended, and ITT's 1995 Incentive Stock
Plan, as amended, (iv) not in excess of 8,718,231 Shares covered by ITT Options,
and (v) no shares of ITT Preferred Stock issued and outstanding or held in ITT's
treasury or by its subsidiaries. As of October 17, 1997, 200,000 shares of ITT
Preferred Stock, all denominated as Series A Participating Cumulative Preferred
Stock (subject to increase and adjustment as set forth in the Rights Agreement,
dated November 1, 1995, between ITT and The Bank of New York (as amended, the
"Rights Agreement") and the Certificate of Designation attached as an exhibit
thereto) were reserved for issuance in connection with the Rights. Except for
the rights granted pursuant to the Rights Agreement (which agreement has been
amended as described in Section 5.7 hereof), and ITT Options as set forth above
(which shall be canceled pursuant to Section 3.2(a) hereof), there were not as
of October 17, 1997, any existing options, warrants, calls, subscriptions, or
other rights or
-14-
other agreements or commitments obligating ITT or any of its subsidiaries to
issue, transfer or sell any shares of capital stock of ITT or any of its
subsidiaries or any other securities convertible into or evidencing the right to
subscribe for any such shares. Except pursuant to the exercise of ITT Options
outstanding as of October 17, 1997, in accordance with the terms thereof, since
October 17, 1997, ITT has not issued any Shares or any options, warrants, calls,
subscriptions, or other rights or other agreements or commitments obligating ITT
or any of its subsidiaries to issue, transfer or sell any shares of capital
stock of ITT or any of its subsidiaries or any other securities convertible into
or evidencing the right to subscribe for any such shares. Except for SARs issued
in tandem with the ITT Options as set forth above (and which substitute for the
rights to acquire Shares under such ITT Options) there are no obligations of or
rights granted by ITT or any of its subsidiaries that require payment of cash or
other property based on the value of any shares of capital stock of ITT or any
of its subsidiaries. All issued and outstanding Shares are duly authorized and
validly issued, fully paid, non-assessable and free of preemptive rights with
respect thereto.
Section 5.3. Authority. ITT has full corporate power and authority to
execute and deliver this Agreement and, subject to the approval of its
stockholders, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
ITT Board, and other than the approval by its stockholders, no other corporate
proceedings are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by ITT and, assuming this Agreement constitutes a legal,
valid and binding agreement of the other parties hereto, it constitutes a legal,
valid and binding agreement of ITT, enforceable against it in accordance with
its terms.
Section 5.4. No Violations; Consents and Approvals. (a) Except as set
forth on the ITT Disclosure Letter, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by ITT with any of the provisions hereof will (i) violate any
provision of its Articles of Incorporation or Bylaws, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default, or give rise to any right of termination, cancellation or
acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation or change in control, under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which ITT or any of its subsidiaries is a
party, or by which ITT or any of its subsidiaries or any of their respective
properties is bound, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default, or give rise to
any right of termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger,
-15-
consolidation or change in control, under, any of the terms, conditions or
provisions of any license, franchise, permit or agreement (other than those
covered by the preceding clause (ii)) to which ITT or any of its subsidiaries is
a party, or by which ITT or any of its subsidiaries or any of their respective
properties is bound, or (iv) violate any statute, rule, regulation, order or
decree of any public body or authority by which ITT or any of its subsidiaries
or any of their respective properties is bound, excluding from the foregoing
clauses (ii), (iii) and (iv) violations, breaches, defaults or rights under the
laws of any jurisdiction outside the United States or which, either individually
or in the aggregate, would not have an ITT Material Adverse Effect or materially
impair ITT's ability to consummate the transactions contemplated hereby or for
which ITT has received or, prior to the consummation of the Amended Offer, shall
have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (a
"Governmental Entity") is required in connection with the execution and delivery
of this Agreement by ITT, or the consummation by ITT of the transactions
contemplated hereby, except (i) expiration of the waiting period under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
which waiting period has expired, (ii) in connection, or in compliance, with the
provisions of the Exchange Act, (iii) the filing of the Certificate of Merger
with the Delaware Secretary of State and the Articles of Merger with the Nevada
Secretary of State, (iv) such filings and consents as may be required under any
environmental law pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, (v) filing with, and approval of, the NYSE and the SEC with respect
to the de-listing and de-registration of the Shares, (vi) such consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states or non-U.S. changes in control laws or regulations, (vii) such
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings as may be required under gaming laws, rules and
regulations, and (viii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings not obtained prior to the
consummation of the Amended Offer the failure of which to be obtained or made
would not, individually or in the aggregate, have a ITT Material Adverse Effect,
or materially impair ITT's ability to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
Section 5.5. SEC Documents; Financial Statements. (a) ITT has made
available to Hilton and the Purchaser copies of each registration statement,
report, proxy statement, information statement or schedule filed with the SEC by
ITT since October 15, 1995 (the "ITT SEC Documents"). As of their respective
dates, the ITT
-16-
SEC Documents complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and none of such
ITT 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.
(b) Neither ITT nor any of its subsidiaries, nor any of their
respective assets, businesses, or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under any
contract or agreement or amendment thereto, that in each case would be required
to be filed as an exhibit to a Form 10-K as of the date of this Agreement that
has not been filed as an exhibit to an ITT SEC Document filed prior to the date
of this Agreement.
(c) As of their respective dates, the consolidated financial statements
included in the ITT SEC Documents complied as to form in all material respects
with then applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented ITT's consolidated financial position and that of
its consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and statements of cash flows for the periods then
ended (subject, in the case of unaudited statements, to the lack of footnotes
thereto, to normal year-end audit adjustments and to any other adjustments
described therein).
Section 5.6. Absence of Certain Changes. Except as disclosed in the ITT
SEC Documents or the ITT Disclosure Letter, since December 31, 1996, ITT and its
subsidiaries have conducted their respective businesses only in the ordinary
course, and there has not been (i) any change having an ITT Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock or any redemption, purchase or
other acquisition of any of its capital stock, (iii) any split, combination or
reclassification of any of its capital stock 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 its capital stock, (iv) (w) any granting by ITT
or any of its subsidiaries to any officer of ITT or any of its subsidiaries of
any increase in compensation, except in the ordinary course of business
(including in connection with promotions) consistent with prior practice or as
was required under employment agreements in effect as of the date of the most
recent audited financial statements included in ITT SEC Documents, (x) any
granting by ITT or any of its subsidiaries to any such officer of any increase
in severance or termination pay, except as part of a standard employment package
to any person promoted or hired (but not including the five most senior
officers), or as was required under employment, severance or termination
agreements in effect as of the date of the most recent audited
-17-
financial statements included in ITT SEC Documents, (y) except termination
arrangements in the ordinary course of business consistent with past practice
with employees other than any executive officer of ITT, any entry by ITT or any
of its subsidiaries into any employment, severance or termination agreement with
any such officer or (z) any increase in benefits available under or
establishment of any benefit plan (including the granting of stock options,
stock appreciation rights, performance awards or restricted stock awards or the
amendment or acceleration of vesting of any existing stock options, stock
appreciation rights, performance awards or restricted stock awards but excluding
any amendment accelerating vesting of existing stock options), except in the
ordinary course of business consistent with past practice, (v) any damage,
destruction or loss to physical properties owned or used by ITT, whether or not
covered by insurance, that has or reasonably could be expected to have an ITT
Material Adverse Effect, (vi) any revaluation by ITT of any of its material
assets, or (vii) any material change in accounting methods, principles or
practices by ITT.
Section 5.7. Rights Agreement. The Rights Agreement has been duly
amended to provide that neither Hilton nor the Purchaser will become an
"Acquiring Person" or "Principal Party," that no "Business Combination," or
"Distribution Date" (as such terms are defined in the Rights Agreement) will
occur and that Section 11 of the Rights Agreement will not be triggered, in each
case as a result of the announcement, commencement or consummation of the Offer
or the Amended Offer, the execution or delivery of this Agreement or any
amendment hereto or the consummation of the transactions contemplated hereby
(including, without limitation, the Merger), with the effect that none of such
events will trigger the exercisability of the Rights, the separation of the
Rights from the stock certificates to which they are attached or any other
provision of the Rights Agreement. ITT has provided Hilton and the Purchaser a
complete and correct copy of the Rights Agreement, as so amended.
Section 5.8. Information. None of the Amended Schedule 14D-9, the
Prospectus/Joint Proxy Statement, or any other document filed or to be filed by
or on behalf of ITT with the SEC or any other Governmental Entity in connection
with the transactions contemplated by this Agreement contained when filed or
will, at the respective times filed with the SEC or other Governmental Entity,
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
made therein, in light of the circumstances under which they were made, not
misleading; provided that the foregoing shall not apply to information supplied
by Hilton or the Purchaser specifically for inclusion or incorporation by
reference in any such document. The Amended Schedule 14D-9 will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder. None of the information supplied by ITT
specifically for inclusion or incorporation by reference in the Schedule 14D-1,
the Prospectus/Joint Proxy Statement or in any other document filed or to be
-18-
filed by or on behalf of Hilton or the Purchaser with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 5.9. NGCL. (a) The ITT Board has previously taken all
appropriate action to amend the Bylaws of ITT such that the Bylaws of ITT in
effect as of the date hereof provide that the provisions of NGCL Sections 78.378
to 78.3793, inclusive (the "Control Share Statute"), do not apply to ITT, with
the effect that the Control Share Statute shall not apply to the Amended Offer,
the Merger, or any other transaction contemplated by this Agreement.
(b) The ITT Board has previously taken all appropriate action to
approve (in accordance with NGCL Section 78.438 and otherwise) for purposes of
NGCL Sections 78.411 to 78.444, inclusive (the "Business Combination Statute"),
the consummation of each of the Amended Offer and the Merger, with the effect
that the restrictions and requirements of the Business Combination Statute shall
not apply to the Amended Offer, the Merger, or any other transaction
contemplated by this Agreement.
Section 5.10. Broker's Fees. Except for fees and expenses specifically
described in ITT's Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer payable in connection with the engagement of Xxxxxxx, Xxxxx
& Co. and Lazard Freres & Co. LLC by ITT, neither ITT nor any of its
subsidiaries or any of its directors or officers has incurred any liability for
any broker's fees, commissions, or financial advisory or finder's fees in
connection with any of the transactions contemplated by this Agreement, and
neither ITT nor any of its subsidiaries or any of its directors or officers has
employed any other broker, finder or financial advisor in connection with any of
the transactions contemplated by this Agreement.
Section 5.11. Third-Party Agreements. (a) The ITT Board has taken all
appropriate action to approve the consummation of each of the Amended Offer and
the Merger, with the effect that the consummation of the Amended Offer, the
Merger or any other actions contemplated hereby (including the actions required
to be take under Section 1.5) shall not constitute a "Change of Control" (or any
such similar event referred to by another term) for purposes of each of the
hotel management, franchise or similar agreements to which ITT or any of its
subsidiaries is a party (other than those agreements listed on the ITT
Disclosure Letter). The ITT Disclosure Letter shall set forth, next to each
agreement listed on the ITT Disclosure Letter pursuant to this Section 5.11, the
amounts payable annually thereunder to ITT and each of its subsidiaries.
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(b) ITT has not paid CDRV Acquisition, L.L.C. ("CDRV") any amounts in
connection with the Investment Agreement between ITT and CDRV, dated as of July
15, 1997 (the "CDRV Agreement"), or under any other agreement or understanding
between ITT and CDRV or otherwise.
(c) ITT has not paid Starwood Lodging Corporation or Starwood Lodging
Trust (collectively, "Starwood") any amounts in connection with the Agreement
and Plan of Merger between ITT and Starwood, dated as of October 19, 1997 (the
"Starwood Agreement"), or under any other agreement or understanding between ITT
and Starwood or otherwise.
Section 5.12. ITT Affiliate Agreements. To ensure compliance with Rule
145 of the rules and regulations promulgated by the SEC under the Securities Act
("Rule 145"), ITT's Affiliates have signed, and delivered to Hilton, ITT
Affiliates Agreements in the form of Exhibit 5.12 (the "ITT Affiliate
Agreements") agreeing to certain restrictions as set forth in such ITT Affiliate
Agreements. An "Affiliate" shall have the meaning referred to in Rule 145.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF
HILTON AND THE PURCHASER
Hilton and the Purchaser represent and warrant to ITT as follows:
Section 6.1. Organization. Hilton and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of their respective jurisdictions of incorporation and Hilton and each of its
subsidiaries has all requisite corporate power and authority to own, lease and
operate their respective properties and to carry on their respective businesses
as now being conducted. Hilton and each of its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, financial condition or results of operations of
Hilton and its subsidiaries taken as a whole (a "Hilton Material Adverse
Effect"). The disclosure letter previously delivered by Hilton to ITT (the
"Hilton Disclosure Letter") contains a complete and correct description of the
shares of stock or other equity interests that are authorized, issued and
outstanding, of each of Hilton's subsidiaries. Except as set forth in the Hilton
Disclosure Letter, Hilton owns directly or indirectly all of the outstanding
capital stock of each of its
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subsidiaries free and clear of all liens. Except as indicated in the Hilton
Disclosure Letter, Hilton has no equity interests in any person other than the
subsidiaries.
Section 6.2. Capitalization. The authorized capital stock of Hilton
consists of 400,000,000 shares of Hilton Common Stock and 24,832,700 shares of
preferred stock, par value $1.00 per share ("Hilton Preferred Stock"). As of
October 1, 1997, there were 251,635,541 shares of Hilton Common Stock and
14,832,300 shares of Hilton Preferred Stock, designated as "Preferred Redeemable
Increased Dividend Equity Securities(SM), 8% PRIDES(SM), Convertible Preferred
Stock" (the "Hilton PRIDES(SM)") issued and outstanding, and there are 903,597
shares of Hilton Common Stock or Hilton Preferred Stock held in Hilton's
treasury. As of October 1, 1997, 550,000 shares of Hilton Preferred Stock,
denominated as Series A Junior Participating Preferred Stock (subject to
increase and adjustment as set forth in the Rights Agreement, dated as of July
14, 1988, between Hilton and The First National Bank of Chicago (the "Hilton
Rights Agreement") and the Certificate of Designation attached as an exhibit
thereto) were reserved for issuance in connection with the rights issued
pursuant to the Hilton Rights Agreement. As of October 1, 1997, there were
outstanding options to purchase 14,321,035 shares of Hilton Common Stock under
Hilton's 1990 Stock Option and Stock Appreciation Rights Plan, 1984 Stock Option
and Stock Appreciation Rights Plan, 1996 Chief Executive Stock Incentive Plan,
and 1996 Stock Incentive Plan (collectively, the "Hilton Option Plans"). Except
for the rights granted pursuant to the Hilton Rights Agreement, the Hilton
PRIDES(SM), and the options as set forth above to purchase shares of Hilton
Common Stock under Hilton Option Plans, there were not as of October 1, 1997,
any existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating Hilton or any of its subsidiaries to issue,
transfer or sell any shares of capital stock of Hilton or any of its
subsidiaries or any other securities convertible into or evidencing the right to
subscribe for any such shares. All issued and outstanding shares of Hilton
Common Stock are duly authorized and validly issued, fully paid, non-assessable
and free of preemptive rights with respect thereto.
Section 6.3. Authority. Each of Hilton and the Purchaser has full
corporate power and authority to execute and deliver this Agreement and, subject
to the approval of Hilton's stockholders, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board of Directors of each of Hilton and the
Purchaser and by Hilton as the sole stockholder of the Purchaser and, other than
the approval of Hilton's stockholders, no other corporate proceedings are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Hilton and the Purchaser and, assuming this Agreement
constitutes a legal, valid and binding agreement of ITT, it constitutes
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a legal, valid and binding agreement of each of Hilton and the Purchaser,
enforceable against them in accordance with its terms.
Section 6.4. No Violations; Consents and Approvals. (a) Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by Hilton or the Purchaser with
any of the provisions hereof will (i) violate any provision of their respective
Certificates of Incorporation or Bylaws, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default, or give rise to any right of termination, cancellation or acceleration
or any right which becomes effective upon the occurrence of a merger,
consolidation or change in control, under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which Hilton or any of its subsidiaries is a
party, or by which Hilton or any of its subsidiaries or any of their respective
properties is bound, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default, or give rise to
any right of termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger, consolidation or change in
control, under, any of the terms, conditions or provisions of any license,
franchise, permit or agreement (other than those covered by the preceding clause
(ii)) to which Hilton or any of its subsidiaries is a party, or by which Hilton
or any of its subsidiaries or any of their respective properties is bound, or
(iv) violate any statute, rule, regulation, order or decree of any public body
or authority by which Hilton or any of its subsidiaries or any of their
respective properties is bound, excluding from the foregoing clauses (ii), (iii)
and (iv) violations, breaches, defaults or rights under the laws of any
jurisdiction outside the United States or which, either individually or in the
aggregate, would not have a Hilton Material Adverse Effect or materially impair
Hilton's ability to consummate the transactions contemplated hereby or for which
Hilton has received or, prior to the consummation of the Amended Offer, shall
have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of any Governmental Entity is required in connection with
the execution and delivery of this Agreement by Hilton or the Purchaser, or the
consummation by Hilton or the Purchaser of the transactions contemplated hereby,
except (i) expiration of the waiting period under the HSR Act, which waiting
period has expired, (ii) in connection, or in compliance, with the provisions of
the Exchange Act, (iii) the filing of the Certificate of Merger with the
Delaware Secretary of State and the Articles of Merger with the Nevada Secretary
of State, (iv) such filings and consents as may be required under any
environmental law pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, (v) filing with, and approval of, the NYSE (or in the case of the CVP
Stock, the American Stock Exchange or The Nasdaq National Market) and the SEC
-22-
with respect to the listing and registration of the shares of Hilton Common
Stock and CVP Stock to be issued pursuant to this Agreement, (vi) such consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states or non-U.S. changes in control laws or regulations, (vii) such
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings as may be required under gaming laws, rules and
regulations, and (viii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings not obtained prior to the
consummation of the Amended Offer the failure of which to be obtained or made
would not, individually or in the aggregate, have a Hilton Material Adverse
Effect, or materially impair Hilton's ability to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 6.5. SEC Documents; Financial Statements. (a) Hilton and the
Purchaser have made available to ITT copies of each registration statement,
report, proxy statement, information statement or schedule filed with the SEC by
Hilton or the Purchaser since October 15, 1995 (the "Hilton SEC Documents"). As
of their respective dates, the Hilton SEC Documents complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and none of such Hilton 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.
(b) Neither Hilton, nor Purchaser, nor any of Hilton's subsidiaries,
nor any of their respective assets, businesses, or operations, is as of the date
of this Agreement a party to, or is bound or affected by, or receives benefits
under any contract or agreement or amendment thereto, that in each case would be
required to be filed as an exhibit to a Form 10-K as of the date of this
Agreement that has not been filed as an exhibit to a Hilton SEC Document filed
prior to the date of this Agreement.
(c) As of their respective dates, the consolidated financial statements
included in the Hilton SEC Documents complied as to form in all material
respects with then applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented Hilton's and Purchaser's consolidated financial
positions and that of Hilton's consolidated subsidiaries as at the dates thereof
and the consolidated results of their operations and statements of cash flows
for the periods then ended (subject, in the case of unaudited statements, to the
lack of footnotes thereto, to normal year-end audit adjustments and to any other
adjustments described therein).
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Section 6.6. Absence of Certain Changes. Except as disclosed in the
Hilton SEC Documents or the Hilton Disclosure Letter, since December 31, 1996,
Hilton and its subsidiaries have conducted their respective businesses only in
the ordinary course, and there has not been any change having a Hilton Material
Adverse Effect.
Section 6.7. Information. None of the Schedule 14D-1, the
Prospectus/Joint Proxy Statement, or any other document filed or to be filed by
or on behalf of Hilton or the Purchaser with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement
contained when filed or will, at the respective times filed with the SEC or
other Governmental Entity, 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 made therein, in light of the circumstances under
which they were made, not misleading; provided that the foregoing shall not
apply to information supplied by ITT specifically for inclusion or incorporation
by reference in any such document. None of the information supplied by Hilton or
the Purchaser specifically for inclusion or incorporation by reference in the
Amended Schedule 14D-9, the Prospectus/Joint Proxy Statement, or any other
document filed or to be filed by or on behalf of ITT with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 6.8. Financing. Hilton or the Purchaser has access to, and will
have at the time of acceptance for payment and purchase of Shares under the
Amended Offer and at the Effective Time, the funds necessary to consummate the
Amended Offer and the Merger and the transactions contemplated thereby and to
pay related fees and expenses.
Section 6.9. Broker's Fees. Except for fees and expenses specifically
described in Hilton's Tender Offer Statement on Schedule 14D-1 with respect to
the Offer payable in connection with the engagement of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation ("DLJ") by Hilton, neither Hilton nor any of its
subsidiaries or any of its directors or officers has incurred any liability for
any broker's fees, commissions, or financial advisory or finder's fees in
connection with any of the transactions contemplated by this Agreement, and
neither Hilton nor any of its subsidiaries or any of its directors or officers
has employed any other broker, finder or financial advisor in connection with
any of the transactions contemplated by this Agreement.
-24-
ARTICLE VII.
ADDITIONAL COVENANTS
Section 7.1. Conduct of Business of ITT. Except as contemplated by this
Agreement or as expressly agreed to in writing by Hilton, during the period from
the date of this Agreement to the Effective Time:
(a) Each of ITT and its subsidiaries will conduct its operations
according to its ordinary course of business consistent with past practice, and
will use its reasonable best efforts to preserve intact its business
organization, to keep available the services of its employees and to maintain
satisfactory relationships with suppliers, distributors, customers and others
having business relationships with it and will take no action which would
materially adversely affect the ability of the parties to consummate the
transactions contemplated by this Agreement.
(b) ITT shall not, and it shall not permit any of its subsidiaries to,
(i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
(iii) repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any shares of capital stock.
(c) ITT shall not, and it shall not permit any of its subsidiaries to,
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of its capital stock of any class or any securities convertible
into, or any rights, warrants, calls, subscriptions or options to acquire, any
such shares or convertible securities, or any other ownership interest
(including but not limited to stock appreciation rights or phantom stock) other
than (i) the issuance of Shares upon the exercise of stock options or stock
appreciation rights or warrants granted under the Option Plans and outstanding
on the date of this Agreement and in accordance with the present terms of such
options or stock appreciation rights and (ii) issuances by a wholly owned
subsidiary of ITT of its capital stock to ITT.
(d) ITT shall not amend or propose to amend its Articles of
Incorporation or Bylaws.
(e) ITT shall not, and it shall not permit any of its subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof.
-25-
(f) ITT shall not, and it shall not permit any of its subsidiaries to,
make any payments (i) to CDRV and its Affiliates under the CDRV Agreement or
otherwise, or (ii) to Starwood and its Affiliates under the Starwood Agreement
or otherwise.
Section 7.2. Access to Information. From the date of this Agreement
until the Effective Time, ITT will give Hilton and its authorized
representatives (including counsel, environmental and other consultants,
accountants and auditors) full access during normal business hours to all
facilities, personnel and operations and to all books and records of ITT and its
subsidiaries, will permit Hilton to make such inspections as it may reasonably
require and will cause its officers and those of its subsidiaries to furnish
Hilton with such financial and operating data and other information with respect
to its business and properties as Hilton may from time to time reasonably
request. Other than as required by applicable law, Hilton agrees that any
information furnished to it, its subsidiaries or its authorized representatives
pursuant to this Section 7.2 will be kept confidential for a period of three
years from the date hereof.
Section 7.3. Reasonable Best Efforts; Other Actions. Subject to the
terms and conditions herein provided and applicable law, each of ITT, Hilton and
the Purchaser shall use its reasonable best efforts promptly to take, or cause
to be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, (i) the obtaining of all necessary consents,
approvals or waivers under its material contracts and (ii) the lifting of any
legal bar to the Amended Offer or the Merger.
Section 7.4. Public Announcements. Before issuing any press release or
otherwise making any public statements with respect to this Agreement, the
Amended Offer or the Merger, Hilton, the Purchaser and ITT will consult with
each other as to its form and substance and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law.
Section 7.5. Notification of Certain Matters. Each of ITT and Hilton
shall give prompt notice to the other party of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause either (x) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to the acceptance for payment of Shares pursuant to the Amended
Offer, (y) any condition set forth in Annex I to be unsatisfied in any material
respect at any time from the date hereof to the date the Purchaser purchases
Shares pursuant to the Amended Offer or (z) any condition set forth in Article
VIII hereof to be unsatisfied in any material respect at any time from the date
hereof to the Effective Time, and (ii) any material failure of ITT or Hilton, as
the case may be, or any officer, director, employee or agent thereof, to comply
with or
-26-
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 7.5 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 7.6. Indemnification. From and after the Effective Time, the
Surviving Corporation shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of ITT and its subsidiaries
against all losses, claims, damages, expenses or liabilities arising out of
actions or omissions or alleged actions or omissions occurring at or prior to
the Effective Time to the same extent, on the same terms and conditions, and
subject to the same limitations provided for in ITT's Articles of Incorporation
and Bylaws and agreements in effect at the date hereof (to the extent consistent
with applicable law).
Section 7.7. Expenses. Hilton and ITT shall bear their respective
expenses incurred in connection with this Agreement, the Amended Offer and the
Merger, including, without limitation, the preparation, execution and
performance of this Agreement and the transactions contemplated hereby, and all
fees and expenses of investment bankers, finders, brokers, agents,
representatives, counsel and accountants.
Section 7.8. ITT Rights Agreement. Except as contemplated by Section
5.7 hereof or the last sentence of this Section 7.8, ITT shall not redeem the
Rights or amend or terminate the Rights Agreement prior to the consummation of
the Merger unless required to do so by order of a court of competent
jurisdiction or fiduciary obligations. If requested to do so by Hilton or the
Purchaser, ITT shall redeem all outstanding Rights at a redemption price of
$0.01 per Right effective immediately prior to the acceptance for payment of any
Shares by the Purchaser pursuant to the Amended Offer.
Section 7.9. Takeover Laws and Provisions. ITT shall, upon the request
of Hilton or the Purchaser, take all reasonable steps to assist in any challenge
by Hilton or the Purchaser to the validity or applicability to the transactions
contemplated by this Agreement, including the Offer, the Amended Offer and the
Merger, of (i) any state takeover law, and (ii) any termination provision in any
hotel management, franchise or similar agreement triggered by the occurrence of
a "Change of Control" (as defined in any such agreement).
Section 7.10. Registration and Listing. Hilton and Purchaser shall use
their reasonable best efforts to cause the Hilton Common Stock that may be
issued to redeem the CVP Stock to be registered under the Securities Act, and to
be listed for trading, subject to official notice of issuance, on the NYSE.
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Section 7.11. Restricted Transactions. If the CVP Stock is issued in
the Merger, until the first anniversary of the Merger, Hilton shall not, and
shall not permit any of its controlled Affiliates to, purchase any shares of
Hilton Common Stock in open market transactions, privately negotiated
transactions or otherwise, on any day during the Valuation Period (as defined in
Exhibit 3.1), except with respect to employee benefit plans and other incentive
compensation arrangements.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF HILTON,
THE PURCHASER AND ITT
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment of each of the following conditions:
Section 8.1. Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Amended Offer in accordance with the
terms thereof; provided that this condition shall be deemed to have been
satisfied with respect to Hilton and the Purchaser if the Purchaser fails to
accept for payment or pay for Shares pursuant to the Amended Offer in violation
of the terms of the Amended Offer.
Section 8.2. Stockholder Approval. The vote of the stockholders of each
of ITT and Hilton necessary to consummate the transactions contemplated by this
Agreement shall have been obtained.
Section 8.3. No Legal Impediments. No statute, rule, regulation,
judgment, writ, decree, order or injunction shall have been promulgated,
enacted, entered, enforced or deemed applicable to this Agreement or the Merger,
and no other action shall have been taken, by any domestic, foreign or
supranational Governmental Entity that has the effect of making illegal or
directly or indirectly restraining, prohibiting or restricting the consummation
of the Merger; and the approval of all Governmental Entities necessary for
consummation of the Merger shall have been obtained.
ARTICLE IX.
TERMINATION AND ABANDONMENT
Section 9.1. Termination. Subject to Section 1.5(c), this Agreement may
be terminated at any time prior to the Effective Time:
(a) by mutual consent of the ITT Board and the Hilton Board;
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(b) by either Hilton or ITT if, without fault of such terminating
party, the purchase of Shares pursuant to the Amended Offer shall not have
occurred on or before December 31, 1997, which date may be extended by mutual
written consent of the parties hereto;
(c) by Hilton or ITT if the Amended Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased thereunder;
provided, however, that Hilton may not terminate this Agreement pursuant to this
Section 9.1(c) if Hilton's or the Purchaser's termination of, or failure to
accept for payment or pay for any Shares tendered pursuant to, the Amended Offer
does not follow the occurrence, or failure to occur, as the case may be, of any
condition set forth in Annex I hereto or is otherwise in violation of the terms
of the Amended Offer; or
(d) by either Hilton or ITT if any court of competent jurisdiction in
the United States or other Governmental Entity in the United States shall have
issued an order (other than a temporary restraining order), decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
purchase of Shares pursuant to the Amended Offer or the Merger, and such order,
decree, ruling or other action shall have become final and nonappealable;
provided that the party seeking to terminate this Agreement shall have used its
reasonable best efforts to remove or lift such order, decree or ruling.
Section 9.2. Termination by Hilton. This Agreement may be terminated
and the Amended Offer and the Merger may be abandoned by action of the Hilton
Board, at any time prior to the purchase of Shares pursuant to the Amended
Offer, if the ITT Board shall (a) withdraw, modify or change its recommendation
or approval in respect of this Agreement or the Amended Offer in a manner
adverse to Hilton, (b) have recommended any proposal in respect of any merger,
consolidation or other business combination involving ITT or its subsidiaries,
or (c) fail to reaffirm its recommendation and approval in respect of this
Agreement and the Amended Offer promptly after any request therefor by Hilton.
Section 9.3. Procedure for Termination. In the event of termination and
abandonment of the Merger and the Amended Offer by Hilton or the Merger by ITT
pursuant to this Article IX, written notice thereof shall forthwith be given to
the other.
Section 9.4. Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except
that nothing herein shall relieve any party from liability for any breach of
this Agreement.
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ARTICLE X.
DEFINITIONS
Section 10.1. Terms Defined in the Agreement. The following terms used
herein shall have the meanings ascribed in the indicated Sections.
Additional Amount..............................................3.2(a)
Affiliate........................................................5.12
Agreement....................................................Preamble
Amended Offer................................................Recitals
Amended Schedule 14D-9.........................................1.2(b)
Articles of Merger................................................2.2
Average Hilton Share Price.....................................3.1(a)
Business Combination Statute...................................5.9(b)
CDRV..........................................................5.11(b)
CDRV Agreement................................................5.11(b)
CVP Stock........................................................7.10
Certificate of Merger.............................................2.2
Certificates...................................................4.2(a)
Code...........................................................4.2(i)
Constituent Corporations.....................................Preamble
Control Share Statute..........................................5.9(a)
Delaware Secretary of State.......................................2.2
DGCL.........................................................Recitals
DLJ...............................................................6.9
Effective Time....................................................2.2
Effective Time Deficiency......................................3.1(b)
Exchange Act...................................................1.2(b)
Exchange Agent.................................................4.2(a)
Exchange Fund..................................................4.2(a)
Exchange Ratio.................................................3.1(a)
Form S-4..........................................................2.6
Governmental Entity............................................5.4(b)
HSR Act........................................................5.4(b)
Hilton.......................................................Preamble
Hilton Board.................................................Recitals
Hilton Charter.................................................1.4(a)
Hilton Common Stock............................................1.4(a)
Hilton Disclosure Letter..........................................6.1
Hilton Material Adverse Effect....................................6.1
Hilton Option..................................................3.2(a)
Hilton Option Plans...............................................6.2
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Hilton PRIDES(SM).................................................6.2
Hilton Preferred Stock............................................6.2
Hilton Rights Agreement...........................................6.2
Hilton SEC Documents...........................................6.5(a)
ITT..........................................................Preamble
ITT Affiliate Agreements.........................................5.12
ITT Board....................................................Recitals
ITT Disclosure Letter.............................................5.1
ITT Material Adverse Effect.......................................5.1
ITT Options....................................................3.2(a)
ITT Preferred Stock...............................................5.2
ITT SEC Documents..............................................5.5(a)
Merger.........................................................2.1(a)
Nevada Secretary of State.........................................2.2
NGCL.........................................................Recitals
NRS..........................................................Recitals
NYSE...........................................................3.1(a)
Offer........................................................Recitals
Offer Documents................................................1.1(a)
Offer to Purchase..............................................1.1(a)
Option Plans...................................................3.2(a)
person...........................................................11.9
Purchaser....................................................Preamble
Prospectus/Joint Proxy Statement..................................2.6
Rights.......................................................Recitals
Rights Agreement..................................................5.2
Rule 145.........................................................5.12
Schedule 14D-1.................................................1.1(a)
SEC............................................................1.1(a)
Securities Act....................................................2.6
Shares.......................................................Recitals
Starwood......................................................5.11(c)
Starwood Agreement............................................5.11(c)
SARs...........................................................3.2(a)
subsidiary.......................................................11.9
Surviving Corporation..........................................2.1(a)
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ARTICLE XI.
MISCELLANEOUS
Section 11.1. Amendment and Modification. Subject to applicable law and
the provisions of Section 1.5(c), this Agreement may be amended, modified or
supplemented only by written agreement of Hilton, the Purchaser and ITT at any
time prior to the Effective Time with respect to any of the terms contained
herein.
Section 11.2. Waiver of Compliance; Consents. Subject to the provisions
of Section 1.5(c), any failure of Hilton, the Purchaser or ITT to comply with
any obligation, covenant, agreement or condition herein may be waived by ITT,
the Purchaser or Hilton, respectively, only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.2.
Section 11.3. Survivability; Investigations. The respective
representations and warranties of Hilton, the Purchaser and ITT contained herein
or in any certificates or other documents delivered prior to or as of the
Effective Time shall not be deemed waived or otherwise affected by any
investigation made by any party hereto and shall not survive the Merger. The
covenants and agreements of the Surviving Corporation and Hilton and the
Purchaser shall survive the Effective Time without limitation.
Section 11.4. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally, by next-day courier or
mailed by registered or certified mail (return receipt requested), first class
postage prepaid, or telecopied with confirmation of receipt, to the parties at
the addresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, one day after delivery to a
courier for next-day delivery, or three days after mailing, if deposited in the
U.S. mail, first class postage prepaid.
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(a) if to ITT, to
ITT Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: ( ) -
Attention:
with a copy to
(b) if to Hilton or the Purchaser, to
Hilton Hotels Corporation
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Executive Vice President and General Counsel
with a copy to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Section 11.5. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties.
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Section 11.6. Governing Law. Except as the laws of the State of
Delaware or Nevada are by their terms applicable, this Agreement shall be
governed by the laws of the State of New York (regardless of the laws that might
otherwise govern under applicable New York principles of conflicts of law) as to
all matters, including but not limited to matters of validity, construction,
effect, performance and remedies.
Section 11.7. Counterparts. This Agreement may be executed by
facsimile and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 11.8. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a party hereto, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
Section 11.9. Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof; and (ii) the term "subsidiary" of any specified
corporation shall mean any corporation of which a majority of the outstanding
securities having ordinary voting power to elect a majority of the board of
directors are directly or indirectly owned by such specified corporation or any
other person of which a majority of the equity interests therein are, directly
or indirectly, owned by such specified corporation.
Section 11.10. Entire Agreement. This Agreement, including the Annexes
and Exhibits hereto and the documents and instruments referred to herein and
therein, embodies the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein, supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, and is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. There are no representations,
promises, warranties, covenants, or undertakings in respect of such subject
matter, other than those expressly set forth or referred to herein and therein.
* * *
-34-
IN WITNESS WHEREOF, Hilton, the Purchaser and ITT have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
HILTON HOTELS CORPORATION
By:
------------------------------------
Name:
Title:
HLT CORPORATION
By:
------------------------------------
Name:
Title:
ITT CORPORATION
By:
------------------------------------
Name:
Title:
-35-
ANNEX I
CONDITIONS OF THE AMENDED OFFER
Notwithstanding any other term of the Offer or the Agreement and Plan
of Merger by and among ITT Corporation, a Nevada corporation, Hilton Hotels
Corporation, a Delaware corporation, and HLT Corporation, a Delaware
corporation, dated as of November __, 1997 (the "Merger Agreement"), the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer unless there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer at least
63,500,000 Shares (the "Minimum Condition"). Furthermore, notwithstanding any
other term of the Offer or the Merger Agreement, the Purchaser shall not be
required to accept for payment or, subject as aforesaid, to pay for any Shares
not theretofore accepted for payment or paid for, and may terminate the Offer
if, at any time on or after the date of the Merger Agreement and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exists (other than as a result of any action or inaction of
Parent or any of its subsidiaries that constitutes a breach of the Merger
Agreement):
(a) there shall be instituted or pending by any governmental
authority or agency any suit, action or proceeding, (i) challenging the
acquisition by Parent or the Purchaser of any Shares under the Offer or
seeking to restrain or prohibit the making or consummation of the Offer
or the Merger, (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of their
respective subsidiaries of a material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, or to compel the Company or Parent
to dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as a result of the Offer or any
of the other transactions contemplated by the Merger Agreement, (iii)
seeking to impose material limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of,
any Shares accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Shares on all matters
properly presented to the stockholders of the Company or (iv) seeking
to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the
business or operations of the Company and its subsidiaries;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be
taken by any governmental authority or agency or court that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above;
(c) Parent or the Purchaser shall not have obtained any
waiver, consent, extension, approval, action or non-action from any
governmental authority or agency which is necessary to consummate the
Offer; or
(d) any material adverse change (or any development that,
insofar as reasonably can be foreseen, is reasonably likely to result
in any material adverse change) in the financial condition (other than
attributable to a change in results of operations) or business of the
Company and its subsidiaries, taken as a whole;
(e) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or the Purchaser its approval or recommendation of the Offer, the
Merger or the Merger Agreement, or approved or recommended any proposal
in respect of any merger, consolidation or other business combination
involving the Company or its subsidiaries, or (ii) the Board of
Directors of the Company or any committee thereof shall have resolved
to take any of the foregoing actions;
(f) any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified as to materiality
shall not be true and correct or any such representations and
warranties that are not so qualified shall not be true and correct in
any material respect, in each case at the date of the Merger Agreement
and at the Expiration Date;
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(h) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on a national
securities exchange in the U.S. (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any governmental authority or agency on,
or other event that materially adversely affects, the extension of
credit by banks or other lending institutions or (iv) in case of any of
the foregoing existing on the date of the Merger Agreement, material
acceleration or worsening thereof; or
(i) the Merger Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may, subject to the terms of the Merger Agreement, be waived by the
Purchaser and Parent in whole or in part at any time and from time to time in
their sole discretion. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
